New Bill Gives More Time to Respond to Social Security Clawback Notices

The bill, Allred added, "will provide flexibility and extend the time beneficiaries have before they have to repay overpayments and their benefits are intercepted" by the Social Security Administration.

The Social Security Overpayment Fairness Act would allow individuals notified of an overpayment to have more time to understand the notice, speak to a representative from the Social Security Administration, apply for the relevant waivers or develop a payment plan, the lawmakers said.

A First Step

Maria Freese, senior legislative representative at the National Association to Preserve Social Security and Medicare, told ThinkAdvisor Monday in an email that while the group has "not been asked to endorse this bill" and has no comment on it, the group supports "any action to mitigate the negative impacts of overpayments on beneficiaries."

The main challenge, Freese said, "is that the Social Security Administration needs adequate funding from Congress in order to address this and other issues it faces. Unfortunately, the agency has been chronically underfunded for more than a decade."

Nancy Altman, president of Social Security Works, added in another email that "demands to immediately repay benefits deemed overpayments months, years, or even decades after they were paid, caused by no fault of the beneficiary, can result in extreme hardship. The stress of a letter from the government demanding the repayment of tens of thousands of dollars that you don't have and didn't know that you owed, has landed people in the hospital."

While overpayments have gotten the most public attention, "underpayments also create serious hardship, reducing income essential to meet basic necessities," Altman said.

The Social Security Administration "is doing what it can through executive action, but legislation is needed," she added.

While the Social Security Overpayment Fairness Act "is an extremely important first step. Congress should quickly enact it, but also do much more" by enacting a statute of limitations on the demand for repayment of overpayments, Altman said.

Congress "should also allow SSA to spend just a few tenths of a percent more of its accumulated surplus to hire enough staff to catch overpayments and underpayments more quickly," Altman added.

Further, she said, lawmakers should "simplify and update Supplemental Security Income, including enacting the SSI Savings Penalty Elimination Act, so that the program is more administrable and fewer errors occur."