Social Security Cuts Benefit Clawback Rate to 50% After Backlash

The updated Social Security policy, effective April 25, maintains a 10% withholding rate for Supplemental Security Income (SSI) benefits while reducing the recovery rate for standard Social Security benefits by half. This adjustment follows shortly after the SSA’s mid-March announcement that it would implement a 100% default overpayment withholding rate.

The March decision had reversed a previous policy change made less than a year earlier, which had established a more modest 10% rate. On March 27, the agency began sending notices about the 100% withholding rate for new overpayments. However, under the latest guidance, Social Security beneficiaries now have a 90-day period to:

• Request a lower withholding rate
• appeal the clawback decision through the Social Security appeals process
• Submit a waiver application for overpayment recovery

Stakeholder Responses to the Revised Social Security Policy

Nancy Altman, president of Social Security Works, expressed measured criticism of the policy adjustment. “The Trump administration is beginning to retreat in the face of public outrage, but fifty percent is still way too high,” she stated in an email to ThinkAdvisor. “Imagine losing half your income overnight. When the overpayment is through no fault of the beneficiary, the government should absorb the cost.”

Altman further highlighted a perceived imbalance in the agency’s approach to payment errors. She noted that while there is substantial focus on recovering overpayments, there appears to be insufficient effort to address Social Security underpayment correction, where beneficiaries receive less than their entitled amount. According to Altman, both types of Social Security payment errors have become increasingly difficult for beneficiaries to correct due to organizational changes at Social Security.

She concluded with a call to action for citizens, urging them to contact their congressional representatives to advocate for Social Security changes. Specifically, she suggested that Social Security should cease recovering overpayments that occurred through no fault of the beneficiary and instead prioritize the correction of underpayments for those needing Social Security help.