The Social Security Administration has announced a change in its policy regarding the recovery of overpayments made to beneficiaries. Instead of automatically withholding 100% of the overpayment amount from recipients’ monthly benefits, they will now only collect 10% or $10, whichever is greater. This change aims to make the overpayment policies more fair and equitable, and to prevent beneficiaries from facing financial hardship due to withheld payments. There will be limited exceptions to this policy, such as when an overpayment resulted from fraud.
This change applies to new overpayments, but those who already have more than 10% of their benefits withheld can contact the Social Security Administration to discuss reducing the rate. Beneficiaries who would like a rate lower than 10% can be approved if the overpayment will be recovered within 60 months, rather than the previous deadline of 36 months. These adjustments come in response to criticism of the Social Security Administration’s handling of overpayments, which has been reported by news outlets and discussed in a House subcommittee hearing.
The issue of overpayments is a significant concern for beneficiaries of Social Security disability benefits, as these overpayments often occur without fault on the part of the recipient. A 2019 study found that overpayments typically lasted nine months and totaled nearly $9,300 for the majority of recipients affected. Despite the large number of beneficiaries receiving payments from the Social Security Administration, overpayments represent a small percentage of the total benefits distributed. The agency paid out over $1.4 trillion in benefits in fiscal year 2023, with an estimated $6.5 billion in overpayments, representing about 0.5% of the total amount paid.
In response to the issue of overpayments, the Social Security Administration recovered more than $4.9 billion in overpayments in fiscal year 2023. However, there remains a significant amount of uncollected payments, with a total balance of $23 billion at the end of the year. An independent auditor’s report highlighted deficiencies in the internal control overpayments, including deficiencies in documenting and calculating benefit overpayment and in tracking long-term installment payments. In October, the then-Acting Commissioner initiated a review of the agency’s overpayment procedures and policies to address these issues and prevent future overpayments.
Overall, the changes to the Social Security Administration’s overpayment policy aim to make the process more fair and equitable for beneficiaries while addressing concerns about financial hardship caused by withheld payments. By reducing the amount withheld from overpayments and extending the recovery period, the agency hopes to alleviate some of the burden placed on recipients. The ongoing review of overpayment procedures and policies will help to ensure that the agency can effectively address and prevent overpayments in the future, ultimately benefiting those who rely on Social Security benefits for their financial security.
