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Social Security slashes amount of overpayments beneficiaries must pay back | Public Finance

staticwire | April 1, 2024
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Social Security recipients will now face adjusted overpayment policies, following an announcement from the Social Security Administration on Friday. In an effort to alleviate financial burdens on beneficiaries, the agency will no longer automatically withhold 100% of overpayment amounts from monthly benefits. Instead, recipients will see only 10% – or $10, whichever is greater – deducted to recover overpayments, with limited exceptions for cases involving fraud.

This significant policy shift comes in response to mounting criticism of the Social Security Administration’s handling of overpayments. Lawmakers and advocates have raised concerns over the impact of aggressive overpayment collection practices on vulnerable recipients, many of whom rely on Social Security benefits for their basic needs. Georgia Rep. Drew Ferguson, who chairs the House Ways and Means subcommittee, highlighted the heavy burden that improper payments place on beneficiaries during a hearing last fall.

The issue of overpayments is particularly prevalent among recipients of Social Security disability benefits whose earnings affect their eligibility. A report from the Government Accountability Office revealed that a majority of these beneficiaries experience overpayments, with the average duration being nine months and the total amount reaching nearly $9,300. With millions of Americans receiving monthly payments from the Social Security Administration, the impact of overpayment policies on vulnerable populations is a matter of significant concern.

In fiscal year 2023, the Social Security Administration distributed more than $1.4 trillion in benefits to senior citizens, survivors, and individuals with disabilities. However, the agency estimated that $6.5 billion in overpayments occurred, representing about 0.5% of total payments. Among low-income senior citizens and individuals with disabilities receiving Supplemental Security Income, overpayments totaled $4.6 billion, accounting for 8% of total payments in that category.

Despite efforts to recover overpayments, the Social Security Administration ended fiscal year 2023 with a sizable balance of $23 billion in uncollected payments. An independent auditor’s report highlighted significant deficiencies in internal controls related to overpayments, including shortcomings in documenting and calculating overpayments, as well as issues with record-keeping and tracking long-term installment payments.

In response to these challenges, then-Acting Commissioner Kilolo Kijakazi initiated a review of the agency’s overpayment procedures and policies in October. The recent policy change to reduce automatic overpayment withholdings represents a step towards improving the fairness and effectiveness of the Social Security Administration’s recovery process. By implementing more equitable policies, the agency aims to prevent undue harm to beneficiaries and ensure that overpayments are managed in a transparent and responsible manner.

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Written by staticwire

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