(CNN) — Social Security recipients will now have to pay back much less if they were inadvertently overpaid.
The Social Security Administration announced Friday that it will no longer automatically withhold 100% of the overpayment amount from recipients’ monthly benefits. Instead, it will collect 10% – or $10, whichever is greater – to recover the overpayment.
There will be limited exceptions, such as when an overpayment resulted from fraud.
“Social Security is taking a critically important step towards our goal of ensuring our overpayment policies are fair, equitable, and do not unduly harm anyone,” Social Security Commissioner Martin O’Malley said in a statement. “It’s unconscionable that someone would find themselves facing homelessness or unable to pay bills, because Social Security withheld their entire payment for recovery of an overpayment.”
The change applies to new overpayments, but those already having more than 10% of their benefits withheld can contact the Social Security Administration to discuss reducing the rate.
Beneficiaries who would like a rate lower than 10% will be approved if the overpayment will be recovered within 60 months, rather than the former deadline of 36 months.
The Social Security Administration has been under fire lately for mistakenly overpaying beneficiaries and then clawing the money back. Several news outlets have reported on the issue, and a House Ways and Means subcommittee held a hearing on it last fall.
“Improper payments, many of which occur by no fault of those who have been improperly paid, do in fact place a heavy burden on the recipients,” Georgia Rep. Drew Ferguson, a Republican who chairs the subcommittee, said in his opening statement at the hearing. “That’s why we’ve got to do more to help prevent this before they happen.”
The majority of recipients who receive Social Security disability benefits and have earnings sufficient to affect their benefits receive an overpayment, according to a report published by the Government Accountability Office last fall. The agency cited a 2019 study by the Social Security Administration and Mathematica, a research and consulting company, that found that overpayments typically lasted nine months and totaled nearly $9,300.
An average of roughly 72 million people received monthly payments from the Social Security Administration in fiscal year 2023, according to the agency’s latest financial report. It distributed more than $1.4 trillion in benefits.
Of the $1.3 trillion it paid to senior citizens, survivors and people with disabilities in fiscal year 2022, the agency estimated $6.5 billion were overpayments, or about 0.5%. It also estimated that $4.6 billion, or 8%, of the $57.6 billion it paid in Supplemental Security Income to low-income senior citizens and people with disabilities that year were overpayments.
The Social Security Administration recovered more than $4.9 billion in overpayments in fiscal year 2023 but still ended the year with a total balance of $23 billion in uncollected payments.
In an independent auditor’s report in fiscal year 2023, Ernst & Young said there was a “significant deficiency in internal control” regarding overpayments, including “deficiencies” in documenting and calculating benefit overpayment and in overpayment records and tracking long-term installment payments.
In October, then-Acting Commissioner Kilolo Kijakazi initiated a review of the agency’s overpayment procedures and policies.
