Your Client Got a Social Security Clawback Notice. What Should They Do?

My client got an overpayment notice. What should they do?

Anyone who receives an overpayment notice should contact SSA as they have a number of options. If they believe the overpayment notice is wrong, they can appeal the overpayment — SSA calls it a reconsideration. One of the changes made by the new SSA Commissioner Martin O'Malley is that the burden to prove the notice is correct will now be on the agency, rather than the beneficiary. They can also request a waiver or apply for a repayment plan.

Can my client get a waiver? How?

If it turns out a beneficiary has been overpaid but they will have a hard time repaying the amount due, they can request a waiver. Typically to receive a waiver the overpayment cannot have been your fault and you must show inability to repay or hardship. Beneficiaries must file a request for waiver with SSA and Commissioner O'Malley has announced the agency is working to make it easier for waivers to be granted.

What about repayment plans?

If a beneficiary doesn't qualify for a waiver, they may be eligible for a repayment plan. SSA previously would automatically withhold a beneficiary's entire benefit check until the overpayment was repaid. Commissioner O'Malley has announced the agency will no longer withhold 100% of checks as of March 25.

The automatic percentage withheld will now be 10% (or $10, whichever is greater) of a beneficiary's check. New overpayments will have the 10% amount withheld automatically.  Those with existing overpayments will take a little longer for SSA to process and may need to contact SSA to request the change. If a beneficiary requests a repayment plan with less than 10% withheld, the agency will approve the request if it results in the overpayment being satisfied within 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 is also a change as previously SSA attempted to complete the repayment plan within 36 months. There are limited exceptions to the above, primarily if the overpayment resulted from fraud.

What else should clients know about O'Malley's recent changes?

In addition to the process changes mentioned above, Commissioner O'Malley is spearheading other changes that are designed to get at some of the root causes of overpayments, to keep them from happening in the first place.

For example, he is requesting more funding for the agency so it can hire staff and improve the agency's information systems. This should lead to changes in income being processed more quickly.  He has announced SSA is establishing information exchanges with payroll data providers so the agency can receive notification of income changes automatically, relieving beneficiaries of the burden of constantly updating the agency on their incomes. This not only eliminates the need for a beneficiary to file the report but also cuts out the need for someone at SSA to input the data into the agency's computers.

SSA is also making changes to the rules that apply to SSI beneficiaries such as eliminating food from in-kind support and maintenance calculations, and expanding the definitions of rental subsidies and public assistance households. These changes should not only make it easier for SSI beneficiaries but also reduce the number of overpayments made to them.