The Social Security Administration (SSA) has reduced its overpayment clawback rate from 100% to 50%. This means that beneficiaries who received more money than they were owed will now have half of their monthly benefits withheld until the debt is paid off. The decision comes after the SSA faced backlash for its previous plan to withhold 100% of benefits from overpaid recipients.
Critics called the full clawback “draconian” and warned it would leave some individuals without any income at all. Overpayments can occur for several reasons, including agency errors or delays in processing information, such as changes to a beneficiary’s income, living situation, or marital status. When the SSA determines that an overpayment has taken place, it sends a notice asking for full and immediate repayment.
If the beneficiary doesn’t respond within roughly 90 days by requesting a waiver, reconsideration, or a lower repayment rate, the SSA begins automatically withholding funds.
Benefit clawback rate cut by half
While the reduced rate is seen as progress, experts warn that losing half of their benefit income could still be financially devastating for many beneficiaries.
“If you’re relying on your benefits to pay your rent or your mortgage and buy food, losing half of that income is going to be devastating and can still result in people becoming homeless,” said Kate Lang, director of federal income security at Justice in Aging. Beneficiaries can request a reconsideration, a waiver, or a lower withholding rate. However, responses can vary depending on the SSA employee handling the case.
“There are thousands of employees that individual beneficiaries are going to be dealing with to ask for a waiver or ask to negotiate a different repayment rate,” Lang said. “And those employees have a lot of discretion in what they decide.”
If you receive an overpayment notice, experts recommend contacting the SSA as soon as possible to explore your options. You may be able to reduce the withholding rate or avoid repayment altogether if you weren’t at fault for the overpayment.
The new 50% clawback policy began on April 25, according to an SSA statement.