Social Security resumes full overpayment recoveries

The Social Security Administration (SSA) announced on Friday that it will start recovering all overpayments made to beneficiaries, reversing a 2024 policy that allowed recipients to keep more of their benefits. Starting March 27, the agency will increase the default overpayment withholding rate to 100% of a person’s monthly benefit, aiming to recover about $7 billion over the next ten years. Last year, the SSA faced criticism when Americans receiving Social Security benefits were hit with significant bills as part of the federal government’s repayment policy. The agency is legally required to recover any overpaid money, but due to the backlash, the Biden administration reduced the amount being reclaimed to 10% of the person’s monthly benefit. Acting Commissioner of Social Security, Lee Dudek, stated, “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 the first Trump administration, to properly safeguard taxpayer funds. The policy first gained public attention after several high-profile cases where beneficiaries received bills for thousands of dollars that had to be repaid within 30 days. Those unable to pay on time could have their entire Social Security payment withheld until the debt was settled, leaving them in financial hardship. Individuals affected by the new policy can call the SSA at 1-800-772-1213 to request a lower rate of recovery or to appeal the repayment. The new measures are expected to save approximately $7 billion over the next decade.

Social Security’s overpayment recovery changes

If an individual received an overpayment of $100, that amount would be deducted from their next check. In cases of larger overpayments, such as $10,000, future checks could be withheld entirely until the debt is repaid. The 10% withholding rate will still apply for Supplemental Security Income benefits. Beneficiaries who cannot afford the loss in benefits are encouraged to contact Social Security or visit their local office to request a lower repayment rate. They also have the option to appeal the determination of overpayment, which will delay any deductions while the matter is in dispute. Senator Mark Kelly, D-Ariz., expressed concerns about the focus on overpayment recovery, emphasizing that while fraud should be pursued, his office had not been informed of widespread overpayments leading to new debt recovery efforts. Overpayments are not exceedingly common, but they do occur. In 2022, the SSA’s inspector general estimated that without significant changes, the agency would have over 203,000 beneficiaries with nearly $2.5 billion in untracked overpayments. In 2021, the SSA recovered $4.7 billion, leaving $21.6 billion unrecovered. The SSA’s stepped-up efforts to recoup overpayments underscore the agency’s commitment to accurate benefit distribution, even amidst broader governmental budgetary pressures. Image Credits: Photo by Aidan Bartos on Unsplash