Social Security’s overpayments policy takes effect Thursday. Experts say it could hurt seniors.

Some Social Security recipients could soon find themselves in the crosshairs of a policy that advocates for seniors say could cause financial hardship for many older Americans.

Starting Thursday, the Social Security Administration will begin clawing back overpayments from the retirement program by taking 100% of a beneficiary’s monthly check until the money is repaid, up from the prior rate of 10%. The policy will impact new cases of overpayments starting on March 27. The benefits withholding rate for people who were overpaid before that date will remain at 10%. 

The agency’s 100% recovery rate was announced earlier this month by SSA Acting Commissioner Lee Dudek, who has worked with Elon Musk’s Department of Government Efficiency, or DOGE, to cut costs at the agency by firing thousands of workers and closing field offices. 

Dudek has described the 100% clawback rate as part of the agency’s responsibility to recover overpaid funds. But advocates for older Americans say the policy will cause financial distress for many people, especially those who rely on the program for all or most of their income.

“If an overpayment is being made, that means the Social Security Administration is withholding 100% of their payment for however long it takes to repay the agency — and they are without money to pay for food” or other living expenses, Dan Adcock, director of government relations and policy for the National Committee to Preserve Social Security and Medicare, an advocacy group, told CBS MoneyWatch.

The clawback policy could prove especially hard on the 40% of Social Security beneficiaries who rely on the program for 90% of more of their income, he added. 

In many cases, Social Security overpayments are the fault of agency, with a 2022 report by its inspector general finding that about 73,000 overpayments that year were due to a lack of “effective controls over benefit-computation accuracy.”

Under the Biden administration, the Social Security Administration in 2024 capped the clawback rate at 10%, stepping back from its prior 100% level following reports that the higher rate had pushed some Americans into financial hardship and even homelessness.

Can you avoid a Social Security overpayment?

In some cases, overpayments are due to miscalculations on the part of the Social Security Administration, or because the agency doesn’t update beneficiaries’ records in a timely way. That can make it difficult for seniors to know if they’re getting paid too much. 

But it’s also important for beneficiaries to update the SSA with their latest information, such as increases in their income that can lead to overpayments. The importance of updating the agency about such changes may not be fully appreciated by some beneficiaries because of the complexity of the Social Security system, the agency’s inspector general said in a 2024 report. 

“We urge beneficiaries to keep a close eye on their benefits going forward,” said Shannon Benton, executive director of The Senior Citizens League, an advocacy group for older Americans. “If they notice any unscheduled changes to their benefits, they should contact Social Security immediately.”

DOGE cuts, long waits

Because of DOGE’s job cuts at the Social Security Administration and the closure of agency field offices, it’s recently become more difficult for seniors and other beneficiaries to contact the agency to report changes or ask for help, Adcock said.

Those issues arose in a Tuesday Senate confirmation hearing for President Trump’s nominee for Social Security commissioner, Frank Bisignano, who said that only about 46% of phone calls to the agency are answered “because people get discouraged and hang up” due to long wait times.

Sen. Steve Daines, a Republican from Montana, told Bisignano that one of his staffers this week called the agency’s 800 number to assess the level of customer service, but was disconnected three times, once after being on hold for an hour. 

“We’ve got a lot of work to do to serve the taxpayers in this country,” Daines said. 

Improvements to Social Security?

In the hearing, Bisignano also said he wants to reduce what the agency calls “improper payments,” which include both overpayments and underpayments to beneficiaries. Currently, about 1% of Social Security’s annual payments are improper, with Bisignano saying he believes that rate should be “five decimal points to the right.”

Yet enhancing the accuracy of benefits will likely take a large investment in Social Security because it would require changes in systems, technology and other resources, Benton said. 

“While improvements are possible, achieving such a low error rate is challenging due to the complexity of Social Security benefits and past challenges with fraud and reporting errors,” she said. “Some progress is likely and will probably be incremental, but a significant reduction over the next four years will be extremely challenging.”

In the meantime, seniors and other Social Security recipients should watch their benefits closely and report changes in their income to the agency. And if people receives a beneficiary letter from the agency, they can also request a waiver, which can be made through SSA form 632. 

“While we believe that overpayments should be recouped, we believe it’s essential that beneficiaries have time to plan, and not face undue pressure from an almost immediate 100% reduction in benefits,” Benton said.