SSA no longer going after old debts -- for now

In a move that was applauded by Social Security recipients and federal lawmakers alike, the Social Security Administration announced earlier this week that it was indefinitely suspending its controversial debt collection efforts.

Until 2008, federal law granted federal agencies like the SSA the ability to refer outstanding debts to the Treasury Department, directing it to seize tax refunds as a means of settling debts that were a maximum of ten years old up. After this time, the law was changed such that the SSA and its counterparts could seize tax refunds for debts that were more than ten years old, a move that greatly expanded debt collection capabilities.

Indeed, the SSA has collected $55 million in debts, the majority of it via seized tax refunds, and has named 400,000 recipients with outstanding debts.     

While you might be tempted to think that the collection efforts would have drawn praise from federal lawmakers, it has actually been the opposite.

"While this policy of seizing tax refunds to repay decades-old Social Security overpayments might be allowed under the law, it is entirely unjust," read an angry letter from Sens. Barbara Boxer (D-California) and Barbara Mikulski (D-Maryland).

The outrage stems from the fact thousands of people are having their tax refunds taken from them to cover Social Security overpayments made when they were only children.

To illustrate, consider the following:

  • A child whose parent dies may be entitled to receive survivor's benefits, which are often administered to a surviving parent or guardian. The way the program is currently run, if a child receives overpayment, the SSA could pursue payment from them years later as an adult.
  • A disabled child may receive overpayments while growing up. While these overpayments would typically be offset in future payments once discovered, the situation would be different if the child's condition improved, disability payments were discontinued and the overpayments were discovered well after the fact. Here, the SSA could once again pursue payment years later.

As stated above, the SSA now appears to see some of the inequity in this approach with Acting Social Security Commissioner Carolyn Colvin announcing on Monday that the collection program was being suspended "pending a thorough review."

"If any Social Security or Supplemental Security Income beneficiary believes they have been incorrectly assessed with an overpayment under this program, I encourage them to request an explanation or seek options to resolve the overpayment," she said.

While this is certainly a promising development, we can only hope that the SSA makes this its permanent stance. In the meantime, consider speaking with an experienced legal professional if you would like to learn more about securing the Social Security disability benefits you need.

Source: The Washington Post, "People with old Social Security debts get reprieve," April 15, 2014