Retirees once eagerly anticipated their monthly Social Security payments, often relying on them to cover essential expenses. However, since the Social Security overpayment scandal emerged last year, many seniors now hesitate to spend these funds, fearing potential repercussions. By November 2023, the Social Security Administration had dispersed over $23 billion in overpayments, prompting the agency to initiate the process of reclaiming these funds from recipients.
The SSA acknowledges on its website that overpayments occur when inaccurate or incomplete information leads to errors in benefit calculations, often stemming from unreported changes in recipients’ circumstances such as employment status, living arrangements, marital status, or income levels. However, the SSA itself bears responsibility in some instances for these overpayments.
Surge in Social Security overpayments: What you need to know
This debacle led Social Security officials to testify before Congress, sparking widespread confusion and indignation regarding the causes and management of the situation. According to the SSA’s latest Agency Financial Report, released in line with GOBankingRates’ earlier coverage, the agency recorded approximately $11.1 billion in new overpayments to Social Security beneficiaries during the federal fiscal year 2022, marking a staggering 65% increase from the previous year as reported by KFF Health News. Typically, the SSA had been issuing new overpayments amounting to $6 billion to $7 billion annually in recent years.
Recipients who receive a letter from the SSA indicating they’ve been overpaid are required to reimburse the excess amount within 30 days. By last October, the SSA had already reclaimed approximately $4.7 billion in overpayments.
Many individuals affected by these clawbacks are financially disadvantaged or disabled, and the errors often involve substantial sums of money. For instance, one woman was compelled to reimburse over $300,000 due to an SSA error, while another received a repayment notice exceeding $60,000, as reported by ABC News. Similarly, a woman in Florida faced a demand for $121,000 to be settled within 30 days.
- If you’ve received an overpayment notice, here are four steps to safeguard your finances:
- Request a reconsideration: This involves appealing to the SSA to review your case again if you believe the overpayment amount or the reason provided by the SSA is incorrect.
- Seek a waiver: Even if you acknowledge the overpayment, you can still petition the SSA to waive the repayment obligation. If you believe the overpayment wasn’t your fault and you lack the means to repay it, requesting a waiver is advisable.
Other Things for Retirees to Consider
Arrange for installment payments: If you acknowledge responsibility for the overpayment and possess the financial resources, you can opt for a payment plan instead of a lump sum repayment. The recurring payment amount would be determined based on your essential living expenses.
For assistance with overpayments or clawbacks, reach out to The National Organization of Social Security Claimant Representatives. Their team of attorneys specializes in handling Social Security cases. Additionally, certain beneficiaries may be eligible for free legal aid through federally funded protection and advocacy programs.