As the second Wednesday of August approaches, a third of Social Security beneficiaries will likely be eagerly awaiting their monthly benefit check. For some of these beneficiaries, however, they may only see half of their benefit for this month since the Social Security Administration (SSA) has officially started withholding from beneficiaries who had been overpaid previously.
The withholding rate was announced at 50% during an emergency meeting at the agency in April and the clawbacks have officially gone into effect as of July 24th which means that the August benefit payments will likely be the first to be affected by the clawbacks. Here is what you need to know.
SSA recoups overpayments
Since the beginning of the year, the Social Security Administration (SSA) has both been undergoing and enacting various changes. The earliest and more notable of the changes has been the cutbacks at the agency conducted by the Department of Government Efficiency wherein around 7,000 employees were let go and another 1,000 were reassigned.
Recently, the agency has also announced that it will be implementing a multi-factor authentification system for users who wish to conduct routine tasks over the phone. The most notable change impacting beneficiaries is the increased withholding rate for beneficiaries who had been overpaid previously. Under the former Biden Administration, the withholding rate for beneficiaries who had been overpaid was capped at 10% of the benefit. This was said to have been done so as to prevent sending the vulnerable population into poverty.
A March announcement from the current Trump Administration, however, revealed that the withholding rate would be brought up to 100% of the benefit. This sparked immediate criticism and backlash from advocacy groups. Following the backlash, an emergency meeting was held at the SSA in April and the withholding rate was subsequently dropped to 50%.
According to the emergency message, “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.”
A beneficiary can be overpaid for a number of reasons, including a miscalculation from the SSA, or if the beneficiary fails to update any changes to income. According to a report from the Office of the Inspector General of the SSA, “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.”
Social Security benefits slashed in August
The first round of notices informing beneficiaries that they had been overpaid were sent out on April 25th. Following the reception of the overpayment notice, the recipient will have a period of 90 days during which they may take action against the notice. The recipient may submit a reconsideration if they believe that they had been paid the appropriate amount. Alternatively, the beneficiary could submit a waiver of repayment if losing half of their benefit would put them under severe financial hardship. Lastly, the recipient could also negotiate a lower rate of withholding.
The 90 day period from when the first round of notices were sent out came to a close on July 24th and as such, the August benefit payments will be the first round of payments to be subject to withholding.
August benefit payments will roll 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