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Martin O'Malley. Credit: Social Security Administration

Retirement Planning > Social Security

New Social Security Chief Promises Overpayment Clawback Fix

By Allison Bell

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What You Need to Know

  • The SSA technology budget is one-third the size of the Veterans Affairs technology budget.
  • About 85% of the disability insurance benefits determination workers in some states are trainees.
  • A closely watched Social Security report should appear in about 30 days.

Martin O’Malley, the new Social Security Administration commissioner, told members of Congress Wednesday that the agency will change how it claws excess benefits payments back from the recipients, but that it needs more funding to ease other service problems.

Reporters with the CBS show “60 Minutes” reported in November that the agency has often responded to benefits overpayment problems by intercepting 100% of the recipients’ benefits checks and putting the burden on the recipient to prove that the overpayments were the agency’s fault.

O’Malley, who took over as head of the agency in December, told senators that the agency will assume the burden for showing that the recipient was at fault, rather than requiring the recipient to prove that the agency is at fault.

The agency will also limit benefits interception levels to 10% of the full benefits amount and increasing the maximum benefits repayment period to 60 months, from 36 months today, O’Malley said.

The agency said separately, in a press release, that the new approach to overpayments will take effect Monday.

O”Malley acknowledged that the examples of the problem shown in the “60 Minutes” segment spurred the agency to act quickly. “The overpayment stories are shocking to our shared sense of equity and good conscience,” he said.

But he said Congress has to provide more cash to help the Social Security Administration solve many of its other serious service problems.

O’Malley spoke at a hearing the Senate Finance Committee held on the Social Security and President Joe Biden’s proposed budget for 2025.

What it means: The Social Security Administration — an agency that helps people sign up for Medicare as well as for Social Security retirement and disability insurance benefits — is struggling with severe customer service problems at a time when many of your clients are becoming eligible for benefits from the programs the agency runs.

The Social Security Administration: SSA is an agency that provides retirement, survivor and disability insurance benefits for about 71 million people.

It pays the benefits using income from a trust funded by payroll taxes from workers and their employers.

The agency will collect about $1.2 trillion in payroll taxes this year and spend about $1.4 trillion on benefits, according to White House budget analysts.

Martin O’Malley: O’Malley is a lawyer who served as mayor of Baltimore and governor of Maryland.

At the Social Security Administration, he succeeded Kilolo Kijakazi, an Urban Institute policy researcher who was an acting SSA head from 2021 through 2023.

The hearing: Both Democrats and Republicans on the Senate Finance Committee blasted the Social Security Administration’s slow call center response times and long field office lines.

Senators also expressed frustration about a “60 Minutes” segment showing that some benefits recipients suffered terrible problems when the agency overpaid the recipients, realized it had overpaid them and suddenly clawed the overpayments back by withholding 100% of the recipients’ benefits until the overpayments were recouped.

Service fix needs: O’Malley said Social Security Administration service levels are poor partly because agency staffers are making do with IBM computers from the 1980s, and because employee attrition is so bad that, in some states, about 85% of the workers who handle Social Security disability insurance benefits determinations are trainees.

O’Malley noted that a combination of understaffing and old technology hurt agency efforts to retain experienced employees at its call centers. “You can only image the sort of stress that people encounter on an underperforming system when people have been on hold for 45 minutes or an hour,” he said. “Nobody’s coming in pleasant.”

O’Malley said one thing SSA needs to do is to improve its notices.

“We send out notices that look like the old Mad Libs, excepts that these are designed by mad lawyers over time,” he said. “We can’t blame our seniors when they receive the notices and they can’t make sense of it. The only thing you can make sense of on some of our notices is that, if you don’t understand it, you should call our 1-800 number and wait for 39 minutes.”

The agency also needs to increase staffing levels and revamp its technology, he said.

He noted that Congress provides only about one-third of the information technology services funding for SSA that it provides for the Veterans Affairs Department.

“A lot of our so-called modernization efforts or simplification efforts are really about taking paper forms and turning them into online forms, which is not really simplification,” he said.

SSA really needs to simplify its programs, not just its forms, he said.

Solvency: When senators asked O’Malley about the underlying solvency problems of the Social Security benefits trust funds, he said program actuaries have told him there are two main culprits.

One is the severity of the 2007-2009 Great Recession, he said.

Another, he said, is decisions policymakers made when revamping the program in 1982, five years before Congress enacted major tax system change legislation.

Because Congress capped the amount of earnings subject to Social Security and Medicare payroll taxes, and because the 1987 tax rule changes sharply increased the share of income flowing to the very top earners, the percentage of earnings subject to payroll taxes dropped to 82%, from 90%, he said.

The Social Security trustees’ report: The trustees of the Social Security and Medicare trust funds issue closely watched reports every spring. The reports are due April 1.

The Social Security trustees’ report will be a little late this year because of delays in getting Census data, but the report should be out within about 30 days, O’Malley said.

Martin O’Malley. Credit: Social Security Administration

Allison Bell

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