Each month, around 72 million Americans stand recipient to benefit checks from the Social Security Administration (SSA). For a significant number of these beneficiaries, these monthly benefit checks are an integral source of income that aids them with covering their living expenses such as food or shelter. The amount each beneficiary is paid differs from person to person as various factors such as income and living situation have to be taken into account when calculating benefit amounts.
As such, miscalculations that lead to overpayments can sometimes occur. According to the Office of the Inspector General of the Social Security Administration (SSA), for a period of around 7 years starting in 2015, the SSA “estimates it made nearly $72 billion in improper payments.” Subsequently, in March, it had been announced that a 100% withholding rate will be put into effect for those with overpayment balances. The withholding rate was then dropped to a 50% maximum for those with Title II benefits a few weeks later following the major backlash sparked by the initial withholding rate.
A 90 day grace period to request a waiver or reconsideration was available to those who had received an overpayment notice in April, however, the 90 day period is reaching a close and as such, the benefit checks that will be sent out for July may be subject to the 50% withholding rate if no action was taken. Here is what you need to know.
Social Security overpayments
A report from the Office of the Inspector General of the SSA revealed that, “from Fiscal Years 2015 through 2022, SSA estimates it made nearly $72 billion in improper payments, most of which were overpayments. While this is less than 1 percent of the total benefits paid during that period, at the end of FY 2023, SSA had an uncollected overpayment balance of $23 billion.”
Under the previous administration, the withholding rate for overpayment balances had been capped at 10%. At the time, the agency explained that the 10% withholding rate was put in place as a means of “significantly reducing financial hardship on people with overpayments.” Social Security chief at the time Martin O’Malley said at the time that, “Innocent people can be badly hurt,” according to the Detroit Free Press.
In March this year, however, the withholding rate was brought back up to 100% of the benefit, and then subsequently dropped to 50% during an emergency meeting held at the SSA in April.
Notices of overpayment were sent out to impacted beneficiaries starting on April 25th. The affected beneficiaries would have then been notified that the withholding of their benefits would begin around July 24th. Losing half of your monthly benefit until your overpayment balance is cleared will likely place a significant amount of financial strain on the impacted households. The somewhat good news, however, is that there are some steps that can be taken to either reduce the withholding rate or waive the repayment.
Steps to take if you have received an overpayment notice
According to the Inspector General, “73,000 overpayments happened because of errors made by the SSA itself, not because the people receiving the benefits did anything wrong.” If you have received an overpayment notice and believe this to be incorrect, you can request to have the repayment waived. Additionally, if you believe that repaying the overpayment balance would cause major financial strain, you may also apply for the waiver. This can be done on the SSA website.
Another option to ease the repayment burden is to request a lower rate of withholding. It is, however, important to note that both the request for a lower rate of withholding, as well as the submission of a waiver of repayment have to submitted within 90 days of receiving the overpayment notice. If you do not submit the applicable forms within the 90 day window, you next benefit check may be subject to the full 50% withholding rate.