Administration backs down from complete implementation of Social Security benefit reductions
Social Security Administration scrambles its stance on reimbursing overpayments
In a wild turn of events, the Social Security Administration (SSA) has flipped-flopped on its plans to seize full monthly payments from beneficiaries to recover allegedly overpaid funds. Instead, the agency will now default to seizing 50% of old-age, survivors, and disability insurance benefits, as announced in an "emergency message" to staff on April 25.
This decision marks a partial reversal from the Biden administration's previous policy that aimed to provide a lifeline to beneficiaries, who frequently teeter on the edge of poverty. Previously, the SSA had limited clawbacks to 10% of the monthly benefits to prevent exacerbating their financial struggle.
This latest change is yet another twist in the tumultuous relationship the SSA has had with the administration, ranging from staff cuts and threats to effectively shut down the agency, all under the Trump era.
The SSA's practice of repaying overpaid funds has often led to controversial tactics, such as withholding 100% of monthly benefits and demanding the money back, even if the overpayment was due to administrative errors. In some cases, this has resulted in severe consequences, with recipients left homeless.
An investigation by KFF Health News and Cox Media Group in 2023 exposed that millions of beneficiaries have received overpayment notices, causing extensive hardship for many. In response, Martin O'Malley, appointed by President Joe Biden in 2023 to head the agency, made it a priority to end what he called "grave injustices" that left many beneficiaries in a precarious financial situation.
In March 2024, O'Malley announced the agency would discontinue the "cruel clawback" tradition of intercepting 100% of a beneficiary's monthly check if they failed to respond to a demand for repayment. Instead, the agency would default to withholding 10% of the recipient's monthly benefits, he said.
However, after a year, the Trump administration reversed that policy change, returning to 100% withholding for new overpayments in March 2025. "It is our duty to revise the overpayment repayment policy back to full withholding...to properly safeguard taxpayer funds," acting Commissioner Lee Dudek stated in a news release.
Now, the administration is partially reverting the reversal with little fanfare. "I think that we had the policy right before," O'Malley stated in an interview on April 28. "Half of it interrupted means what? That means you go without paying your heating bill for the month; that means you'd go without your medicine instead of buying medicine and food." He added, "at 50%, it's half as cruel, but it's still cruel."
Withholding even 50% of monthly benefits will undoubtedly cause hardship for many older and disabled people. "It makes it harder for many people to afford basic needs like housing, food, and health care," stated Kathleen Romig, who worked at the SSA under O'Malley and is now the director of Social Security and disability policy at the Center on Budget and Policy Priorities.
The SSA press office did not respond to requests for further clarification on this new policy. The emergency message to SSA staff indicates that the new policy applies to overpayment notices issued on or after April 25, and if the recipient does not take action, the agency will begin reducing their benefit payments after about 90 days.
It's clear that this latest policy shift by the SSA will have a significant impact on beneficiaries who already struggle to make ends meet. With the proposed Claws Off Social Security Act still in the works, there is no certainty as to the long-term future of overpayment clawbacks. As always, keep an eye on further developments to understand how these changes may impact affected individuals.
Quick Facts:- Social Security Administration reverted its overpayment clawback policy from 10% to 100% withholding in March 2025, only to partially reverse it back to 50% withholding in April 2025.- The proposed Claws Off Social Security Act aims to codify the 10% cap across all benefit types.- The SSA's practice of overpayment clawbacks has led to severe hardship for many beneficiaries, including instances of homelessness.
- The Social Security Administration (SSA) has announced a partial reversal of its overpayment clawback policy, deciding to seize 50% of old-age, survivors, and disability insurance benefits instead of the full monthly payments.
- This move follows the Biden administration's initial policy aimed at providing a lifeline to beneficiaries teetering on the edge of poverty, which limited clawbacks to 10% of the monthly benefits.
- The SSA's strained relationship with the administration, seen during the Trump era, has played a part in this tumultuous policy-and-legislation landscape.
- Controversial tactics such as withholding 100% of monthly benefits to recover overpayments, even due to administrative errors, have led to severe consequences for some recipients, including homelessness.
- In Seattle and across the nation, this policy has affected millions of beneficiaries, causing extensive hardship for many, as an investigation by KFF Health News and Cox Media Group revealed in 2023.
- The Claws Off Social Security Act, currently in the works, aims to codify the 10% cap across all benefit types, potentially offering relief to beneficiaries who currently face withholding up to 50% of their monthly benefits.
- As the proposed act makes its way through policy-and-legislation and general-news cycles, it is crucial for the public and advocates to stay informed about its progress and its potential impact on those who rely on Social Security benefits.
