Here’s what beneficiaries need to know as the Social Security Administration phases in new policies for overpayments

Personal finance

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Social Security beneficiaries who owe money to the Social Security Administration may see much lower default withholding rates from their monthly checks, thanks to new policies that are going into effect.

As of March 25, the Social Security Administration will no longer collect 100% of a total monthly Social Security benefit payment to recoup the money a beneficiary owes due to overpayment of benefits.

Instead, the agency will collect either 10% of a beneficiary’s total monthly benefit or $10 — whichever is greater.

But there may be a short period where beneficiaries are still affected by the old policy, the agency announced Friday.

If that happens, affected beneficiaries should call the Social Security Administration at 1-800-772-1213 to lower their withholding rate, the agency said.

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The new rules apply to overpayments, which are triggered when the amount of benefits due is miscalculated and checks are sent for higher sums than what beneficiaries are owed.

When that happens, the Social Security Administration is required by law to seek repayment of the excess money paid to beneficiaries. But it might not be clear that an overpayment has happened for years, sometimes resulting in overpayment notices for tens of thousands of dollars.

In recent years, the problem with overpayments has become worse, said David Camp, CEO at the National Organization of Social Security Claimants’ Representatives.

“There were always far too many overpayments,” Camp said, as the agency has struggled over the years with limited or outdated resources. “Although in the last few years, it’s been a steady, though shockingly high, sum total of overpaid individuals.”

Supplemental Security Income, or SSI, beneficiaries who face strict limits on their income and assets are particularly vulnerable to overpayment issues, Camp said.

The Social Security Administration said it is working to curb the burden to affected beneficiaries.

“We are no longer going to have that clawback cruelty of intercepting 100% of a payment if people do not respond to our notice,” Commissioner Martin O’Malley said during recent testimony before the Senate.

While the new repayment threshold applies to new overpayments, beneficiaries who currently have an overpayment withholding rate greater than 10% can contact the Social Security Administration to have that lowered, the agency said.

All affected beneficiaries should call the agency about the 10% repayment rate, Camp said, but they need to approach the process with patience. The Social Security Administration does not have enough staff to answer a high volume of calls, so beneficiaries should expect a hold time, Camp said, as well as processing time.

The Social Security Administration is also implementing other new policies to address overpayments, including shifting the burden of proof away from Social Security claimants when determining who is at fault for the error.

The maximum time for repayment plans is being extended to 60 months, up from 36 months. It will also be easier for beneficiaries to request a waiver so they don’t have to pay back the sums.

“The great majority of claimants never request a waiver, although many of them could qualify,” Camp said.

That’s particularly true for beneficiaries who are struggling to meet their basic needs or who are at risk of being evicted because they are repaying Social Security, he said.

“Claimants ought to know that they can also ask for not having to pay it back at all if it wasn’t their fault and they can’t afford to repay,” Camp said.

To request a waiver, a beneficiary must fill out a form.

Since O’Malley was sworn in as commissioner in December, he has taken some “very aggressive steps” toward addressing the overpayment issues that vex beneficiaries, said Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare.

“They’re so reasonable, it makes you wonder why no one did it before,” said Richtman, referring especially to the end of the policy of withholding all of a beneficiary’s monthly payments until the entire overpaid sum is repaid.

“That’s a huge burden on most beneficiaries who live on Social Security or the majority of their income is Social Security,” Richtman said.

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