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.

HSC’s efforts to recover overpayments have attracted considerable attention in recent months. Newsweek has previously reported on the large number of pension, disability and survivors’ benefits claimants who were asked to pay thousands of dollars after benefits were calculated incorrectly. These errors may arise from the recipient’s failure to accurately report his financial situation or from errors made by the SSA.

Read more: Checking account vs. Savings Account: Which is Best for You?

Speaking with CBS anchor Anderson Cooper, Laurence Kotlikoff, an economics professor 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 Act. of Social Security regarding repayments for overpaid benefits.

Kotlikoff said part of the Social Security Act states that the agency must not recover an overpayment if doing so would be “against equity and good conscience.” Under the clause, overpayments must not be recovered in certain scenarios, including when a person’s financial situation has deteriorated.

When asked by Cooper if the SSA “has a lot of discretion” when it comes to this clause, both said that was true, with Kotlikoff adding that staff are trained to “collect every penny you can, no matter what.” .

Read more: Compare the best short-term low-risk investments

“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 off those checks, and all of a sudden you get no check, a smaller check amount.”

The agency recovered $4.9 billion in overpayments during fiscal year 2023, with an additional $23 billion in overpayments still outstanding, according to SSA’s 2023 annual financial report.

Savage suggested there should be a “statute of limitations” on collections, especially if the SSA is at fault for any extra benefits issued.

Read more: CD vs. High Yield Savings Account

In a previous statement made to Newsweekan SSA spokesman said: “Social Security is required by law to adjust benefits or recover debts when we find that someone has received payments to which they are not entitled and an overpayment occurs. We must uphold our responsibilities to taxpayers to be good stewards of trust funds.

“Each person’s situation is unique, and we treat overpayments on a case-by-case basis. Overpayments can happen for many reasons, such as when a beneficiary fails to report work on time or other changes that may affect their benefits.”

Newsweek contacted SSA by email for further comment outside of normal business hours.

In March of this year, the SSA announced four key changes it would make to address the issue of overpayments and the severe consequences they can have on recipients’ lives and finances, including “ending the burdensome practice of 100 percent wiretapping of a beneficiary’s overpaid monthly Social Security benefits in default if they do not respond to our request 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 repayment waivers.

“Implementing these policy changes — with the right education and training across the agency’s people, policies and systems — is an important but complex change. And we are undertaking that change with urgency, diligence and speed,” Commissioner Social Security Martin O. Malley said.