For millions of vulnerable Americans, such as retirees or disabled individuals, Social Security checks are an incredibly important source of income. Due to the necessity of these benefit checks and the massive scale at which they are distributed each month, it is not unlikely for mistakes to sometimes occur with the rolling out of the checks.
Often unbeknownst to the beneficiary, the Social Security Administration (SSA) sometimes ends up paying a beneficiary more than they were actually supposed to receive. As a result, beneficiaries will receive a notice from the SSA stating that they now have an overpayment balance and if action is not taken timeously, it could result in the beneficiary having a portion of their future benefit checks clawed back until the debt is cleared.
The SSA began sending out notices to beneficiaries with overpaid balances as of March 27.
Social Security clawback rate changes
With the Trump Administration coming into power earlier this year, many sweeping changes have been enacted within the SSA. Amongst these changes has been the clawback limit which, in March, was announced to be 100% of the recipient’s benefit check.
Naturally, this sparked much backlash from critics and beneficiaries alike as it would impose significant financial stress on those dependent on these welfare checks each month. Some even described the 100% rate as “ridiculously draconian and cruel.” As such, the SSA held an emergency meeting in April where it was decided that the clawback rate would now be capped at 50%.
Whilst a reduced 50% rate may provide an ounce of relief to beneficiaries, experts still strongly feel that a “clawback on monthly benefit checks may still cause a financial burden for individuals who are affected.”
Since the agency is on a path with limited funding, retrieving overpaid amounts has been given more importance, hence the changes to the clawback rates. According to an August 2024 report, “the Social Security Administration’s Office of the Inspector General estimated the agency made nearly $72 billion in improper payments – mainly overpayments – during fiscal years 2015-2022.”
These overpayments occur for a variety of reasons, some due to mistakes from the agency, and some as a result of a mistake on the part on the beneficiary regarding personal information. As the SSA works towards balancing these accounts, the new 50% clawback rate will go into effect as of April 25 and will apply to “Title II benefits, which include retirement, survivors and disability insurance,” as per the SSA’s emergency meeting. Supplemental Security Income benefits will continue to be withheld at a 10% rate, however.
“Obviously, it’s better not to lose all of your income,” said Kate Lang, director of federal income security at Justice in Aging.
“But 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.”
What to do if you receive an overpayment notice?
If a notice of overpayment reaches your mailbox, the SSA should be contacted as soon as possible. Typically, beneficiaries will have 90 days to request a lower withholding rate, and in some instances, avoid repayment entire if the agency was at fault. If a request is not made within 90 days of receiving the notice, the agency will withhold 50% of the recipients benefit checks until the balance is cleared.
Whilst it is crucial that beneficiaries make this request and negotiate the terms of their repayment, there is no actual guarantee that the outcome will be what the beneficiary desires. In addition to incredibly lengthy wait times at SSA offices, “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 explained. “And those employees have a lot of discretion in what they decide.”
