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Social Security To Fix ‘Cruel-Hearted’ Overpayment Clawbacks?

In an interview with KFF Health News, the Social Security Administration’s new chief Martin O’Malley is promising to overhaul the agency’s system of clawing back billions of dollars it claims was wrongly sent to beneficiaries, saying it “just doesn’t seem right or fair.”

O’Malley, who took office in December, said that “addressing the injustice we do to too many Americans because of overpayments, the rather cruel-hearted and mindless way that we recover those overpayments,” is among his top priorities.

In the coming days, O’Malley, whose term will run until January 19, 2025, says that he will propose changes to help people avoid crushing debts that have driven some into homelessness and caused financial hardships for the nation’s most vulnerable.

He said he has concrete steps in mind, such as establishing a statute of limitations, shifting the burden of proof to SSA, and imposing a 10% cap on clawbacks for some beneficiaries.

O’Malley suggests that the SSA will not have to wait for congressional action.  He says, “We do have the ability and we do have the authority to address many of these injustices.”

The pledge comes after an investigation by KFF Health News and Cox Media Group television stations revealed that SSA routinely reduces or halts monthly benefit checks to reclaim billions of dollars in past overpayments.

In some cases, years passed before the government discovered its mistake and then imposed debts that sometimes have reached tens of thousands of dollars on people who cannot afford to pay. KFF Health News and Cox Media Group discovered that more than 2 million people a year have been hit with overpayment demands.

Most overpayments are linked to the Supplemental Security Income (SSI) program, which provides money to people with little or no income, who have a disability, are blind or are at least age 65. Others are connected to the Social Security Disability Insurance (SSDI) program, which aids workers with disabilities and their dependents.

O’Malley said the agency plans to cease efforts to clawback years-old overpayments and halt the practice of terminating benefits for workers with disabilities who don’t respond to overpayment notices because they did not receive them or couldn’t make sense of them.

A firsthand experience is delivered by Denise Woods who lives in her Chevy, seeking a safe place to sleep each night at strip malls or truck stops around Savannah, Ga. Woods said she became homeless in 2022 after the SSA — without explanation — determined it had overpaid her and demanded she send back roughly $58,000. Woods didn’t have that amount on hand, so the agency cut off her monthly disability benefits to recoup the debt.  The agency later restored some of her benefit allowance: She gets $616 a month. That’s not enough to cover rent in Savannah, where even modest studio apartments can run $1,000 a month.

In January, she fell ill and landed in intensive care with pneumonia. “I signed a (Do Not Resuscitate form) and a nurse asked, ‘Do you know what this means?’” Woods said. “I told her there was no reason to revive me if my heart stops. They have already ruined my life. I’m beyond exhausted.”

After KFF Health News and Cox Media Group published the series “Overpayment Outrage,” hundreds of disability beneficiaries came forward with troubling accounts, including how the government sent them overpayment notices without explanation and threatened to cut off their main source of income with little warning.

Members of Congress publicly demanded that SSA fix the problems. Democratic U.S. Sen. Ron Wyden of Oregon said he would meet monthly with agency officials “until it is fixed.”

Sens. Gary Peters and Debbie Stabenow, both Michigan Democrats, sent a letter dated Feb. 29 to the SSA, saying many overpayments were caused by the agency. They asked officials to explain what is causing the problems.

“It’s absolutely critical that the agency is accurately administering these benefits,” Peters said in written response to an interview request. “I’ve heard from too many people across Michigan who have faced financial hardship after the agency sent them incorrect payments.”

The SSA recovered $4.9 billion of overpayments during the 2023 fiscal year, with an additional $23 billion in overpayments still uncollected, according to its latest annual financial report.

O’Malley said he wants to address overpayment clawbacks as part of a larger effort to address SSA’s “customer service crisis.” He did not provide specifics but said he anticipated plans would be implemented this year.

Officials have long acknowledged that the federal disability system is dogged by lengthy delays and dysfunction. Some people become homeless or grow sicker while waiting for an initial decision on an application, which took an average of over seven months in 2023, according to a letter signed by dozens of members of Congress.

O’Malley pointed to a 27-year low in staffing. “We’ve been unpacking many of these customer service challenges,” he said. “There’s not one of them that hasn’t been made worse by the short staff.”

Still, he said, the overpayment process is unfair. Beneficiaries often must produce evidence to show they did not receive extra money, O’Malley noted.  “One would assume that in a country where people are innocent until proven guilty,” he said, “that the burden should fall more on the agency than on the unwitting beneficiary.”

“Overpayments have long plagued our clients and caused severe hardship,” said Jen Burdick, an attorney with Community Legal Services of Philadelphia, which represents clients who have received overpayment notices. “We are heartened to see that SSA’s new commissioner is taking a hard look at overpayment policy reforms and optimistic and hopeful his administration will provide these folks some long-needed relief.”

If you agree that you have been overpaid, but you feel you should not have to pay it back because you did not cause the overpayment and you cannot afford to repay it, you should file Form SSA-632, Request for Waiver of Overpayment Recovery.  NOTE: You may not need to complete the SSA-632 if you think you are not at fault and your overpayment is $1,000 or less. Instead, you can call 1-800-772-1213, as SSA states it may be able to process your request quickly over the phone.

Sourced from Fred Clasen-Kelly, KFF Health News –