The Social Security Administration (SSA) announced on Friday that it will be amending its overpayment recovery procedures, effectively reducing the burden on beneficiaries.
As of Friday, the agency will no longer automatically withhold 100% of the overpayment amount from recipients' monthly benefits. Instead, it will adopt a more lenient approach, collecting only 10% of the total monthly Social Security benefit, or $10, whichever is greater, to recover overpayments.
This move aims to alleviate the financial strain on recipients who may find themselves struggling due to withheld payments.
New Policies Aim to Alleviate Social Security Overpayment Challenges
According to Social Security Commissioner Martin O'Malley, this adjustment represents a crucial step towards ensuring fairness and equity within the overpayment policies.
"Social Security is taking a critically important step towards our goal of ensuring our overpayment policies are fair, equitable, and do not unduly harm anyone," O'Malley stated. "It's unconscionable that someone would find themselves facing homelessness or unable to pay bills, because Social Security withheld their entire payment for recovery of an overpayment."
Exceptions to this new policy will be limited, particularly in cases where overpayments resulted from fraudulent activities.
For beneficiaries already subject to withholding rates exceeding 10%, they are encouraged to reach out to the SSA to discuss potential reductions in their repayment rates.
Moreover, beneficiaries will now have a longer period to repay their overpayments, with the deadline extended from 36 to 60 months.
This means that if a beneficiary seeks a rate below ten percent, the request will be approved if it ensures full overpayment recovery within 60 months.
This extension is designed to provide more flexibility for recipients in managing their finances while ensuring the timely recovery of overpaid amounts.
SSA Addresses Overpayments Issues
The decision comes amidst growing scrutiny over the SSA's handling of overpayments, which have been a source of financial distress for many American beneficiaries.
Chairman Drew Ferguson of the Social Security Subcommittee emphasized last October the importance of preventing such errors.
"One thing that I think that we all agree on is that way too many Americans now have the burden of having to deal with an overpayment," Ferguson said. "And I believe that we have to come together in a way that makes sure that those people are not caused additional harm or suffering."
"With a program this size, which pays out more than $1.2 trillion a year, even a small percentage of errors can have a big impact," he added. "Every error can affect beneficiaries, livelihood."
Overpayments have been a persistent issue for the SSA, as highlighted in a report by the US Government Accountability Office (GAO) and various congressional hearings.
In the most recent fiscal year (FY 2023), the federal government disclosed a staggering $236 billion in "improper payments.
These errors, reported by 14 agencies across 71 programs, encompass a variety of issues including overpayments, inaccurate recordkeeping, and potential fraud.
Of this total, overpayments accounted for a significant majority, totaling more than $175 billion, constituting 74% of the reported errors. Examples of overpayments include funds disbursed to deceased individuals or those no longer eligible for government assistance.
Efforts to address these challenges have been ongoing, with the SSA launching a comprehensive review of its overpayment policies last October.
In addition to the policy change, the SSA is actively working to enhance its data exchange with payroll providers to reduce instances of improper payments.
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