The Trump government has now revealed two prominent and divisive policy changes it claims are aimed to fight waste and fraud in Social Security.
First, the agency declared it would reverse a regulation limiting clawbacks to a lesser level and start garnishing entire benefit checks from Americans who get overpayments. Officials of Social Security assert the modification will enable the government to reclaim extra $7 billion over ten years.
The Social Security Administration provides several billion dollar inadvertent overpayments annually to elderly persons and those with disabilities. Sometimes mistakes happen when enrollees neglect to document a life event that can influence their benefits, such marriage or a new job search. In other circumstances, participants submit the information, but the government keeps overpaying them while handling the change.
When the government discovers an error, it seeks to recover the money by deducting it from a future benefit entitlement of an enrollee.
The Trump government declared late last week that it would once more follow the policy of withholding 100% of a person’s benefits should they owe money from an overpayment. That was Social Security’s policy until March of 2024 when Biden officials reduced the maximum amount the government may withhold to merely 10% of an enrollee’s monthly check.
Acting Social Security Commissioner Lee Dudek said in a news statement, “It is our duty to reverse the overpayment refund policy back to full withholding, as it was during the Obama administration and first Trump administration, to properly safeguard taxpayer funds.” Only those who get overpayments after March 27 will be subject to the revised guidelines going forward. Additionally applicable to Supplemental Security Income, which helps the most impoverished elderly and disabled Americans, is the 10% cap.
From Florida Republican Sen. Rick Scott, who wrote a letter to Social Security officials stating the issue was “unacceptable,” the articles resulted in a bipartisan outrage on Capitol Hill. Former Social Security commissioner Martin O’Malley claimed in a hearing before Congress last year the government was implementing the new 10% restriction to prevent “clawback cruelty.”
Though some of it related to early allegations by the Washington Post suggesting the government was planning far more expansive restrictions on Social Security’s phone operations, the new direct deposit rules have also generated debate. Rather, the government stated late Wednesday that anyone previously registered for benefits would have to either amend their bank details online or in person.
The modification is presumably meant to stop frauds in which a con artist phones saying they are a beneficiary or relative and has their benefits sent to their own bank account.
“Approximately 40 percent of Social Security direct deposit fraud is associated with someone calling SSA to change direct deposit bank information,” the agency noted. “SSA’s present system of merely asking identifying questions by phone is no longer sufficient to prevent fraud.”
Given Social Security offices have shifted to an appointment-only system and could soon have greatly reduced staffing, some advocates worry seniors who lack computer skills or cannot easily get to an office will find difficulty changing their bank information. For seniors, these changes might be time-sensitive since they are often altering their direct deposit information for reasons unrelated to their control, such as a bank merger leaving them with a new account number.
Exactly how often direct deposit fraud actually takes place over the phone is unknown. Between 2013 and 2017, Social Security’s inspector general’s 2019 report revealed there were 20,658 occurrences of direct deposit fraud handled using the agency’s web portal; public figures on phone fraud do not seem to exist.