In a recent initiative, the representatives, Ms. Caraveo and Mr. Allred, introduced the bill HR 8265, known as the “Social Security Overpayment Fairness Act”, to the House of Representatives. This is a proposal that seeks to introduce substantial modifications to the Social Security law, especially on the issue of overpayment charges that affect millions of Americans.
An overpayment happens when Social Security pays out more money than a beneficiary deserves and then collects it back by taking large amounts out of monthly benefit payments. This bill proposes to establish a 120-day period between the notice of overpayment of benefits and the start of clawbacks by the Social Security Administration (SSA).
The Bill to Change How Social Security Claims Back Overpayments
If this bill passes, it would also require the Commissioner of Social Security to submit a report to Congress on a strategy for recovering such payments in a way that is more respectful and empathetic to the affected beneficiaries.
The bill focuses on addressing the issue of overpayments in Social Security benefits, Title II, which includes old age, survivors and disability benefits, as under Title XVI, which covers Supplemental Security Income (SSI) benefits.
Currently, the SSA can immediately initiate the clawback of benefits after notifying the beneficiary, which can cause financial difficulties and severe problems in the stability of people affected by these overpayments.
The concern is that there are not a few people who suffer the vicissitudes of having received Social Security overpayments: According to a report by the 60 Minutes program from the end of 2023, the SSA bills about 1 million people for overpayments every year. It is often thousands of dollars that are claimed back from them, leaving them broke or with severe difficulties to make ends meet with a few hundred dollars.
In response to the outcry over the refunds, Social Security Commissioner Martin O’Malley told Congress on March 20 that the SSA would stop the practice of withholding 100% of benefits, effective March 25.
What Are Social Security Overpayments?
Social Security overpayments are an error in the Social Security Administration system that can happen for various reasons. Those beneficiaries who receive retirement, survivors or disability benefits (Title II) and even beneficiaries of Title XVI, which covers Supplemental Security Income (SSI) benefits, may be affected.
One of the most common factors that lead to an overpayment is the change in the individual’s income or the beneficiary’s resources that were not reported on time and properly to the SSA.
For example, if a beneficiary starts working and does not report his new income, the agency could continue to pay benefits based on the information prior to this new job. Under this scenario, overpayments are generated that are then charged back.
Also, changes in the family situation such as marriage, divorce or the death of a spouse can result in excessive amounts to a beneficiary person. If these changes are not communicated in a timely manner, as soon as the SSA finds out, it stops issuing these overpayments and starts collecting those that have already been sent.
Sometimes overpayments are the result of administrative mistakes made by the SSA itself. Incorrect calculations or incorrect application of eligibility can lead to these errors.
How Does the SSA Clawbacks the Overpaid Money?
When the SSA determines that there has been an overpayment, it notifies the beneficiary about the excess amount and the reasons for the overpayment. This notice includes information on how the decision can be appealed or a waiver requested if the beneficiary believes that he or she is not responsible for the overpayment.
The SSA is required to recover the overpayments. Traditionally, this clawback can begin immediately, deducting a part of the beneficiary’s monthly benefit until the entire overpayment is recovered. However, H.R. 8265 proposes a 120-day waiting period between notification and the start of recovery, giving beneficiaries more time to prepare and resolve any discrepancies.
