Seniors and other recipients of Social Security benefits might see higher payments after the Social Security Administration (SSA) made a few changes to its rules to address its overpayment problem. 

No More Severe Penalties for Seniors and Other Recipients of Social Security Benefits Due to Overpayments

According to Newsweek, Social Security Administration commissioner Martin O'Malley said during a Senate Committee on Aging hearing this week that overpayments will now be charged at a reduced rate.

Overpayment is determined when the SSA decides beneficiaries are not eligible to receive money already paid to them. It stemmed from the agency's errors, leading to years of overpayments on a person's Social Security checks. 

If the SSA discovers these errors, it can impose severe penalties, including a hefty slash to future benefits, or end them altogether until the amount is repaid. On Thursday, O'Malley said this will no longer be the case, providing relief for seniors who received overpayments.

Under the new rules, which will take effect on March 25, the SSA would stop its practice of intercepting 100 percent of an overpaid monthly benefit if the beneficiary failed to respond to the notice for repayment.

"We are no longer going to have that clawback cruelty of intercepting 100 percent of a payment if people do not respond to our notice," O'Malley noted.

Instead, the SSA will only cut Social Security payments by 10 percent instead of ending beneficiaries' checks altogether. O'Malley said the previous process caused "grave injustices to individuals," as some lost their homes or were put in dire financial straits when their benefits were suddenly cut off to recover overpayments.

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Other Changes Made by Social Security Administration to Address Overpayment Problem

In a statement, the SSA also said it would be "reframing" its guidance and procedures so that the burden of proof shifts away from the recipient in determining who is to blame for the overpayment.

Seniors and other recipients of Social Security benefits will also have the option to repay overpayments in a period of five years instead of the previous three.

The fourth step is for beneficiaries who do not feel the overpayment is their fault or if they are unable to repay the amount requested. They can now apply for a waiver of said payment.

While these reforms represent a step forward, the SSA acknowledged the need for more improvements, such as reducing the average more than 30-minute hold time to speak to a customer service officer and ensuring prompt decisions on disability benefits.

The SSA also advised seniors and those with disabilities who receive Social Security benefits to contact the agency themselves to get new repayment terms because it does not necessarily mean that the repayment amount will change if the new rules go into effect this month.

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