Social Security Changes Rules on Recouping Benefit Overpayments

Social Security Changes Rules on Recouping Benefit Overpayments

The Social Security Administration (SSA) has announced that it will change how it collects past benefit overpayments to Social Security recipients. SSA’s previous overpayment policies have left many Americans with disabilities in dire financial circumstances. SSA previously insisted that individuals with benefits overpayments immediately pay back thousands of dollars in excess benefits that they received by withholding their entire monthly Social Security check. In many cases, the overpayment occurred years ago and was due to no fault of the recipients.

When an overpayment occurs, the law requires that SSA make every effort to recoup the overpaid benefits. For instance, in FFY 2023, SSA collected $4.9 billion in overpaid benefits, but about $23 billion remains unpaid. However, aggressive overpayment collection tactics can force people into a situation where they suddenly have no income but cannot work. Depending on the extent of the overpayment, the situation could last for months, if not years.

Changes to the Overpayment Recoupment System

Beginning March 25, 2024, SSA will no longer cut off monthly Social Security benefits payments to recipients with benefit overpayments who fail to respond to an overpayment notice. Instead, SSA will reduce their monthly benefits check by 10% or collect $10 – whichever is greater – to put toward the overpayment. The reduction in benefits typically begins 60 days after the SSA issues the notice of reduction of benefits to the SSA. SSA has established some exceptions to the new benefit overpayments recoupment policy, such as in fraud cases.

Furthermore, SSA will take three other steps to improve benefit overpayments collection process for recipients with overpayments, as follows:

  • The SSA, rather than the recipient, now will have the burden of proof to show whether the recipient was at fault for the overpayment.
  • Repayment plans for overpayments will increase from a maximum term of three years to five years. As a result, recipients can pay less than 10% of their monthly checks toward the repayment if doing so will satisfy the overpayment within ten years.
  • SSA will make the process of requesting a waiver of repayment easier for those recipients who do not believe they are at fault for the overpayment or cannot afford to repay it.

SSA’s new policies apply to new overpayments in the future. However, recipients with existing overpayments can contact SSA to request a reduction in the monthly repayment rate if it is more than 10% per month.

Appealing Benefit Overpayments

Anyone who receives notice of a Social Security overpayment has the right to appeal the determination of overpayment within 60 days of the date that they received the overpayment notice. SSA assumes that recipients receive notices within five days of their dates. Individuals can start the appeal process by filing a request for reconsideration online or using Form SSA-561 Request for Reconsideration.

Submitting an Overpayment Waiver Request

Recipients who receive an overpayment notice may ask for a waiver of the overpayment at any time if:

  • They do not believe that the overpayment is their fault; and
  • Paying it back would cause them financial hardship.

Individuals can ask for a waiver of an overpayment by submitting Form SSA-632 Request for Waiver of Overpayment Recovery to SSA. If the overpayment is $1,000 or less, individuals can process their overpayment waiver request more quickly by calling 1-800-772-1213 or their local SSA office.

Common Causes of Overpayments

Most Social Security overpayments occur in the Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs, which pay benefits for individuals with disabilities. Both programs have strict limits on work activity and income. Additionally, the SSI program, which is for people with disabilities or over age 65 with very low incomes, is subject to complex asset rules, which depend on everything from how much is in a person’s bank account to whether a relative provides them with financial assistance.

Generally, it is up to recipients to report changes in their income, assets, household composition, and other relevant factors (depending on which program is involved) to SSA. The complexity of the reporting and eligibility rules contributes to a failure in reporting that often leads to overpayments. Even those recipients who faithfully report changes in income often end up with overpayments, which creates a disincentive for individuals with disabilities to return to work. According to SSA data, of the estimated $11.1 billion in SSA overpayments in FFY 2023, $1.9 billion resulted from SSA errors, not recipient errors.

Contact Us Today to Learn More About Benefit Overpayments

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