As of July 24th, the Social Security Administration (SSA) has officially begun enacting clawbacks on Social Security benefits in order to recoup all overpayments that were previously made in error. The withholding rate for those with overpayment balances is 50% of the benefit amount and notices informing beneficiaries that they had been overpaid in the past were sent out on April 25th.
Currently, Social Security benefits are collected by approximately 72 million vulnerable Americans each month, and for many of these individuals, their primary source of income is their monthly benefit check. As such, having your monthly income halved this way could increase the potential for financial hardship in these households. If a beneficiary did receive a notice of overpayment, however, there are some options available that could prevent them from losing a full 50% of their monthly check. Here is a breakdown of the issue of clawbacks, as well as the options available to beneficiaries in this regard.
Overpayments at the Social Security Adminsitration
Pew Research has determined that “in 2022, Social Security made up at least half of total personal income for 38.3 million people, or 63.2% of adult recipients, according to the SIPP data. For 26.5 million people (43.6% of recipients), it accounted for three-quarters of their income.” The report further noted that “for 16.4 million (27%), it was their only source of income,” and when considering this fact in the context of the clawbacks that have just begun, the importance, or rather the necessity of the monthly benefit check with its full amount is highlighted even further.
An overpayment of benefits can occur for various reasons with the blame lying with either parties. For instance, the benefit amount could have been miscalculated by the SSA themselves, or the beneficiary could have failed to report an income change or update any other required information. According to a report from the SSA’s Office of the Inspector General, “from FYs 2015 through 2022, SSA estimates it made nearly $72 billion in improper payments, most of which were overpayments.”
Subsequently, following an emergency meeting held at the SSA in April, it was announced that the withholding rate for overpaid benefits will be brought down to 50%. Prior to this meeting, the withholding rate was announced to be 100% of the benefit meaning that beneficiaries would lose their entire check for the month if they had been overpaid in the past. This naturally sparked much backlash and criticism from advocates and beneficiaries and as a result, the rate was lowered.
Under the former Biden Administration, the withholding rate had been capped at 10% of the benefit so as to reduce the risk of financial hardship for these individuals, however, the Trump Administration announced in March that it would be bringing the withholding rate up to 100% but ultimately dropped it to 50%.
“We are changing our policy for the default 10 percent benefit withholding to recover a Title II overpayment. Effective April 25, 2025, overpayment notices will provide a default Title II overpayment benefit withholding rate of 50 percent of the monthly benefit,” the SSA announced.
What to do if you have received an overpayment notice
Overpayment notices were sent out to the impacted beneficiaries on April 25th. Upon receiving the notice, the recipient would have then had a 90 day period during which they could take the following actions to prevent losing half of their monthly benefit:
- Request a reconsideration if you believe you have been paid the appropriate amount in the past
- Submit a request for a waiver of repayment if losing 50% of your monthly benefit will lead to financial hardship
- Request or negotiate a lower rate of withholding
The 90 day period came to an end on July 24th and as a result, all benefit payments going forward from this date will likely be subject to the 50% garnishment — particularly for those who had not filed a waiver or negotiated a lower rate of withholding. The final benefit payment for July was made on the 23rd and as such, all benefit payments starting in August will likely be withheld.