Social Security to cut overpayment clawbacks to 50%, down from 100%

The Social Security Administration is retreating from a recent policy change on the agency recovering overpayments that sparked concerns it could cause financial hardship for tens of thousands of beneficiaries.

In an April 25 "emergency message" to Social Security employees, the agency said it is reducing its overpayment clawback rate to 50% from 100%. The change comes after SSA on March 27 started recovering erroneous overpayments to Social Security recipients by taking 100% of a beneficiary's monthly check until the money is repaid, up sharply from the prior rate of 10%.

The agency didn't explain its reason for the change, nor immediately respond to a request for comment.

The 100% clawback policy was directed by SSA Acting Commissioner Lee Dudek, who has worked with Elon Musk's Department of Government Efficiency, or DOGE, to cut costs at the agency. Dudek said in a March 7 press release that the change was needed to "properly safeguard taxpayer funds."

The agency's move to recover overpayments has long been a pain point for thousands of beneficiaries who are overpaid each year, with many people unaware they had received a bigger benefit than they were entitled to until receiving notices from the Social Security Administration.

The agency's inspector general found that 73,000 overpayments in 2022 were due to problems with Social Security's own calculations, rather than the fault of the beneficiary.

"SSA's automated systems could not compute benefit payments due in certain situations, and the Agency did not provide employees with a comprehensive tool to use when they had to manually calculate them. Without adequate automation tools, employees can make errors," the inspector general said in a report.

Last year, the Biden administration capped the clawback rate at 10% after reports that some seniors and disabled beneficiaries had been forced into financial hardship, including homelessness, due to the prior 100% clawback rate. But that 10% rate was only effective for about a year, with the the agency returning it to a 100% rate in March.

Those most at risk from the government's stepped-up effort to recover overpayments are the roughly one-third of Social Security recipients who rely on their monthly benefit check for at least 75% of their income. Some seniors have told CBS News they were left too financially strapped to afford rent, food and other basics.

Many of the overpayments involve disabled workers who receive payments through the Social Security Disability Insurance (SSDI) program, whose recipients receive an average of $1,538 per month, said Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.

One SSA report found that SSDI has a higher rate of overpayments than the overall Social Security program because disabled recipients sometimes fail to report work income, which can occur if they're not aware they need to disclose extra earnings to the agency. Social Security reduces benefits for disabled recipients who earn more than $1,620 a month.

"While walking back the clawback of overpayments from 100% to 50% is a step in the right direction, taking half of the monthly benefit will still be a burden to many workers with disabilities who receive SSDI," Adcock told CBS MoneyWatch.

He added, "A fifth of all SSDI beneficiaries rely on their benefits for almost all of their income. That means some SSDI recipients are still going to have trouble paying for rent, food, utilities and prescriptions" with the 50% clawback rate.

The Social Security Administration docked the the benefits of about 670,000 recipients by 10% for overpayment last year, according to KFF.

Under the new rule, the 50% clawback for overpayments started April 25, according to the SSA's statement.

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