A policy regarding Social Security benefit overpayments that had been announced recently in March has been rolled back by the Social Security Administration. An overpayment of benefits can occur either as a result of a mistake from the agency or if a beneficiary had failed to comply with requirements, both intentionally or otherwise.
The Social Security Administration walks back major change
In recent years, the Social Security Administration has lost billions of dollars as a result of overpayments. According to Newsweek — who had contacted the SSA for comment via email — “from fiscal years 2015 through 2022, the SSA is estimated to have made nearly $72 billion in improper payments, the majority of which were overpayments. By the end of FY 2023, the SSA had an uncollected overpayment balance of $23 billion.”
The SSA announced on March 7 that the 100 percent withholding rate would be reinstated when incorrectly paid benefits were to be clawed back by the agency. This was slated to begin earlier this year, as of March 27. As a result of this 100 percent withholding rate, if a beneficiary had an overpayment balance, the agency would withhold the entire benefit amount to pay off the balance.
Now, however, the withholding rate has been dropped to 50 percent of the benefit amount. According to an “emergency message” made to SSA staff on April 25, “the SSA will default to withholding 50 percent of old-age, survivors, and disability insurance benefits.” This means that if a beneficiary is found to have an overpaid balance, half of their benefits will be withheld by the SSA to pay off the balance.
When the original announcement was made, acting SSA Commissioner Leland Dudek stated that the SSA has a “significant responsibility to be good stewards of the trust funds for the American people” and that it has a “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.”
A press release for the recent policy change has not yet been issued by the SSA.
Overpayments at the SSA
A Biden era policy became undone as a result of the March 7 announcement. During the Biden Administration, the then SSA Commissioner Martin O’Malley introduced a policy that decreased the default overpayment withholding rate to ten percent — or $10, whichever is greater — down from 100 percent. This policy had been in place for about a year, until March 7 of this year when acting commissioner Dudek changed it.
The change was made after a significant number of reports of overpayments came about from various news outlets. Newsweek had spoken with seniors and disabled Americans with overpayment balances. These seniors and disabled Americans had been asked to repay thousands of dollars back to the SSA with little notice.
One woman shared with Newsweek that she had been “hit with a $62,000 bill for overpayments relating to Social Security survivor payments she received after her father died while she was just a child.”
Additionally, a disabled veteran with bipolar disorder, also shared with Newsweek that he “had received a letter from the SSA requesting he pay back $67,000.”
On April 28, Martin O’Malley, the former Commissioner of the SSA under President Biden, said that, “I think that we had the policy right before. We looked at the various break points, and if you would depend entirely on your Social Security check, having half of it interrupted means what? That means you go without paying your heating bill for the month; that means you’d go without your medicine instead of buying medicine and food.”
The new policy with a withholding rate of 50 percent on overpayment balances has gone into full effect as of April 25.