The Social Security Administration plans to end “clawback cruelty” starting Monday, when the agency will no longer intercept 100% of a beneficiary's monthly benefits if the person has failed to respond to a notice of overpayment, program Commissioner Martin O’Malley told the Senate Committee on Aging today.

“We are no longer going to have that clawback cruelty of intercepting 100% of a payment if people do not respond to our notice,” O’Malley said.

Instead, the agency will use a “much more reasonable” withholding rate of 10% starting on Monday, O’Malley said.

The new 10% rate will only apply when beneficiaries do not respond to overpayment notices in a timely fashion, he added.

The change is in response to complaints from beneficiaries who received notices from the Social Security Administration demanding repayment of benefits that sometimes totaled tens of thousands of dollars, O’Malley said.

At times the overpayments are made by the Social Security Administration and are “no fault” of beneficiaries, who are then placed in the position of having to make immediate repayment or face a significant reduction in their own benefits, Democrat Sen. Raphael Warnock of Georgia said during the hearing.

One of Warnock’s constituents in Savannah, Ga., received a notice for $58,000 from the Social Security Administration, and because she couldn’t make a lump sum payment, Social Security reduced her benefits significantly, which led to her defaulting on her rent payments, said Warnock, who added that his office often hears from constituents with benefit clawback problems.

The reduction to 10% for clawbacks is part of a four-part overhaul in the way the agency handles overpayments. Beginning Monday, claimants will no longer have to prove they are not at fault in causing an overpayment.

It’s up to the agency “to produce that reason, not them,” O’Malley said.

As of Monday, beneficiaries who establish repayment plans with the Social Security Administration will be given a maximum of 60 months to make repayments, up from 36 months currently, O’Malley said.

The agency will also make it easier for beneficiaries to request and obtain a waiver if the overpayment was not their fault and they can prove they don’t have the ability to repay the money. 

O’Malley said the additional funding for the Social Security Administration proposed by President Joe Biden would allow the agency to train its 1,200-plus staff and update systems on the new clawback policies.