With every new month comes new Social Security benefit payments, however, for many beneficiaries, only half of their regular benefit amount will reach their bank accounts for August. This is because the withholding of benefits for those who had been overpaid has officially been put into effect by the Social Security Administration (SSA) as of July 24th.
Earlier in the year, there had been some back and forth regarding what the rate of withholding will be as it was first announced to be 100% of the benefit. However, following major backlash, the withholding rate was subsequently dropped to 50% and notices informing beneficiaries of this were sent out on April 25th with clawbacks set to go into effect following a 90 day period from April 25th. Here is what you need to know.
50% withholding rate for overpaid Social Security benefits
Under the former Biden Administration, the withholding rate for overpaid benefits had been capped at 10% of the benefit amount as a means of “significantly reducing financial hardship on people with overpayments,” according to the agency at the time. In March of this year, however, the new Trump Administration announced that the 100% withholding rate would be reinstated. Going from a 10% rate to potentially losing your entirely benefit check was a steep jump and as a result, this announcement faced severe criticism from advocacy groups. Consequently, an emergency meeting was held at the SSA in April and it was then decided that the withholding rate would be capped at 50% of the benefit. Following this notices were sent out to the impacted beneficiaries on April 25th.
“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,” as per the SSA’s emergency message.
An overpayment of benefits can occur for a number of reasons, for instance, if a beneficiary does not update a change in income, or if the SSA makes a mistake when calculating benefit amounts. 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. 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.”
Clawbacks to go in effect from August
Following the April 25th notices, a beneficiary with an overpayment balance will have had a 90 day period wherein they would be able to take some sort of action so as to prevent losing half of their monthly benefit. If the recipient believed they had been paid the correct amount in the past, they could appeal the notice, however, they would also have to provide documentation proving this.
If repaying the debt will result in severe financial hardship for the recipient, they could also submit a waiver of repayment and if it is approved, their benefits will no longer be subject to the 50% withholding rate. Alternatively, the recipient could also negotiate a lower rate 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,” the agency outlined in its emergency message.
The 90 day period for action came to an end as of July 24th meaning that all benefits going forward from this date can be subject to the 50% withholding rate. As such, benefit payments for August will likely be the first to be impacted by the clawbacks. Benefit payments for August will go out on the following dates:
- Second Wednesday, August 13th – recipients with birth dates from the 1st of the month to the 10th
- Third Wednesday, August 20th – recipients with birth dates from the 11th of the month to the 20th
- Fourth Wednesday, August 27th – recipients with birth dates from the 21st of the month to the 31st