Social Security ends its 'clawback cruelty' when collecting overpayments, says chief

The Social Security Administration announced a plan last week to end so-called “clawback cruelty” and reform its overpayment policy, after it was revealed that the agency clawed back $4.7 billion in overpayments, while another $23 billion remained outstanding.

“For 88 years, the hardworking employees of the Social Security Administration have strived to pay the right amount, to the right person, at the right time,” Commissioner Martin O’Malley told the U.S. Senate Special Committee on Aging and the U.S. Senate Committee on Finance. “And the agency has done this with a high degree of accuracy over a massive scale of beneficiaries. But despite our best efforts, we sometimes get it wrong and pay beneficiaries more than they are due, creating an overpayment.

“When that happens, Congress requires that we make every effort to recover those overpaid benefits. But doing so without regard to the larger purpose of the program can result in grave injustices to individuals.”

Last year, the agency came under fire from lawmakers and members of the public after an investigation found it had asked for billions of dollars back from beneficiaries, including some of the most vulnerable Americans, following overpayments. An overpayment within the Social Security program is determined when the agency decides beneficiaries were not eligible to receive money that already had been paid to them.

O’Malley outlined four steps his agency is taking to address the problem.

• “Starting next Monday, March 25, we will be ceasing the heavy-handed practice of intercepting 100% of an overpaid beneficiary’s monthly Social Security benefit by default if they fail to respond to our demand for repayment. Moving forward, we will now use a much more reasonable default withholding rate of 10% of monthly benefits — similar to the current rate in the Supplemental Security Income program.”
• “We will be reframing our guidance and procedures so that the burden of proof shifts away from the claimant in determining whether there is any evidence that the claimant was at fault in causing the overpayment.”
• “For the vast majority of beneficiaries who request to work out a repayment plan, we recently changed our policy so that we will approve repayment plans of up to 60 months. To qualify, Social Security beneficiaries would only need to provide a verbal summary of their income, resources and expenses, and recipients of the means-tested SSI program would not need to provide even this summary. This change extended this easier repayment option by an additional two years (from 36 to 60 months).”
• “And finally, we will be making it much easier for overpaid beneficiaries to request a waiver of repayment in the event they believe themselves to have been without any fault and/or without the ability to repay.”

Related: Social Security Chief vows to fix the agency’s ‘cruel-hearted’ overpayment clawbacks

Testifying before the Senate committee March 20, O’Malley said the reforms would end the “clawback cruelty” of demanding that beneficiaries immediately repay excess benefits the agency says they received, in some cases decades ago and often through no fault of their own.

“Implementing these policy changes — with proper education and training across the people, policies and systems of the agency — is an important but complex shift,” O’Malley said. “And we are undertaking that shift with urgency, diligence and speed.”