The Social Security Administration announced plans in March to end “clawback cruelty.”
On March 20, the agency said it would by the end of the month no longer intercept 100% of a beneficiary’s monthly benefits if the person failed to respond to a notice of overpayment. The Commissioner of Social Security, Martin O’Malley, made the announcement to the Senate Committee on Aging.
“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 said.
Instead, the agency said it would use a “much more reasonable” withholding rate of 10% starting on March 25, O’Malley said.
The new 10% rate would only apply when beneficiaries do not respond to overpayment notices in a timely fashion, he added.
The change is in response to complaints from beneficiaries who received notices from the Social Security Administration demanding repayment of benefits that sometimes totaled tens of thousands of dollars, he said.
At times the overpayments made by the administration are “no fault” of beneficiaries, who are then placed in the position of having to make immediate repayment or face a significant reduction in their own benefits, said Sen. Raphael Warnock, a Georgia Democrat, during the hearing.
One of Warnock’s constituents in Savannah, Ga., received a notice for $58,000 from the Social Security Administration. Because she couldn’t make a lump sum payment, Social Security reduced her benefits significantly, which led to her defaulting on her rent payments, Warnock said. He added that his office often hears from constituents with benefit clawback problems.
The reduction to 10% for clawbacks is part of a four-part overhaul in the way the agency handles overpayments. The agency said that by the March 25 date claimants would also no longer have to prove they are not at fault in causing an overpayment.
It’s up to the agency “to produce that reason, not them,” O’Malley said.
As of March 25, the beneficiaries who established repayment plans with the Social Security Administration will be given a maximum of 60 months to make repayments, up from 36 months before, O’Malley said.
The agency said it would also make it easier for beneficiaries to request and obtain a waiver if the overpayment was not their fault and they could prove they didn’t have the ability to repay the money.
O’Malley said the additional funding for the administration proposed by President Joe Biden would allow the agency to train its 1,200-plus staff and update systems on the new clawback policies.