Social Security Warning Issued by Economists
Experts have warned benefit recipients about the “power” the Social Security Administration (SSA) has to claw back overpaid benefits.
Efforts by the SSA to recoup overpayments have garnered significant attention in recent months. Newsweek has previously reported on the vast number of retirement, disability and survivor benefit claimants asked to repay thousands of dollars after benefits were incorrectly calculated. These errors can arise from the recipient not correctly reporting their financial situation or through mistakes made by the SSA.
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Speaking with CBS host Anderson Cooper, Laurence Kotlikoff, professor of economics at Boston University, and Terry Savage, an independent finance expert and author, said the government agency has a “narrow definition” of a certain clause in the Social Security Act regarding repayments for overpaid benefits.
Kotlikoff said part of the Social Security Act stipulates that the agency should not recover an overpayment if doing so would be “against equity and good conscience.” According to the clause, overpayments should not be reclaimed in several scenarios, including when a person’s financial situation has worsened.
A file photo of a person holding a wallet with a dollar bill inside. The SSA has said it is required by law to recoup overpayments.
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When queried by Cooper over whether the SSA “has a lot of discretion” when it comes to this clause, both said this was true, with Kotlikoff adding that staff have been trained to “collect every penny you can, no matter what.”
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“The worst part of it is: they have all the power, because they say if you don’t pay us back, we’re just going to cut your benefit check,” Savage said. “People live on those checks, and all of a sudden you get no check, a smaller check amount.”
The agency recovered $4.9 billion in overpayments during the 2023 fiscal year, with an additional $23 billion in overpayments still outstanding, according to the SSA’s 2023 annual financial report.
Savage suggested there should be a “statute of limitations” on collections, particularly if the SSA is at fault for any extra benefit issued.
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In a previous statement made to Newsweek, an SSA spokesperson said: “Social Security is required by law to adjust benefits or recover debts when we establish that someone received payments to which they are not entitled and an overpayment occurs. We must maintain our responsibilities to taxpayers to be good stewards of the trust funds.
“Each person’s situation is unique, and we handle overpayments on a case-by-case basis. Overpayments can occur for many reasons, such as when a beneficiary does not timely report work or other changes that can affect their benefits.”
Newsweek contacted the SSA via email for further comment outside of normal working hours.
In March this year, the SSA announced four key changes it would be making to tackle the issue of overpayments and the severe consequences they can have on the lives and finances of recipients, including “ceasing the heavy-handed practice of intercepting 100 percent of an overpaid beneficiary’s monthly Social Security benefit by default if they fail to respond to our demand for repayment.”
It also extended repayment plans from 36 months to 60, shifting the “burden of proof” away from the claimant, and “making it much easier” for overpaid recipients to request a waiver of repayment.
“Implementing these policy changes — with proper education and training across the people, policies, and systems of the agency — is an important but complex shift. And we are undertaking that shift with urgency, diligence, and speed,” Social Security Commissioner Martin O’Malley said.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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