Automatic overpayment recovery has been reduced to 10%, significantly reducing the financial burden on people with overpayments
Social Security announced that it will have to pay back much less as the default overpayment withholding rate has been decreased to 10%. Social Security works to pay the right people with the right amounts and errors are less likely to occur. However, the recipients have been requesting the agency for a long time to prevent the overpayments from happening so that they could easily get over with the payments.
Social Security Reduces Overpayment Burden For Its Beneficiaries
Martin O’Malley, Commissioner of Social Security said that the agency was taking a “critically important step” concerning its overpayment policies to ensure it is “fair, equitable, and do not unduly harm anyone.” According to Maleley, the thought of someone being homeless to pay back an overpayment was “unconscionable.”
Until now, when a person is overpaid, the law requires the agency to collect 100% of the total monthly Social Security benefit to recover it which could create financial difficulties for the beneficiaries. However, as of March 25, 2024, the agency has passed a new law by which it will only collect ten percent of the Social Security amount in case of overpayment. However, certain exemptions include overpayment resulting from fraud and others.
There will be a transition period in which those who are currently placed in 100 percent withholding are required to call Social Security’s National Number to lower their withdrawal rate from the existing 100 percent to 10 percent. However, the change will automatically be applied to new overpayments.
As of March 25, 2024, another law has also come into effect that allows the recovery of the overpayment within 60 months, rather than only 36 months. So, if a beneficiary requests to lower the repayment rate to 10 percent, then a representative will approve their request and it allows additional time for repayment. If a beneficiary fails to recover the overpayment within the given period, the Social Security representative information including income, expense, and resources will decide.
In October 2023, the agency launched a comprehensive review respecting its overpayment policies to address payment accuracy. This procedure change as well as the adjustment to 60 months are part of the recently declared major updates to address improper payments.
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Social Security is also working on limiting wage-related improper payments by collecting information exchanges from payroll data providers. The officials expect to significantly reduce the number of improper payments once the plan is implemented. The agency has further promised to make regulatory and sub-regulatory changes to improve the overpayment.
Also, Social Security has given the right for the beneficiaries to report any issues- if the overpayment is not caused by their fault, or if they cannot afford it. Moreover, the agency does not pursue further recoveries while an initial payment is pending. In addition to lowering the percentage of repayment, the agency has ensured to address each case individually, because it is aware of the fact that each person comes from a different financial background. Since each beneficiary’s situation is unique, Social Security ensures handling overpayments case by case, considering the differences, to make it less hard for the beneficiaries to grasp the situation.
The agency representative has signaled about upcoming changes, however, for the time being, only the duration and the percentage of repayment have been changed.