Social Security Administration Resumes Controversial ‘Clawback’ Policy

Just a year after ending a policy then-Social Security Administration head Martin O’Malley called “clawback cruelty,” SSA is re-instituting its practice of recouping 100% of recipients’ benefits until any overpayment is covered. In 2024, SSA had moved to a policy of taking 10% of monthly benefits if an overpayment was made as a way of trying to lessen the financial hardship for recipients who may have received an overpayment, particularly those with low incomes or disabilities. Spotlight spoke recently with Kate Lang, director of Federal Income Security at Justice in Aging, about the reversal and what it could mean for financially challenged Social Security recipients. The transcript of that conversation has been lightly edited for length and clarity. 

Thanks for taking the time to chat with us Kate. Why don’t we start by giving some background on Justice in Aging.

We are a national, nonprofit law firm, and we focus on advocating on behalf of low-income, older adults who have historically been marginalized and excluded from the justice system.

To give our readers some background on this clawback provision, the policy was changed roughly a year ago. Can you walk us through that?

So, historically, for many decades, folks who were receiving Title II benefits from the Social Security administration—those are retirement, survivor or disability insurance benefits that are based on an individual’s work history—if they had an overpayment of those benefits and they were still eligible for and receiving those benefits, SSA would take 100% of those monthly benefits to pay back the overpayment. Last year, there was a lot of media and congressional attention to how devastating this could be for beneficiaries, that there were many people who, if they were relying on those benefits for most or all of their income, if SSA took 100% of those benefits, they would have nothing to live on.

Are improper payments or overpayments a big problem?

Improper payments are less than 1% of all of these Social Security benefits, so it’s pretty rare. And when they do happen, there’s very little fraud involved. It can be a combination of either the beneficiary not reporting something to SSA or taking more time than they should to report something to SSA or SSA delaying their processing of that reporting. Most of these Social security overpayments are the result of the beneficiary working. We see this with people who take early retirement benefits and continue to work; there’s an earnings limit for those beneficiaries. If they earn more than that, then their benefits are reduced. So, that’s one reason we see overpayments.

And then for people receiving disability benefits, if they attempt to return to work or continue working while receiving disability benefits, that can result in an overpayment. And sometimes, there’s just a delay in SSA processing the information that’s reported to them about the beneficiary, and that can result in an overpayment.

So, a year ago, the policy was changed to no longer take a 100% of this money out, correct?

Right. A year ago, when Martin O’Malley was the commissioner, he announced they were going to change this withholding policy to be 10% of the beneficiary’s monthly benefit. So, if a person gets a notice about an overpayment from Social Security, if they don’t do anything and they’re continuing to receive benefits, SSA would then just take 10% of their monthly benefits.

But now the new administration is changing the policy to go back to the old policy. And I guess that started a few weeks ago?

Right. They announced that it would go into effect for new overpayments that were detected after March 27th. But unfortunately, we’ve already heard about a couple of people who had a hundred percent of their monthly benefits withheld for an overpayment even before that date. That’s concerning, as the policy change that was announced was that it would only be new overpayments that were detected after March 27th.

And who is most likely to be impacted by this policy?

Like I said, it’s mostly people who have taken early retirement and are working, or people who are on disability insurance benefits and are returning to work. But there are other odd situations where people end up with overpayments and the overpayment notices that they get are very confusing. A lot of times people get the overpayment notice and it’s not clear to them what happened.

I wanted to ask you about that, how that process works.

People get a notice that says, you are overpaid, and you owe us $62,000, here’s the address to send us $62,000 immediately. The notices are very long, but usually there’s not enough information for people to understand why that happened. People are also given information about their right to appeal in that notice and also that they can request a waiver. In those cases, people are saying, yes, I owe you this money, but it wasn’t my fault. I reported all my earnings to the Social Security administration, and I can’t afford to pay it back, so this debt should be written off or waived by the agency. But there’s so much information in those notices that it’s hard for people to understand what happened and understand what their options are for their next step.

And presumably with the staff reductions at the agency, that process is now going to be even more difficult.

Right. People would have to call their local office to get more information about the overpayment and to figure out what they could do next. And we’ve heard that people are waiting on hold for a long time at those offices—they might wait on hold for hours or the call gets dropped. And also, at the beginning of this year, SSA implemented what they’re calling an appointment-focused model for their field offices. So, people can’t just walk in unless it’s an emergency and talk to somebody. They have to make an appointment ahead of time and frequently they’ll have to wait more than 30 days to get an appointment to talk to somebody in person. So yes, the offices were already understaffed and it’s only getting worse at this point.

And how does your organization help people in this predicament?

We provide support or training, mostly to legal aid attorneys or people who work with the disability community to provide them that direct representation. I hear from hundreds of people across the country helping people with these kinds of cases. And I keep track of these changes that are going on with SSA policies and train those representatives about what’s going on.

Is there any indication of any pushback on this on the Hill? Obviously, Democrats are limited in what they can do.

Unfortunately not, because there was really a lot of bipartisan concern about this 100% clawback policy in the past. There were even bipartisan bills that were introduced on the Hill, but that didn’t move forward. But unfortunately, we haven’t heard that same bipartisan concern about this change.