The Social Security program has undergone several major changes during the first half of this year, such as the appointment of Frank Bisignano as the new Social Security Administration (SSA) Commissioner, or the repealing of the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). Beneficiaries also began the year with a 2.5% bump to their benefit amounts due to the Cost of Living Adjustment, or COLA, and the Full Retirement Age for 2025 increased to 66 years and ten month for persons born in 1959.
The most impactful changes faced by the program so far for this year are the Social Security Fairness Act and the withholding rate for overpaid benefits. Here is what you need to know.
The Social Security Fairness Act
In January, the Social Security Fairness Act had officially been signed into law and as a result, both the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) were repealed. This meant that a cohort of around 3.1 million public sector workers would now have their full benefits restored to them after previously having them reduced under the provisions of the WEP and the GPO. The WEP and the GPO caused public sector employees such as teachers, firefighters, police officers, and certain federal employees and their spouses to have their benefits reduced due to their employers providing them with a pension.
Subsequently, with the WEP and the GPO now repealed under the Social Security Fairness Act, the over 3 million impacted individuals will now have their full benefits restored to them. In addition to a bump in their benefit amounts, this group will also qualify for a once off retroactive payment dating back to January 2024. According to a July 7th press release from the SSA, all Social Security Fairness Act cases have successfully been processed five months ahead of schedule.
“My top priority is to transform SSA into a model of excellence—an organization that operates at peak efficiency and delivers outstanding service to every American,” Commissioner Bisignano said in the July 7th press release. “The American people have waited long enough for better service, and they deserve the absolute best from their government. I am deeply grateful to our dedicated employees who are already making this turnaround a reality.”
Whilst the Social Security Fairness Act greatly benefits the beneficiaries who previously had their benefits reduced, the substantial increase in payments that are being made, along with the retroactive payments, are adding to the financial strain faced by the program at large. According to the latest annual report from the Social Security Board of Trustees, the program’s projected shortfall has been moved up a year to 2034 and the impact of the Social Security Fairness Act has been cited as one of three driving forces behind this issue.
According to the report, “the repeal of these provisions increased projected Social Security benefit levels for some workers, relative to projected benefit levels in last year’s report. The impact of this legislation on the OASI Trust Fund was the primary contributor to the change in the combined OASDI fund depletion date this year.”
SSA begins clawbacks on overpayments
Under the previous administration, the withholding rate for overpaid benefits had been capped at 10%, however, in March the Trump Administration announced that the 100% withholding rate would be reinstated. Following severe criticism, an emergency meeting was then held at the SSA in April where it was decided that the withholding rate would be capped at 50% for those with Title II benefits.
Notices informing beneficiaries of overpayment balances were sent out on April 25th. Following this, the recipient will have a 90 day window during which they may appeal the notice if they believe it to be incorrect or if losing half of their benefit would cause significant financial strain. Alternatively, the recipient could negotiate a lower rate of withholding.
The 90 window will come to a close around July 24th since the notices were sent out on April 25th. As such, if the recipient had failed to take action during this period, 50% of their benefit will be withheld going forward from July 24th up until their overpayment balance is cleared.