Social Security Administration to Relax Overpayment Clawback Rules

Social Security Administration Commissioner Martin O’Malley announced on Wednesday that the SSA would be softening the process for recovering overpayments from beneficiaries.

When a beneficiary of Social Security receives an overpayment, the SSA can withhold the entirety of the beneficiary’s subsequent benefit payments if they are non-responsive to repayment requests. The SSA now will move away from this “heavy-handed practice” and instead reduce the withholding amount to 10%, as of March 25.

Additionally, the SSA will shift the burden of proof in assigning fault for overpayments from the beneficiary to the SSA and the administration will extend the maximum repayment window to 60 months from 36. It will also make it easier for those unable to pay to apply for repayment waivers.

The SSA did not specify how the waiver process would be made easier, and O’Malley suggested during a hearing Wednesday hosted by the Senate Committee on Finance’s subcommittee on aging that an easier waiver process might only be available in the short term. O’Malley said the SSA would ease the process “for now.”

At the hearing, O’Malley also said the SSA was in a “customer service crisis,” and average wait times at call centers were 39 minutes nationwide. He added that it takes an average of eight months to receive a determination on disability eligibility and another seven months to get a hearing if an applicant files an appeal.

O’Malley attributed the call center delays to low funding for the SSA and to high turnover. He argued that the SSA operates with an overhead of 1% of outlays, while private sector insurers have an overhead of 12% or more. He added that since wait times are long, many beneficiaries “are coming into that call hot,” and their anger results in call center workers being stressed and overworked, which results in an annual turnover rate of 24%, according to O’Malley.

O’Malley explained that the agency is making progress by allowing beneficiaries and their attorneys to complete more processes online so that they do not have to use the call centers as much, but other issues, such as funding, require Congressional intervention.