Overpayment Changes Written In The Sand?

    From a press release issued by Social Security on March 20 of this year:

Social Security Commissioner Martin O'Malley today announced he is taking four vital steps to immediately address overpayment issues customers and the agency have experienced. ...

Our deeper understanding of the complexities of this problem has set us on the following course of action:

1. Starting next Monday, March 25, we will be 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. Moving forward, we will now use a much more reasonable default withholding rate of 10 percent of monthly benefits — similar to the current rate in the Supplemental Security Income (SSI) program.
2. We will be reframing our guidance and procedures so that the burden of proof shifts away from the claimant in determining whether there is any evidence that the claimant was at fault in causing the overpayment.
3. For the vast majority of beneficiaries who request to work out a repayment plan, we recently changed our policy so that we will approve repayment plans of up to 60 months. To qualify, Social Security beneficiaries would only need to provide a verbal summary of their income, resources, and expenses, and recipients of the means-tested SSI program would not need to provide even this summary. This change extended this easier repayment option by an additional two years (from 36 to 60 months).
4. And finally, we will be making it much easier for overpaid beneficiaries to request a waiver of repayment, in the event they believe themselves to have been without any fault and/or without the ability to repay.

        This has all been implemented via an Emergency Message and changes in the agency's POMS manual. Social Security says it has reduced the number of people affected by withholding the entire monthly check from 46,000 to 7,000. The problem is that none of these changes have the force and effect of law, as a regulation would. Everything O'Malley has done on overpayments could be easily undone by a simple memo. Regulations can be amended but the process takes time. It's much less likely to be done. Maybe the agency was working on regs and didn't get finished. Maybe it was thought that a subsequent administration wouldn't change this. Maybe they won't but I wouldn't be surprised if this one does. Have you noticed that the incoming administration seems a little bloody-minded?

    One other thing that O'Malley talked about was a statute of limitations on the collection of overpayments. I thought he could have done this by a regulation but, apparently, his agency eventually decided that Congress would have to amend the statutes, which, of course, is impossible.

They Could Do A Much Better Job If They Weren't So Understaffed

     From Challenges in Recovering Supplemental Security Income Overpayments, a report by Social Security's Office of Inspector General (OIG):

... SSA made errors on overpayments for 189 (47 percent) of the 400 sampled SSI recipients because it did not follow policies or use all available tools, to prevent, detect, or recover SSI overpayments. For example, overpayments could have been prevented or detected earlier, but employees made errors when they redetermined SSI eligibility. A redetermination is a review of a recipient or couple’s non-medical eligibility factors (that is, income, resources, and living arrangements) to determine whether the recipient or couple is still eligible for, and receiving, the correct SSI payment amount.

Errors also occurred because employees did not always (1) send recipients complete and accurate due-process notices before they initiated recovery of overpayments; (2) follow policy when they processed waivers of overpayments; or (3) follow policy and use available tools to recover overpayments. When SSA identifies an overpayment, it sends the overpaid person written notification of the overpayment’s cause and amount. Overpayment recovery can begin 60 days after SSA notifies the recipient of the overpayment if they have not requested a waiver of the overpayment collection or a reconsideration of the overpayment facts. If the individual is receiving SSI payments, SSA should begin recovery by withholding from ongoing payments. If the individual is no longer receiving SSI payments, SSA should attempt collection through various means including withholding from ongoing payments to a liable representative payee or spouse, cross-program recovery, referral for external collection through the Department of the Treasury or pursuing recovery from estates.

We estimate SSA did not follow its policies or use all available tools to prevent, detect, or recover SSI overpayments for 1.9 million recipients. For 1.7 million of these recipients, we estimated error amounts totaling over $7 billion. ...

    Not only does Social Security lack the manpower to do what OIG recommends, OIG fails to recognize that most of these SSI overpayments are small so going after all of them using every possible mechanism would not be cost-effective.

I Thought That Job One At The Payment Centers Was To Pay People

     From Reducing Processing Centers’ Pending Actions, a report by Social Security's Office of Inspector General (OIG):

...  SSA met its annual PC [Payment Center] pending actions performance measure goal in 4 of the 6 FYs [Fiscal Years] between FY 2018 through 2023. SSA reported it did not meet its goals in the remaining 2 FYs because of unexpected staff reductions, increased workloads, and less than expected overtime funding it would have used to pay employees to process more PC pending actions.

Although SSA achieved its PC pending actions performance goals in 4 of the last 6 FYs, there was no overall reduction in PC pending actions over those 6 years. In fact, the PC pending actions backlog increased from 3.2 million in FY 2018 to 4.6 million in FY 2023. As the backlog grows, many PC pending actions remain unresolved for long periods of time. From a sample of 139 pending actions, 102 (73 percent) were pending for 300 days or more, with 60 of the 102 pending for 500 days or more.

Delays in processing PC pending actions can lead to higher improper payments, which increased some beneficiaries’ financial burden as they waited longer for underpayments or were charged with increased overpayment amounts. If SSA resolved the PC pending actions we reviewed at the earliest possible instance, we estimate it would have determined approximately 528,000 beneficiaries were improperly paid approximately $534 million. After the pending actions were not processed for 12 months, the improper payment amount for those same beneficiaries rose to approximately $756 million. By the time of our review, many of the PC pending actions had been pending for longer than 12 months, and the improper payment amount had increased to approximately $1.1 billion.

    Notice that it didn't seem to bother OIG that the payment centers were frequently failing to pay benefits for long periods of time. The only thing they seemed to have been concerned about was an increase in overpayments. This in a nutshell is the OIG outlook on the Social Security world -- It doesn't matter when or if you pay claimants what they're due; the only thing that counts is that you not overpay them. That outlook is a prescription for disaster for claimants.

Overpayment Administrative Tolerance Changing From $1,000 To $2,000 Today

     From Emergency Message EM-24019:

... Effective May 13, 2024, we are updating the administrative waiver tolerance policy to improve customer service, reduce the burden to overpaid individuals, and increase front-line staff efficiency. We are implementing the following changes: ...

· Increased the administrative waiver tolerance amount from $1,000 to $2,000 for Title II and Title XVI. ...

    What does this mean? It means that if you have an overpayment below $2,000 it will now be waived pretty much automatically -- as long as you ask for waiver.

O'Malley Trashed

     Mark Warshawsky, of the right wing American Enterprise Institute, has written an op ed for the Baltimore Sun trashing Social Security's Commissioner, Martin O'Malley. Warshawsky blames O'Malley for asking for greater operating funds for Social Security. He says that the increasing number of people drawing Social Security benefits is large irrelevant to the agency's workload since it is mostly retirees who put little burden on the system. He says that the agency's real problem with getting its workload done is employees working from home and Social Security adding a new step in the process of disability review in 2019 and 2020. I don't know what new step he's talking about here. Of course, there's also the problem that in 2019 and 2020 O'Malley wasn't the Commissioner and Biden wasn't the President. Warshawsky goes on criticize what O'Malley is doing about overpayments and O'Malley's failure to adopt new regulations drafted while Republicans were in office to deny far more disability claimants. By the way, Republicans could have adopted those regulations but were no more eager than O'Malley to do so and for good reason. They're not justified by the data not to mention that all hell would break loose if they were adopted.

    By the way, not to knock the Baltimore Sun, which is a fine newspaper, but I'm betting that the New York Times, the Washington Post and the Wall Street Journal passed on this piece before the Sun finally agreed to publish it.

Tidbits On The 800 Number And Overpayments

     WPXI, a television station in Pittsburgh, has been covering Social Security's overpayment problems. Here's some excerpts from a recent story they've run:

... We sat down with the new Commissioner of the Social Security Administration, Martin O’Malley. ...

One of the most significant changes went into effect last Monday. It ensures anyone facing a new overpayment has at most,10 percent of their check withheld to recoup overpayment debt, not the 100-percent claw back the agency had been using; however, for the millions of people already facing overpayments, it’s not automatic. Due to staffing challenges, the solution is for beneficiaries to request a waiver or an adjustment by calling 1-800-772-1213. ...

11 Investigates decided to try that 1-800 number. The wait time when we called it was ‘greater than 60 minutes.’ We didn’t clog up the line by waiting to talk to a representative, but we did notice you can now request a call back instead of waiting on hold. ...

Commissioner O’Malley says you can file a waiver as many times as you want. If a beneficiary requests a rate lower than 10 percent to be withheld to recoup overpayment debt, it will be approved if the money can be repaid within 60 months or five years.  ...

    I had not heard about a call back feature for Social Security's 800 number. That might be an improvement. What experiences are others having with this?

    My guess is that the reporter misunderstood O'Malley or that the Commissioner misspoke about filing waiver requests as often as one likes. That requires clarification.

Emergency Message On Change In Default Rate For Collecting Overpayments

     The Social Security Administration has issued Emergency Message EM-24011 SEN on the recent decision by the Commissioner to change the default rate of benefit withholding where there's been an alleged overpayment. It's labeled as "SEN" because they consider it sensitive. It's labeled at the top as "NOT TO BE SHARED WITH THE PUBLIC" but they are sharing it after redacting significant portions of the message. I don't get a feel for what's in the redacted part.

Rep Payee Fighting Overpayment

     From WMAR:

A Maryland senior is fighting an overpayment notice from the Social Security Administration. The additional money was supposedly paid out to her brother, but now the agency is withholding her monthly retirement benefits.

“They caught their mistake and tried to collect the money, but he had passed," said Everlon Moulton, whose brother died in 2006. Moulton said shortly before then, she had become his financial representative. ...

According to a letter sent to Moulton last November, Congress passed a law permitting the Social Security Administration to collect Supplemental Security Income (SSI) overpayments from the individual's payee. The SSA identified payments to Moulton's brother, while he was still alive, that exceeded the amount he should've received. Moulton said she never used money designated for her brother and was informed that $233 will be deducted from her monthly retirement benefits until the nearly $6,900 overpayment to her brother is settled. ...

    If she only became the representative payee shortly before her brother died how did she become responsible for a debt that must have accrued before she became involved?

More Details On Plan To Reduce Overpayment Harshness

     From a press release:

Social Security Commissioner Martin O’Malley today announced he is taking four vital steps to immediately address overpayment issues customers and the agency have experienced. ...

1. Starting next Monday, March 25, we will be 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. Moving forward, we will now use a much more reasonable default withholding rate of 10 percent of monthly benefits — similar to the current rate in the Supplemental Security Income (SSI) program.
2. We will be reframing our guidance and procedures so that the burden of proof shifts away from the claimant in determining whether there is any evidence that the claimant was at fault in causing the overpayment.
3. For the vast majority of beneficiaries who request to work out a repayment plan, we recently changed our policy so that we will approve repayment plans of up to 60 months. To qualify, Social Security beneficiaries would only need to provide a verbal summary of their income, resources, and expenses, and recipients of the means-tested SSI program would not need to provide even this summary. This change extended this easier repayment option by an additional two years (from 36 to 60 months).
4. And finally, we will be making it much easier for overpaid beneficiaries to request a waiver of repayment, in the event they believe themselves to have been without any fault and/or without the ability to repay. ...

    You may recall that on January 4 I posted on What Can Social Security Do About Overpayments If It Really Wants To? There's much similarity between what I posted then and what the Commissioner announced. I doubt that my post had anything to do with what Social Security decided to do. Both they and I were looking at statutes and regulations to see what could be done about the overpayment problems that were on the news and on the minds of members of Congress. We both came to much the same conclusion that there was plenty that could be done, especially with the "against equity and good conscience" provision in the statute. 

    By the way, I've read comments saying that Social Security is required by statutes and regulations to collect 100% of the benefits of an overpaid individual until they collect the overpayment, making the Commissioner's announcement illegal. Look at what I posted on January 4. There's ample wiggle room to default to a 10% repayment schedule as the Commissioner announced. It's pretty straight forward.

O'Malley Testimony To Senate Aging Committee -- And Note The Overpayment Changes

     Social Security Commissioner Martin O'Malley testified before the Senate Aging Committee today. Here's are some excerpts from his written testimony (emphasis added):

...Currently – due to the extended continuing resolution (CR) that we are under in FY 2024 – we have stopped all hiring, and our staffing levels have already fallen below where they were in April of last year. If we continue this path of no hiring, we will fall to a new all-time low of around 55,000 full-time permanent staff by the end of this fiscal year – nearly 11 percent lower than the roughly 62,000 full-time permanent staff we averaged from 2010 through 2019.

Similarly, the State disability determination services (DDS) were able to make some progress increasing their staffing levels in FY 2023, following years of record-high attrition and a historically low staffing level in FY 2022. But in FY 2024, the DDS have quickly dropped below last year’s staffing levels due to our pause in hiring given the funding level, which is leading to a severe setback in addressing a service delivery crisis. ...

Members may be surprised to learn that Social Security has now been reduced to operate on less than one percent of its annual benefit payments. This is extremely low – much lower than private insurance companies. For instance, Allstate operates on 19 percent of its annual benefit payments, and Liberty Mutual operates on nearly 24 percent of its annual benefit payments. ...

Under the current system, Social Security’s operating overhead, as a share of benefit outlays, has shrunk by 20 percent over the last ten years. ...

People who try to reach us by phone are now waiting on hold for 38 minutes or more on a dysfunctional 800 Number system. ...

Starting next Monday, March 25, we will be 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. Moving forward, we will now use a much more reasonable default withholding rate of 10 percent of monthly benefits — similar to the current rate in the SSI program.

We will be reframing our guidance and procedures so that the burden of proof shifts away from the claimant in determining whether there is any evidence that the claimant was at fault in causing the overpayment. ...

O'Malley Has Plans To Deal With SSA's Overpayment Problems

     From KFF Health News:

The Social Security Administration’s new chief 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.”

 In an interview with KFF Health News, SSA Commissioner Martin O’Malley said that in the coming days he would propose changes to help people avoid crushing debts ...

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

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

“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.”

Thanks, Commissioner O'Malley

     From a recent "Dear Colleague" letter from Social Security to attorneys who represent claimants before the agency:

... We offer flexible repayment plans, including payments as low as $10 per month. If they are unable to meet their necessary living expenses due to the current repayment amount, or are unable to repay the debt within 60 months*, they can request a change in the recovery rate by completing form SSA-634, Request for Change in Overpayment Recovery Rate. *This is a recent policy change. Previous policy required the completion of the SSA-634 if the overpayment could not be repaid within 36 months. ...

    You know, that policy change means that it's harder to get a current repayment rate reduced. More overpayments can be satisfied in 60 months than in 36 months. Squeeze those debtors as hard as you can.

EM On Overpayments During Covid

     From Emergency Message EM-24005:

... On January 20, 2024, the United States District Court for the Eastern District of New York approved a settlement agreement in Campos v. Kijakazi, No. 21-cv-05143. The case involved Title XVI overpayments incurred during the COVID-19 pandemic from March 2020 through April 2023.

C. FO [Field Office] instructions

Effective immediately, when making a fault determination on a waiver request for an overpayment incurred in any month since March 2020, technicians must consider any circumstances related to the COVID-19 pandemic that an overpaid individual alleges prevented the individual from reporting changes. When COVID-19 circumstances are alleged, technicians must also document the individual’s allegations of COVID-19 circumstances that prevented the individual from reporting changes in the file. ...

Examples of circumstances related to the COVID-19 pandemic that may have prevented an individual from complying with Title II or Title XVI reporting requirements include, but are not limited to, the following scenarios:

The overpaid individual:

• attempted to contact us but was unable to visit a FO, mail us information, reach us by phone, or get transportation because of the COVID-19 pandemic;
• was unable to contact us because of government-imposed COVID-19 travel restrictions;
• was unable to contact us because of child-care or family-care changes due to COVID-19 stay-at-home orders or school-at-home requirements;
•  was unable to contact us because of the overpaid individual’s COVID-19 illness or related serious illness; 
•  was unable to contact us because the overpaid individual’s representative payee died or became seriously ill due to COVID-19 or serious illness related to COVID-19; or
•  was unable to contact us because the overpaid individual’s immediate family member died or became seriously ill due to COVID-19 or related serious illness.

NOTE: This list is not exhaustive. ...

What Can Social Security Do About Overpayments If It Really Wants To?

     Recent press reports about the harshness of Social Security's treatment of overpayments remind me of the character Inspector Javert from Les Miserables by Victor Hugo. In the novel, Inspector Javert ruthlessly pursues the fugitive Jean Valjean. Javert's actions are strictly speaking legal but fundamentally unjust as a less rigid man than Javert would realize. 

    I think the attitude at the Social Security Administration has been that there's nothing they can do about overpayments other than to do everything possible to collect them and to put nearly the entire burden on claimants to appeal the overpayments or to seek out repayment schedules or waiver but what could they do if they really wanted to make overpayments less harsh? Below are some ideas that occur to me. They boil down to telling the agency to stop trying to be Inspector Javert. You don't have to administer the Social Security Act in the most harsh manner possible.

    Make a repayment schedule the default mode for collecting overpayments. One huge problem now is that Social Security's default mode in Title II cases is to seize 100% of the claimant's benefits until the overpayment is satisfied. This leads to disastrous situations for claimants who don't know where to turn. Some end up homeless. Many are subjected to huge amounts of stress. Yes, the notices tell claimants that they can appeal the overpayment and request waiver and also that that they can get a payment schedule but let's face it, a substantial number of Social Security claimants are functionally illiterate or so overwhelmed by their life circumstances that they can't comprehend any notice they receive. Notify claimants that unless they appeal or request waiver that their benefits will be reduced by a certain amount each month. That heads off the worst problems associated with overpayments. The statute says that Social Security must "decrease any payment" to an overpaid claimant but it doesn't say that the decrease must be 100% until the money is recovered. A repayment schedule is certainly a "decrease" in payment. The Title II regulations say that no benefit is payable until an overpayment is collected but gives the exception for cases where "withholding the full amount each month would defeat the purpose of Title II." There is no reason why this exception cannot be applied generally until the regulation is amended. There is nothing in the regulations requiring that an individual apply for a repayment schedule. The regulations say that a notice of an overpayment must include "an explanation of the availability of a different rate of withholding when full withholding is proposed" suggesting that there are cases where the notification will not say that less than 100% of benefits will be withheld.

    Invigorate the application of the statutory provision allowing waiver of overpayments when recovery would be "against equity and good conscience." Social Security has interpreted the "against equity and good conscience" provision almost out of existence. Let's apply it to these situations:

• Overpayments to those who had a representative payee at the time they were overpaid. Try to get the money from the representative payee but quit trying to collect it from those who were minors or under such disabilities that they needed a representative payee at the time they were overpaid. You will notice that many of the media pieces on Social Security overpayments feature those who were overpaid when they were children. These stories get reported exactly because they seem to be against equity and good conscience. Acknowledge that fact and act accordingly. Quit declaring overpayments in the first place to those who had a representative payee. Waive them for all existing cases.
• Very old overpayments. There is no statute of limitations on collection of overpayments by administrative offset. Cases where the Social Security Administration is trying to collect ancient overpayments are often featured in media pieces, again because these cases seem to be against equity and good conscience. Just adopt a policy that the agency regards attempts to collect debts older than 10 years as generally being "against equity and good conscience." Who cares that Congress didn't tell you explicitly that you can do this? They've told you that they expect you to administer the programs in a way that isn't "against equity and good conscience." Act accordingly.

    Give staff more discretion to waive overpayments without the claimant filing an application for waiver. Many times I see a demand that claimants provide detailed information about their financial situation on a waiver form when it's obvious that the overpayments will be waived. The waiver forms themselves are a deterrent to obtaining waiver. They're too long and difficult for many claimants. Dispense with the form when it's appropriate.

 

    I guess that Social Security has been wary of doing anything other than rabidly pursuing collection of overpayments because they've been concerned that the Inspector General (who always conflates overpayments with fraud) will criticize them. Who cares what this Inspector General has to say?

 

    By the way, many Social Security employees say that it's OK to treat overpaid individuals harshly because so many of them failed to properly report work activity. Really? What would make anyone confidant that all those claimants failed to report the work? Most overpaid claimants tell me that they did report the work but nothing was done about their report. Does anyone at the agency believe that records are routinely made of such work reports and that appropriate adjustments are made in a timely manner? I never see that happening. Never. The agency has a mess in its field offices and teleservice centers. Don't pretend that the agency is delivering service as it might have 50 years ago.

Homeless In Atlanta Due To Overpayment

    From WSB in Atlanta:

Denise Woods drives around Georgia strip malls, truck stops, and parking lots, looking for a safe place to sleep each night.

“It’s scary. You just don’t know what each day is going to bring,” Woods said.

Everything she owns is jammed into the back seat of her car.

According to a letter sent by the Social Security Administration, the agency is demanding back nearly $58,000 after determining it was overpaying her.

Because of her disability, Lupus, and congestive heart failure, she can only work part-time and makes just $14 per hour.

 So, the agency is withholding her entire monthly check - about $2,000 per month until February 2026. 

“I still don’t know how it happened,” said Woods, who has requested a waiver and is seeking a hearing. “No one will give me answers. It takes weeks or months to get a caseworker on the phone. They have made my life unbearable.” ...

    You can say that she really needs to work out a repayment schedule but she can't get anyone on the phone. Also, and more important, she doesn't know to ask. Yes, she gets notices but most claimants understand very little contained in any notice they receive from Social Security.

This Doesn’t Sound Good

      One in four Social Security recipients reports having received an overpayment.

NYT On SSA Overpayments

      The New York Times has a piece up on Social Security’s overpayment problem and its brutal effects on claimants.

On The Way Out The Door

     In one of her last acts as Acting Commissioner of Social Security, Kililo Kijakazi issued an apology for her confused testimony before a Congressional committee that badly understated her agency's problem with overpayments of benefits.

    By the way, does anyone have an idea where Kijakazi is headed now? Back to a staff job? On to a new position?

Now They Make It Public

     I can't say whether this is related to the recent publicity concerning overpayments to Social Security claimants but the agency has decided to make public its longstanding policy of waiving overpayments of less than $1,000 in most cases. The policy has been around for a long time, at least for SSI cases, but it was previously labeled "sensitive" in Social Security's manual and withheld from the public. Now it's out there for everyone to see. The exception to these administrative waivers is cases where the claimant is at fault. My experience is that they only refuse to waive these small overpayments when it's obvious that the claimant is a bad actor.

    Now, how about let's raise that amount from $1,000 to $5,000? How long has it been at $1,000? Also, how about waiving these without demanding that the claimant file a request for waiver? These waivers may be nearly automatic but the big catch is that you have to file a request for waiver. Most of these small overpayments aren't waived because the claimant doesn't know to request waiver or can't figure out how to complete a waiver request form or, perhaps more important, can't get through to a Social Security office to ask what to do.

Kijakazi Made A Mistake

    From Government Executive:

The Social Security Administration has demanded money back from more than 2 million people a year — more than twice as many people as the head of the agency disclosed at an October congressional hearing.

That’s according to a document KFF Health News and Cox Media Group obtained through a Freedom of Information Act request.

Acting Commissioner of the Social Security Administration Kilolo Kijakazi read aloud from the document during the hearing but repeatedly left out an entire category of beneficiaries displayed on the paper as well. ...

The document obtained via FOIA shows that the numbers Kijakazi gave at the hearing covered only two of the three Social Security benefit programs. They did not cover Supplemental Security Income, or SSI ...

    Kijakazi should have included the SSI numbers or made it clear that she wasn't including them but to defend her more than she deserves, the Social Security Subcommittee has no jurisdiction over SSI. Perhaps more important, while SSI is part of the Social Security Act (Title XVI of it), most of the titles of the Social Security Act cover things like Medicare that aren't generally considered part of "Social Security." To the extent that we consider SSI as part of "Social Security" it's because the Social Security Administration, uh, administers it. Generally, Title II of the Social Security Act (providing old age, survivor and disability benefits based upon work credits) is always what people are thinking about when they refer to "Social Security" but sometimes they're also thinking about SSI.