Social Security recipients may see some of their next payments come in higher because of a decision the Social Security Administration (SSA) made in favor of seniors who receive payments. Sometimes, the SSA makes some mistakes that cause them to receive overpayments on their monthly checks for several months or even years.
When the organization finds out about these overpayments, the SSA can apply severe penalties, including severe cuts to your future benefits, or completely canceling the sending of checks or deposits until the entire amount is paid. However, a new move is going to help millions of seniors who receive Social Security payments.
Overpaid Social Security Beneficiaries to See Lower Cuts
Recently, Commissioner Martin O’Malley said that the sharp cuts or the total cancellation of money transfers by the SSA, so that older people who depend on this income, and who were depositories of this type of overpayments, will be able to feel a relief.
“We are no longer going to have that clawback cruelty of intercepting 100 percent of a payment if people do not respond to our notice,” O’Malley said during a Senate Committee on Aging hearing the last week.
When the SSA makes a rebate to compensate for an overpayment to a beneficiary, it is called a “clawback.” In finance, a clawback refers to the recovery of excessive compensation or bonuses paid to certain individuals based on inaccurate financial statements or performance metrics, or, as in the case of the SSA, when there is an error.
The end of these clawbacks will begin to happen gradually from Monday, March 25th, 2024. Be aware of that, the SSA will opt to reduce Social Security payments by only 10% instead of totally cutting checks to beneficiaries who have received overpayments.
Who Will Benefit From an Increase in Their Social Security Payments?
For O’Malley, the previous clawbacks process caused “grave injustices” to people, and there are known cases of individuals who lost their homes or found themselves in serious economic difficulties when they saw their benefits cut to recover excessive payments they received for decades.
The beneficiaries of the new reduced rebates are those who are currently being targeted for overpayments, but there are other changes that will also affect (for the better) these individuals: now, instead of imposing on the recipient the burden of proof of who is to blame for the overpayment, the agency itself has that responsibility.
There will also be new facilities to repay the overpayment, within a period of five years instead of the three years that are currently in force. This will make the clawbacks smaller and people will not fall into financial disgrace when they see their checks suddenly stop coming in.
The most important thing is that, if a recipient of these clawbacks believes that the overpayments were not their fault, they can apply for an exemption and the SSA will be obliged to put their case to study. In the future, the SSA may also set a limit on the number of years during which the agency can claim reimbursement for overpayments, as directed by the commissioner.
Keep in mind that the entry into force of these changes this month will not necessarily imply a change in the specific amount of your payment. Seniors and those with disabilities who receive Social Security benefits should contact the SSA directly for up-to-date information on the terms of their payments.