WASHINGTON, D.C. — In a significant policy shift, the Social Security Administration (SSA) has reversed course on its controversial decision to withhold 100% of certain overpaid benefits, announcing it will now limit clawbacks to 50% for new overpayment notices. While the move marks a partial relief for affected Americans, advocates warn the reduced rate still poses a severe threat to the financial stability of vulnerable beneficiaries.

The change applies to Title II benefits — covering retirement, survivors, and disability insurance — for notices sent on or after April 25. These benefits will now face a 50% default withholding rate instead of the full seizure of monthly checks, which the SSA announced just weeks earlier. The rate for Supplemental Security Income (SSI) benefits, meanwhile, remains unchanged at 10%.

Kate Lang, director of federal income security at Justice in Aging, acknowledged the change as an improvement, but said the new policy still fails to protect low-income seniors who depend heavily on their monthly benefits to survive. “Obviously, it’s better not to lose all of your income,” she said. “But if you’re relying on your benefits to pay your rent or your mortgage and buy food, losing half of that income is going to be devastating and can still result in people becoming homeless.”

The problem stems from overpayments — instances when the SSA sends out more money than a beneficiary is technically owed. These errors can result from unreported changes in a person’s circumstances, data-entry mistakes, or delays in processing new information. Once the agency detects an overpayment, it sends a notice demanding a full and immediate refund.

Beneficiaries are then given a 90-day window to request a waiver, reconsideration, or a lower repayment rate. If they don’t act within that time, the SSA will begin deducting 50% of their benefits each month until the overpaid amount is recouped.

The new 50% withholding policy comes after a whirlwind of changes. Under President Biden’s administration, the default rate had been lowered to 10%, or $10 — whichever was greater. That was until the SSA abruptly raised it to 100% earlier this year, sparking widespread backlash.

“In the last 100 days, we’ve gone from as low as 10 percent to 100 and now to 50,” said Richard Fiesta, executive director of the Alliance for Retired Americans. He blasted the 100% policy as “ridiculously draconian and cruel,” noting that it could have generated $7 billion in savings over the next decade — but at the expense of seniors’ livelihoods.

Even with the reduction to 50%, Fiesta said the harm is still real. “Losing 50% [of benefits] for a lot of people could put them into immediate economic hardship,” he warned. “In most cases, it wasn’t the beneficiary’s fault that they were overpaid. They shouldn’t be put in a worse situation because of something they never caused in the first place.”

Adding to the confusion and stress for beneficiaries is the complexity of the repayment process. While individuals can technically negotiate their repayment terms or request a waiver, Lang pointed out that success often hinges on the discretion of SSA employees.

“There are thousands of employees that individual beneficiaries are going to be dealing with to ask for a waiver or ask to negotiate a different repayment rate,” she said. “And those employees have a lot of discretion in what they decide.”

Lang also emphasized that navigating the system is not easy. Beneficiaries facing overpayment notices often experience long wait times when trying to schedule appointments with SSA offices, limiting their ability to respond effectively within the required timeframe.

As the SSA grapples with criticism over the handling of benefit overpayments, it has yet to publicly comment on the most recent policy reversal. Advocates continue to push for systemic reforms, calling for clearer communication, more reasonable repayment processes, and safeguards to ensure that elderly and disabled Americans aren’t unfairly penalized for bureaucratic errors beyond their control.

For now, the new 50% policy provides some relief — but for many, it may not be enough to prevent financial ruin.