The Social Security Administration has reinstated its controversial policy of withholding 100% of monthly payments to recover overpayments. This policy will take effect on March 27, 2025, marking a drastic change from the 10% withholding policy that was in effect last year. This new rule could cause many seniors to struggle financially.
Changes To Expect With Social Security Overpayments
Due to the new announcement, beneficiaries who had overpayment cases risk losing all their monthly payments until the overpayment is recovered. For those who were already paying their overpayments before March 27, the 10% withholding will continue to apply. However, those with new overpayments will have to lose 100% of the monthly payments.
For the recipients of Supplementary Security Income (SSI), the withholding policy will remain at 10%.
Why the Social Security Administration Has Taken This Measure
In an official statement released by SSA, Lee Dudek the acting commissioner, said, “We have the significant responsibility to be good stewards of the trust funds for the American people. It is our duty to revise the overpayment repayment policy back to full withholding, as it was during the Obama administration and the first Trump administration, to properly safeguard taxpayer funds.”
The SSA estimates that the new 100% withholding policy will enable it to recover approximately $7 billion that had been lost through overpayments.
How Serious is the Overpayment Issue
According to a report from the SSA’s Inspector General, the agency lost close to $72 billion in improper payments between 2015 and 2022, mostly through overpayments. As of September 2023, the agency had $23 billion in uncollected overpayments.
The Cause of Overpayments
Overpayments occur when the Social Security Administration pays beneficiaries more than they are eligible for. Some of the causes are;
- Miscalculation by the SSA.
- Failure by beneficiaries to report changes in work status, marital status, and income change.
- Outdated SSA records that lead to errors in payment.
How This New Rule Affects Beneficiaries
It is estimated that over 40% of beneficiaries rely on Social Security for 90% of their income. Therefore, if 100% of their monthly payment is withheld, they could lose almost their entire monthly check.
Advocates for seniors like Dan Adcock the Director of Government Relations and Policy for the National Committee to Preserve Social Security and Medicare said, “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.”
What To Do If You Are At Risk of 100% Withholding?
If you receive a notice of overpayment, you have the following options to avoid losing 100% of your monthly benefits to overpayments;
- Request a lower recovery rate if you cannot afford a 100% withholding by visiting a local SSA office or by contacting them at 1-800-772-1213.
- Appeal the overpayment ruling if you believe that the decision is a mistake by the SSA.
- Request a waiver if it was not your fault to receive the overpayments. You can also request a waiver if you cannot afford to lose 100% of your benefits.
- Monitor your benefits keenly by checking your “My Social Security Account” regularly to ensure you are receiving the right amounts.
- Report any changes in your income, work activity, or marital status to prevent overpayments and underpayments, too.
Conclusion
With the reinstatement of 100% withholding to recover overpayments, many Social Security beneficiaries, and more so the retirees, might find themselves in financial distress. If you receive an overpayment notice and you are unable to cope without your monthly benefits, act quickly by contacting the SSA and requesting a waiver or appealing their decision if you believe they are wrong.