The Social Security Administration (SSA) said it will reinstate its policy of recouping overpayments made to beneficiaries at a 100% withholding rate. The move comes as many older workers and people over 65, who are largely retired, continue to experience a rise in financial hardship. This decision, set to take effect on Thursday, March 27, is driven by a push for what the Trump administration says is stricter financial oversight of the Social Security trust fund.
The Office of the Chief Actuary estimates this change will equal program savings of about $7 billion over the next decade. However, this is a sharp increase from the 10% limit put in place in early 2024 during the Biden era to help alleviate the financial hardship of retirees asked to repay large sums, often due to administrative errors.
The SSA points out that the withholding rate change only applies to new overpayments related to Social Security benefits. The withholding rate for current beneficiaries with an overpayment before March 27 will not change and will continue under the current repayment terms, so no action is required. The withholding rate for Supplemental Security Income (SSI) overpayments remains at 10%.
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In a July report, the SSA’s Office of the Inspector General said there were about $71.8 billion in benefits – less than 1% of the $8.6 trillion paid out – in improper payments between fiscal years 2015 and 2022. While not all of these were overpayments, most fell into that category. In another report, the Office of Inspector General (OIG) said overpayments in the Old Age, Survivors, and Disability Insurance program added up to roughly $13.5 billion in the four years from 2020 until 2023.
“We have the significant responsibility to be good stewards of the trust funds for the American people,” said Lee Dudek, Acting Commissioner of Social Security. “It is our duty to revise the overpayment repayment policy back to full withholding, as it was during the Obama administration and first Trump administration, to properly safeguard taxpayer funds.”
Beneficiaries who receive an overpayment after March 27 will have their entire monthly Social Security check withheld until the debt is repaid. However, if someone cannot afford full recovery of their overpayment, they can contact Social Security at 1-800-772-1213 or their local office to request a lower rate of recovery.
People also have the right to appeal the overpayment decision or the amount and can ask Social Security to waive collection of the overpayment if they feel it was not their fault or they can’t afford to pay it back. The agency does not pursue recoveries while an initial appeal or waiver is pending.
For more information about overpayments and appeal rights, visit www.ssa.gov.