Earlier this year, the Trump Administration announced that the Social Security Administration (SSA) would be working towards settling all overpayment balances held by beneficiaries. The initial withholding rate was announced to be 100% of the monthly benefits, however, after facing severe backlash, the withholding rate was then dropped to 50% of the monthly benefit.
Beneficiaries with an overpayment balance would have received a notice regarding this in April, and it appears that the round of benefit checks that are due to go out in July will be subject to clawbacks.
Here is what you need to know, along with some other changes to take note of.
Social Security clawbacks to begin in July
In March, the withholding rate for beneficiaries found to have an overpayment balance was set at 100% of the benefit amount. This sparked major backlash, particularly because of how reliant many beneficiaries are on these monthly checks. Subsequently, an emergency meeting was held at the SSA a few weeks later in April and as a result, the withholding rate was revised to be capped at 50% of the benefit amount.
The overpayment of benefits can occur for an array of reasons. In some cases, the fault of the overpayment lies with the SSA themselves and had occurred as a result of a miscalculation. Alternately, the fault could also lie with the beneficiary. For instance, if any updates to income or life changes are not reported to the SSA, an overpayment could occur.
According to the revised terms of withholding, “If the individual does not request a lower rate of withholding, reconsideration, or waiver after the approximately 90-day period, we will recover the overpayment by withholding up to 50 percent of their Title II benefit payment (if there is no fraud or similar fault), until we fully recover the overpayment.”
Notices of overpayment were rolled out in April to those found to have been overpaid meaning that the 90 day window to request a waiver, reconsideration, or lower rate of withholding is about to expire and as such, the first bout of clawbacks will likely affect the benefits for July.
“The SSA tried to reclaim overpayments from about 2 million people in the fiscal year that ended September 2023,” as per KFF and Cox Media Group, who determine this using data acquired in a Freedom of Information Act request.
Other changes coming to the SSA
On a more positive note, the SSA will be rolling out digital Social Security Number Cards later this summer as a means of increasing efficiency, along with reducing the risk of losing your traditional paper card. The digital SSN card can be accessed via your my Social Security account and can be used to display your Social Security number when conducting financial transactions or submitting job applications. Additionally, it should also be noted that the introduction of a digital SSN card does mean that the traditional paper card will be phased out. This new feature is merely an additional means of accessing one’s SSN efficiently and safely.
Another big change to keep an eye out for in the coming months is the decision to discontinue to the use of paper based payments forms from the federal government. An executive order from President Trump in March titled “Modernizing Payments To and From America’s Bank Account” has confirmed that all federal payments and disbursements will be made using digital payment systems as of September 30, 2025.
The aim of this executive order is to “modernize how the government handles money, switching from old-fashioned paper-based payments to fast, secure electronic payments,” as per The White House. According to the executive order, the use of paper based payment methods such as mailed checks “imposes unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies.”