Millions upon millions of vulnerable Americans rely on their Social Security benefit checks every month to cover their living expenses, however, some of these vulnerable individuals could soon see their precious benefit checks slashed in half if they do not take action soon. This is due to the Social Security Administration (SSA)’s move to action to retrieve all overpaid benefits that had been sent out in the past.
The withholding rate for overpaid balances was announced to be 50% of the benefit in an emergency meeting held at the SSA in April. Under the previous Biden Administration, the withholding rate had been capped at 10% of the benefit amount, making the recently amended 50% withholding rate seem like a rather steep jump. Notices of overpayment were sent out to the impacted beneficiaries on April 25th and subsequently, benefit checks might be reduced by half for many starting in August. Here is what you need to know.
Overpayments at the Social Security Administration
Earlier this year in March, it was announced that the withholding rate of 100% of the benefit for those with overpayment balances would be reinstated, however, this announcement had not been received well, with many advocates claiming that this rate is too cruel. Subsequently, an emergency meeting was held in April at the SSA and the withholding rate was then dropped to 50% of the benefit for those with Title II benefits.
“Any new Title II overpayment determinations will have the 50 percent benefit withholding automatically applied for overpayment notices sent beginning April 25, 2025, which is the first day of COM 05. If an overpaid individual has a prior overpayment and incurs a new overpayment, all outstanding overpayments will default to 50 percent benefit withholding at the end of the approximately 90-day period if the individual does not request reconsideration, a waiver, or negotiate a lower repayment rate,” as per the SSA’s emergency message.
An overpayment of benefits can occur for a number of reasons and the fault of this issue can lie with either the beneficiary or the Social Security Administration themselves. “Benefits are overpaid when we can’t accurately calculate your benefit amount because our information is wrong or incomplete,” the official website of the SSA explains. “It can happen if you don’t share updates with us about what’s changed in your life, like your ability to work, living situation, marital status, or income.”
Clawbacks to go into effect in August
A report from the Office of the Inspector General of the SSA states that, “from FYs (fiscal years) 2015 through 2022, SSA estimates it made nearly $72 billion in improper payments, most of which were overpayments.” As such, the SSA will begin collections from those with overpayment balances starting in August.
On April 25, notices of overpayment were sent to the impacted beneficiaries. Following this, the recipient will have a 90 day window during which they may appeal the notice if they believe they have not been overpaid and that losing half of the benefit would place a significant financial burden on them. This can be done by submitting a waiver of repayment. Alternatively, the recipient could negotiate a lower rate of withholding. The 90 day window will close around July 24th and failure to take action during this period will result in losing 50% of your benefit starting in August up until the overpayment balance is cleared.
Impacted beneficiaries should take action soon if they have received a notice as July 24th is fast approaching. According to a study conducted by the Center on Budget and Policy Priorities (CBPP), “roughly half of Social Security recipients rely on their payments to stay above the poverty line.” Furthermore, the study also notes that “the program lifts more people above the poverty line than any other program in the country, and without it, 22 million more American adults and children would fall below the poverty line.”