Millions of Social Security beneficiaries could soon see their monthly checks withheld entirely if they have been overpaid. The Social Security Administration (SSA) has announced a major policy shift, increasing the default overpayment withholding rate from 10% to 100%, starting March 27, 2025.
This means that individuals newly identified as having been overpaid will have their entire Social Security benefit withheld until the overpaid amount is fully recovered. The SSA says this change is necessary to protect the Social Security trust funds and recover an estimated $7 billion over the next decade.
According to Acting Commissioner Lee Dudek, “We have the significant responsibility to be good stewards of the trust funds for the American people. It is our duty to revise the overpayment repayment policy back to full withholding, as it was during the Obama administration and first Trump administration, to properly safeguard taxpayer funds.”
While the SSA aims for accuracy in payments, errors do happen. When they do, the law requires the agency to recover the overpaid amounts. However, many critics argue that withholding 100% of benefits could severely impact seniors who rely on Social Security to survive.
Overpayments
The new 100% withholding policy applies only to overpayments observed after March 27, 2025.
However, beneficiaries whose overpayments were identified before this date will continue under the current 10% repayment rate. Additionally, Supplemental Security Income (SSI) recipients will not be affected by the change and will also remain at a 10% withholding rate.
While overpayments account for less than 1% of all Social Security payments, the total amount is staggering. Between 2015 and 2022, the SSA issued $72 billion in improper payments, most of which were overpayments. This represents 0.84% of all Social Security payments during that period.
How Do Overpayments Happen?
Overpayments occur for several reasons, including:
- Failure to report changes in income or life circumstances that affect benefit eligibility.
- SSA employee errors, including delays in updating records due to complex systems and manual processes.
- “Strategic overpayment” by beneficiaries, where some individuals take the risk of exceeding income limits, knowing they may have to repay benefits later.
Ed Weir, a former SSA manager, explained that some working seniors who are unsure whether they will exceed the $23,400 annual earnings limit take the risk of receiving benefits, only to face harsh penalties if they exceed the threshold.
Beneficiaries
One of the biggest concerns about this policy change is its impact on Medicare premiums. Since Medicare costs are usually deducted from Social Security checks, withholding 100% of a beneficiary’s payment could mean they are unable to pay their premiums. This raises fears that seniors could lose their Medicare coverage.
“If you are on Medicare, it means you might not pay your Medicare, so you might lose your Medicare,” warned Weir. “It’s a trickle-down effect.”
For those facing financial hardship due to overpayment claims, there are options:
- Appeal the overpayment using SSA Form 561 if you believe you were not overpaid or dispute the amount.
- Request a waiver using SSA Form 632 if the overpayment was not your fault and repaying it would cause financial distress.
- Negotiate a lower repayment rate instead of full withholding if paying back the full amount would leave you unable to meet basic living expenses.
“Two things have to be met for the payment to be waived: No. 1, it’s not your fault, and No. 2, you don’t have the ability to pay,” explained Weir.
What Should You Do?
Since SSA has not provided full details on how Medicare and other deductions will be handled under this policy, seniors are urged to take action before the change takes effect:
- Check your payment history for possible overpayments by logging into your My Social Security account online.
- Contact the SSA at 1-800-772-1213 or visit a local office if you receive an overpayment notice.
- Consider appealing or requesting a waiver if you believe the overpayment was not your fault.
As this policy goes into effect, advocacy groups and experts are warning that some of the most vulnerable seniors could face devastating financial consequences. While the SSA argues that protecting the trust funds is necessary, many believe that the human cost of this aggressive recovery effort is too high, especially when overpayments often result from SSA administrative errors rather than fraud.
FAQs
When does the new Social Security overpayment policy start?
The 100% withholding rate begins on March 27, 2025.
Who will be affected by the new policy?
Beneficiaries with overpayments identified after March 27, 2025, will have their entire check withheld.
Will SSI recipients be affected?
No, SSI recipients will continue under the 10% withholding rate.
Can I appeal an overpayment claim?
Yes, you can appeal using SSA Form 561 if you believe the overpayment is incorrect.
What should I do if I can’t afford to repay the overpayment?
You can request a waiver using SSA Form 632 or negotiate a lower withholding rate.
