Social Security says it will restart clawing back 100% of overpayments to beneficiaries

The Social Security Administration (SSA) said it is reinstating a plan to recover 100% of overpayments to beneficiaries, a policy the agency had abandoned last year after an outcry over cases in which the practice led some Americans to receive shock bills amounting to thousands of dollars.  

In a statement, SSA said late Friday that it will increase the default overpayment withholding rate for Social Security recipients to 100% of a person’s monthly benefit, the same level that it had in place before last year’s reform. The agency is required by law to claw back overpaid benefits.

Because of public backlash over the 100% recovery policy, the agency last year had capped the withholding rate for someone who had been overpaid at 10% of the person’s monthly benefit. On Friday, the SSA said it will start claiming 100% of benefit checks to cover new cases of overpayments, while the withholding rate for people with overpayments before March 27 will remain at 10%, as will the rate for overpayments for Supplemental Security Income, a program for low-income seniors and disabled Americans.

“People who are overpaid after March 27 will automatically be placed in full recovery at a rate of 100% of the Social Security payment,” the agency said.

The 100% clawback policy had sparked an outcry after instances in which beneficiaries were hit with surprise bills that demanded repayment within 30 days. In some cases, the bills were for tens of thousands of dollars. If beneficiaries were unable to immediately pay the bill, the agency could dock their entire monthly Social Security payment, leaving some people financially destitute, as reported by “60 Minutes,” KFF Health News and other media outlets,

In many cases, the overpayments were the fault of SSA. A 2022 report by the agency’s inspector general found that about 73,000 overpayments that year were due to a lack of “effective controls over benefit-computation accuracy.”

In the agency’s new statement, SSA Acting Commissioner Lee Dudek said it is the agency’s “duty to revise the overpayment repayment policy back to full withholding.”

He added, “We have the significant responsibility to be good stewards of the trust funds for the American people.”

Raising the clawback rate to 100% from its current 10% will increase the amount of recovered funds by $7 billion over the next decade, the agency said. SSA pays out about $1.6 trillion in benefits each year.