Social Security commissioner vows to end ‘clawback cruelty’ with new plan for benefit overpayments

Personal Finance

Former Gov. Martin O’Malley (D-MD), President Biden’s nominee to be the next Commissioner of Social Security, testifies during his confirmation hearing before the Senate Finance Committee at the Dirksen Senate Office Building on November 02, 2023 in Washington, DC.
Kevin Dietsch | Getty Images

Three months into his role as commissioner of the Social Security Administration, Martin O’Malley unveiled a new plan to tackle overpayment issues that have led the agency to demand some beneficiaries repay benefits.

“We are no longer going to have that clawback cruelty of intercepting 100% of a payment if people do not respond to our notice,” O’Malley told the Senate Committee on Aging on Wednesday.

The plan comes after some beneficiaries who received excess benefit payments have received letters from the Social Security Administration demanding repayment of those sums.

More from Personal Finance:
Millionaires may have hit their 2024 Social Security payroll tax limit
78% of near-retirees failed or barely passed a basic Social Security quiz
Many Americans believe pensions are key to achieving the American Dream

One overpayment notice for $58,000 was recently sent to a Savannah, Georgia, resident “through no fault of her own,” Sen. Raphael Warnock, D-Georgia, noted during the hearing.

Because that beneficiary could not afford to repay the sum to the SSA, the agency reduced her monthly benefits, Warnock said. As a result, she could no longer pay her rent.

“That’s the human cost, the human face of these policy issues,” said Warnock, and indicated that his office frequently hears from constituents about overpayments issues and clawback notices.

The overpayment and underpayment of beneficiaries’ monthly checks is one of three service issues O’Malley said he plans to tackle in 2024. He also plans to address the long wait times for service on the agency’s 800 number, as well as a backlog in disability benefit applications that leads to long wait times for approval.

During the hearing, he also called on Congress to provide additional support, pointing to President Joe Biden’s proposed budget that calls for a funding increase for the agency.

“We are in a customer service crisis,” O’Malley said, due to underfunding and understaffing.

How Social Security overpayments handling will change

During the Senate hearing, O’Malley introduced a new four-part plan to change how the Social Security handles overpayment issues.

Starting Monday, March 25, the agency will no longer intercept 100% of a beneficiaries’ monthly benefits if they do not respond to a repayment notice, he said. Instead, the agency will use a “much more reasonable” default withholding rate of 10%, according to O’Malley.

Second, the claimant will no longer have the burden of proof to show whether they were at fault in causing the overpayment.

“We should have to produce that reason, not them,” O’Malley said.

Third, for beneficiaries who work to establish repayment plans with the Social Security Administration, the maximum time will be extended to up to 60 months from 36 months.

Finally, it will now be easier beneficiaries to request a waiver so they do not have to repay the money to the SSA if they are not at fault or do not have the ability to repay the money.

“We’re looking to do more as well; I’m not able to announce that now,” O’Malley said.

The changes will require changes to training and systems that beneficiaries encounter when they visit one of the 1,210 Social Security field offices with an overpayment notice, he noted.

Products You May Like

Articles You May Like

Elliott takes $1.9 billion stake in Southwest Airlines, seeks to oust CEO and chair
Family offices are planning big investments in private companies
National Amusements stops discussions with Skydance on Paramount deal, sources say
Fed holds rates steady, indicates only one cut coming this year
Beatrice Advisors launches to serve millennial and Gen Z investors from diverse backgrounds

Leave a Reply

Your email address will not be published. Required fields are marked *