Social Security issues ‘emergency message’ on clawbacks: Here's what is changing

There were increased fears about financial hardship for Social Security beneficiaries in the coming days. In light of such an impending scenario, the Social Security Administration announced that it is reducing its overpayment clawback rate to 50% from 100%. This information was circulated via an "emergency message" to Social Security beneficiaries on April 25.

Big policy change by Social Security Administration

The issue of this policy change stems from recovering overpayments to Social Security recipients. Earlier in March, it was announced by the SSA that 100% of the monthly checks issued will be held until the overpaid amount is recovered.

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However, it had then sparked concerns about possible financial trouble if the checks were halted for the beneficiaries. Now, the SSA has retreated from the March policy change and is now considering a clawback rate of 50%, according to their message.

SSA still mum on reason for policy change

However, SSA did not immediately explain the reason for such a major policy change. According to a CBS News report, the agency's inspector general had discovered that nearly 73,000 overpayments in 2022 were due to problems with Social Security's own calculations. Moreover, these problems had no involvement whatsoever of the beneficiary.

In a report, the inspector general stated, "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 100% clawback policy was introduced by SSA Acting Commissioner Lee Dudek, suggesting that it was necessary to properly "safeguard US taxpayer funds". However, things may see a major change henceforth. During the Biden administration this clawback rate was capped at a mere 10% in 2024, after the White House came to know about financial hardships being faced by dozens of Americans, that even included homelessness. However, that 10% rate was only applicable for about a year, with SSA returning it to the 100% later.