The Social Security Administration (SSA) has announced a change to its policy on recovering overpayments made to beneficiaries. On April 25, the agency sent an “emergency message” to its staff, stating that it would withhold only 50 percent of old-age, survivors, and disability insurance benefits if a beneficiary had been overpaid. This is a significant reduction from the 100 percent withholding rate the SSA announced just weeks earlier on March 27.
The previous policy had been met with widespread criticism and concern, as it would have left many beneficiaries without income until the overpayment was fully recovered. Overpayments can occur for various reasons, such as SSA errors or beneficiaries failing to report changes in their circumstances. From fiscal years 2015 through 2022, nearly $72 billion in improper payments were identified, with the majority being overpayments.
By the end of FY 2023, the SSA had an uncollected overpayment balance of $23 billion.
Recovery policy adjustment impacts benefits
The March 27 announcement overturned a Biden-era policy implemented by former commissioner Martin O’Malley, which reduced the default overpayment withholding rate to ten percent or $10, whichever was greater.
This policy had been in effect for about a year before being changed by the current acting commissioner, Leland Dudek. Despite the recent rollback, experts warn that the 50 percent withholding rate could cause significant hardship for affected beneficiaries. Kate Lang, director of federal income security at Justice in Aging, stated, “If you’re relying on your benefits to pay your rent or your mortgage and buy food, losing half of that income is going to be devastating and can still result in people becoming homeless.
Beneficiaries can negotiate repayment terms, but success is not guaranteed, and outcomes can vary.
Long wait times to make appointments at SSA offices can also interfere with beneficiaries’ ability to exercise their options. Former SSA commissioner Martin O’Malley criticized the rollback: “We had the policy right before. If you depend entirely on your Social Security check, having half of it interrupted means going without essentials like heating or medicine.
The new 50 percent withholding policy went into effect on April 25.
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