Social Security reverses overpayment clawback rules — again

Yahoo

05-05-2025

The Social Security Administration revised — again — its policy for clawing back overpayments in benefits, this time saying it would deduct 50% of benefit checks until an overpayment is recovered, a reversal from the 100% previously stipulated.
The new policy, which went into effect April 25, was announced in an emergency message to agency employees.
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Once a beneficiary is notified of an overpayment, according to the Social Security Administration, it allows a 90-day period in which the beneficiary can request a lower rate of withholding, a reconsideration or a waiver. After those 90 days pass, the clawback kicks in, lasting until the agency collects all of the overpaid funds.
For years, the Social Security Administration has erroneously overpaid some beneficiaries. Once an error has been discovered, the SSA would withhold money from the beneficiary's check until the amount was repaid, sometimes affecting 100% of the benefit. Many of those impacted were elderly, disabled and low-income people who didn't realize they were being overpaid, and for whom losing their full monthly benefit following such an overpayment finding was a hardship.
In early 2024, under then–Social Security Commissioner Martin O'Malley, the repayment requirements were changed and withholding was reduced to 10% from 100%. In March, after the change of presidential administrations, the agency said it was reverting to 100% in most cases. Now, under the latest rule change, the clawback amount will be 50% until a debt is repaid.
At the time of March 7 announcement, Leland Dudek, acting commissioner of Social Security, said: 'We have the significant responsibility to be good stewards of the trust funds for the American people.'
'It is our duty to revise the overpayment repayment policy back to full withholding, as it was during the Obama administration and first Trump administration, to properly safeguard taxpayer funds,' Dudek said in March.
The SSA did not respond to requests for comment on the reason for the late-April policy change.
'It was always very cruel that — through no fault of their own — that Social Security would claw back their mistakes. Fifty percent still seems very cruel,' said Richard Fiesta, executive director for the Alliance for Retired Americans. 'Having half of their benefits taken away could put people into great economic peril.'
Citing the Office of the Chief Actuary, the SSA in March said the 100% clawback provision would lead to overpayment recoveries, or a program savings, of roughly $7 billion over the next 10 years.
According to the SSA's inspector general, about $71.8 billion, or less than 1%, of the total $8.6 trillion in benefits paid between fiscal 2015 and fiscal 2022 were improper payments. Most of those improper payments were overpayments, the SSA said.
'The Senior Citizens League believes overpayments should be recouped but remains concerned about the impact of any recovery rate on the less financially stable retirees. For some retirees, it won't matter if it's 1% or 100%. Any amount of clawback could be catastrophic for the less financially stable retirees,' said Shannon Benton, executive director of the seniors advocacy group.
About 40% of all Americans 65 and older rely on Social Security for half or more of their income, according to AARP. Additionally, about 14% of recipients 65 and older depend on it for 90% or more of their income. The average Social Security check is about $1,980 as of March 2025, according to the SSA.
Social Security has been under attack by Elon Musk's so-called Department of Government Efficiency, or 'DOGE,' which says it is looking for waste, fraud and abuse in the federal government. The Social Security Administration, which was already at a 50-year low in staffing, has said it will cut 12% of its workforce, or 7,000 jobs, and close some regional offices.
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Social Security is facing an insolvency crisis. The trust funds that back Social Security are forecast to be depleted in 2035, at which point beneficiaries would receive only 83% of promised benefits.
'The Trump administration is beginning to retreat in the face of public outrage, but 50% is still way too high. Imagine losing half your income overnight. When the overpayment is through no fault of the beneficiary, the government should absorb the cost,' said Nancy Altman, president of advocacy group Social Security Works.
'There is so much focus on overpayments but no effort at all to correct underpayments, when beneficiaries get less than the amount for which they are eligible. Both underpayments and overpayments are now far harder for beneficiaries to correct, since Elon Musk's DOGE has hollowed out Social Security,' Altman said. 'No one should be satisfied by this change.'
This is not the first time the SSA has reversed a new policy. The agency recently reversed its rules regarding beneficiaries' ability to verify their identities by phone.
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