The Social Security Administration (SSA) has reduced the withholding rate for overpayments from 100% to 50% for certain beneficiaries. This change affects those receiving Title II benefits, such as retirement, disability, or survivor payments. Overpayments occur when the SSA sends out more money than a person is owed.
This can happen due to agency errors or delays in processing information about changes to a beneficiary’s income, living situation, or marital status. When an overpayment is determined, the SSA sends a notice asking for full and immediate repayment. If the beneficiary doesn’t respond within about 90 days by requesting a waiver, reconsideration, or a lower repayment rate, the SSA begins automatically withholding funds.
The new policy sets a default withholding rate of 50% for all new overpayment notices beginning April 25. While this is a relief from the previous plan to withhold 100% of benefits, experts warn that it can still leave retirees and other beneficiaries in financial distress. If you’re relying on your benefits to pay your rent or mortgage and buy food, losing half of that income is going to be devastating and can still result in people becoming homeless,” said Kate Lang, director of federal income security at Justice in Aging.
Social Security reduces overpayment rate
Richard Fiesta, executive director of the Alliance for Retired Americans, noted that the change risks causing “immediate economic hardship,” particularly when the overpayment was not the beneficiary’s fault. Beneficiaries can request reconsideration, a waiver, or a lower withholding rate.
However, responses can vary depending on the SSA employee handling the case. Long wait times for SSA appointments can also make it harder for people to respond in time. If you receive an overpayment notice, experts recommend acting quickly.
You typically have about 90 days to challenge it before the SSA begins withholding up to 50% of your monthly benefit. Contact the SSA as soon as possible to explore your options. You may be able to reduce the withholding rate or avoid repayment altogether if you weren’t at fault for the overpayment.
While the SSA’s decision to cut the withholding rate from 100% to 50% may sound like good news, the fallout could still be serious for many retirees. Stay informed, respond quickly to any overpayment notice, and don’t hesitate to ask for help if you need it.
