The Social Security Administration (SSA) has published a significant policy revision in the recovery of overpayments to beneficiaries. Starting March 27, 2025, the SSA will return to its former practice of withholding 100% of a beneficiary’s monthly benefit to recover overpaid benefits, undoing last year’s reduction to a 10% withholding rate.
Background on overpayments
An overpayment takes place when the SSA disburses more money to a beneficiary than he or she is entitled to. These overbalances may happen for numerous factors, including neglecting to report or in timely manner processing the changes in income, living arrangement, or marriage. The SSA is mandated by law to collect these overpayments to maintain fiscal integrity in its programs.
Policy reversal: From 10% to 100% withholding
In March 2024, consistent with public opinion in response to the fiscal impact of full benefit withholdings, the SSA reduced the default overpayment recovery rate to 10% of an individual’s monthly benefit. This adjusted the direct fiscal impact upon beneficiaries while, at the same time, eliminating the issue of recovery of overpaid benefits.
The SSA has now decided to go back to the 100% withholding provision. That is, overpaid beneficiaries would see their full monthly benefit withheld until the total overpayment has been recovered. This is going to boost recoveries from overpayment by about $7 billion over a decade.
Implications for beneficiaries
Reimplementation of the 100% withholding policy has caused concern among advocacy groups and beneficiaries alike. These concerns are that the withholding of all benefits would lead to severe economic hardship, especially for individuals who survive on Social Security checks only. Shannon Benton, executive director of The Senior Citizens League, had this to say regarding the possible impact of this change in policy: “While the organization supports recovery of errors on overpayments, a sudden 100% reduction in benefits would be detrimental to older Americans.”
Options for beneficiaries
Beneficiaries who find themselves with overpayment notices have several options from which to choose:
- Request a waiver: In the event the overpayment was not the beneficiary’s error and payment back would cause financial hardship, they can request a waiver in order not to recover it. There is no time limit when filing for a waiver, and for overpayments of up to $2,000, the SSA accepts the request over the phone.
- Negotiate a payment plan: Beneficiaries can contact the SSA in an attempt to negotiate a payment plan on which a portion of their monthly benefit is withheld, which lessens the financial burden on their accounts. They can do this by submitting an application for “Request for Change in Overpayment Recovery Rate” (Form SSA-634) to their local SSA office.
- Appeal the overpayment decision: If a beneficiary disagrees with the overpayment decision, they may appeal. While an initial appeal or pending waiver is being processed, the SSA will not recover.
Reactions and concerns
The policy shift has met with a mixed reaction. Pressure groups are concerned that the stringent recovery measures will disproportionately target the beneficiaries, including those that are already financially disadvantaged. The groups state that most overpayments occur because of administrative mistakes and that it is inequitable to blame the beneficiaries for mistakes that they have no control over.
Conversely, proponents argue that the policy is needed to maintain the financial soundness of the program. They point out the SSA’s mandate to recover the surplus funds in a bid to guarantee the Social Security trust funds’ sustainability.
Preventive measures and recommendations
To minimize overpayment frequency, beneficiaries are requested to notify any change that could affect their benefit rate or eligibility as early as possible, such as a change in income, marital status, or living address. Effective and prompt communication with the SSA will lead to prevention of overpayment and the resulting cost of repayment.
Also, the recipients need to check their benefit statements periodically and watch out for discrepancies. Suspecting or finding an overpayment, calling the SSA early may rectify it and even avoid strict repayment conditions.
