The Social Security Administration (SSA) has been undergoing several changes to its systems and processes since the country’s change in leadership with the Trump Administration being elected to office earlier this year.
Amongst these changes has been the longstanding point of contention with beneficiaries: clawbacks for overpaid benefits. For the past year, the clawback rate was capped at 10% under the Biden Administration, however, now under the Trump Administration, the clawback rate was announced to have skyrocketed to the full 100%. Not too long after, however, this rate was dropped to 50% in an emergency meeting at the SSA.
Overpayments of Social Security benefits
Whilst capping the clawback rate at 50% of the benefit rather than a 100% will offer a some relief to beneficiaries, the relief will be minor at best. As of April 25, the 50% clawback rate has officially gone into effect and as a result the SSA is now withholding up to 50% of monthly Title II benefits from beneficiaries who had been overpaid, including, retirement, disability, or survivor payments.
A 50% clawback rate is, of course, better than a full 100%, however, experts are still of the opinion that “the new policy can still leave retirees and other beneficiaries in financial distress.”
Overpayments occur when the SSA sends out more money than what a beneficiary is supposed to receive. This occurs for an array of reasons such as, agency errors or delays in processing information. This refers to changes to a beneficiary’s income, living situation, or marital status.
Once an overpayment is picked up by the SSA, a notice is sent to the recipient requesting a full and immediate repayment. If the beneficiary does not respond within 90 days to ask for a waiver, reconsideration, or a lower repayment rate, the SSA will clawback its funds automatically by withholding a part of the beneficiary’s benefit each month until the debt is cleared. As per the emergency meeting held at the SSA, “the new policy sets a default withholding rate of 50% for all new overpayment notices beginning April 25.”
What are people saying?
The emergency meeting at the SSA to discuss the matter of clawbacks came about as a result of major backlash regarding the 100% rate. Many critics, including advocacy groups and lawmakers had even described the 100% clawback rate as “draconian”.
The reduced rate serves as a slight reprieve all things considered, however, it is not a sustainable solution.
“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.
Richard Fiesta, executive director of the Alliance for Retired Americans, also warned that this change still puts many at risk of “immediate economic hardship,” especially for cases where the overpayment was the fault of the agency.
Whilst overpayments can be disputed, the process is rather complex. Beneficiaries can request a reconsideration, waiver, or lower withholding rate, however, the responses are dependent on the discretion of the SSA agent 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 noted. “And those employees have a lot of discretion in what they decide.”
Additionally, the infamously lengthy wait times when trying to get an SSA appointment will only worsen the situation, resulting in beneficiaries being unable to be responded to in time.
In the event of receiving an overpayment notice, however, experts strongly recommend that beneficiaries contact the SSA as soon as possible to know their available options. According to the SSA, a beneficiary typically has “about 90 days to challenge it before the SSA begins withholding up to 50% of your monthly benefit.”
As such, if the fault lies with the agency and the recipient contacts the SSA timeously, the withholding rate can potentially be reduced, and in some cases, repayment can be avoided entirely.