New Bill Sets 3-Year Time Limit on Social Security Clawbacks

capitol in Washington DC with a Social Security card and money

Two representatives from Ohio, Republican Mike Carey and Democrat Emilia Sykes, have introduced legislation to prevent the Social Security Administration from reducing monthly payments from beneficiaries who received overpayments more than three years prior.

The bill, the Protecting Americans from Social Security Clawbacks Act, was introduced on Aug. 20.

The bill's text states that "in any case in which the Commissioner finds that more than the correct amount of payment has been made to a person, recovery from the person may not be made" if the overpayment occurred more than three years before the date of the finding; and if the overpayment was a result of error on the part of the Social Security commissioner.

The three-year time limit does not apply, however, if the commissioner "determines that the person has ever committed fraud or similar fault with respect to the program," the bill states.

"What we're saying is listen, if you couldn't get your act together and notify these people within a three-year window, then you're going to have to waive that," Carey said in a recent interview with Cox Media Group and KFF Health News.

"We had many of these constituents reach out to our office about these overpayments … These are people that have been playing by the rules," Carey relayed. "They've been doing everything that they thought they were supposed to do."

"I think this is the first step and I do think we need to make sure that Social Security has the tools that they need to make sure that this doesn't happen again," Carey told the network.

Improper Payments

A new report by the Social Security Administration's Office of the Inspector General found that Social Security made nearly $72 billion in improper payments, most of which were overpayments, from fiscal years 2015 through 2022.

While the $72 billion is less than 1% of the total benefits paid during that period, at the end of fiscal 2023, SSA had an uncollected overpayment balance of $23 billion, according to the report, Preventing, Detecting, and Recovering Improper Payments.

Social Security Commissioner Martin O'Malley told lawmakers earlier this year that addressing overpayments was a top priority.

On March 25, the SSA ceased the practice of recovering overpayments by withholding 100% of benefits. Those who do not respond to repayment notices now have their benefits withheld at a rate of 10%, or $10, per check, whichever is greater.