Late Friday, the Social Security Administration said that it would raise the amount it would recoup from beneficiaries who were overpaid, increasing the withholding from 10% to 100%.
New overpayments would be subject to the modification.
The Social Security Administration anticipates that this adjustment will result in overpayment recoveries, or program savings, of about $7 billion over the next ten years, according to the Office of the Chief Actuary.
In 2025, Social Security is expected to disburse $1.6 trillion in benefits.
“We have the significant responsibility to be good stewards of the trust funds for the American people,” said Social Security acting commissioner Lee Dudek in a statement announcing the adjustment. “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.”
Some recipients have been overpaid by the Social Security Administration (SSA) for years. Once found, the SSA would deduct funds—up to 100% of the benefit—from the beneficiary’s check until the debt was paid back. Many of those impacted were low-income, elderly, and disabled individuals who were unaware that they were receiving excessive compensation and found it difficult to stop receiving their entire benefit. Early in 2024, under former Social Security Commissioner Martin O’Malley, the withholding was lowered from 100% to 10% and the payback criteria were modified. In the majority of cases, it will now return to 100%.
“Benefits who receive overpayment notices—typically for no fault of their own—are unduly punished by this measure, which was purportedly designed to reduce SSA’s expenses. The National Committee to Preserve Social Security and Medicare told MarketWatch that SSA’s mistakes are the cause of many overpayments.
Social Security, which provides monthly benefits to around 69 million Americans, is now experiencing an insolvency issue at the time of the announcement. Benefits for present and future recipients would be reduced if the Social Security trust fund becomes insolvent by 2035. For the majority of those over 65, Social Security provides a significant source of income.
Elon Musk, the chairman of the so-called Department of Government Efficiency, and President Trump have also been examining Social Security. Both men have repeatedly refuted allegations that claimants are receiving Social Security benefits on accounts associated with individuals who are 150, 200, or even 300 years old, and they have stated that there is fraud within the SSA.
Approximately $71.8 billion (less than 1 percent) of the $8.6 trillion in benefits paid between fiscal 2015 and fiscal 2022 were illegal payments, according to the Social Security Administration’s inspector general. The majority of those, according to the agency, were overpayments.
Significant job losses were part of the agency’s big restructure, which was revealed last week.
Richard Fiesta, executive director of the Alliance for Retired Americans, stated, “People should receive the correct benefits they earned and if there is an overpayment it should be recovered by the Social Security Administration.” But it’s harsh to return to a 100% payback rate. Some of the most vulnerable Americans may see their monthly benefit cut to zero until the payback is made, causing needless hardship.
Notices that the withholding rate would increase from 10% to 100% will be mailed by the agency on March 27. According to the administration, the withholding-rate adjustment only applies to recent overpayments associated with Social Security benefits.
“The withholding rate for current beneficiaries with an overpayment before March 27 will not change and no action is required,” said the Social Security Administration. Overpayments of Supplemental Security Income will continue to be subject to a 10% withholding rate.
The judgment or amount of the overpayment may be appealed by the beneficiaries. They can request a waiver from the SSA if they don’t think they are at fault for the overpayment or if they can’t repay it. According to the government, recovery are not pursued while an initial appeal or waiver is pending. According to the agency, a recipient who is unable to pay the “full recovery of their overpayment” should contact their local Social Security office or call 1-800-772-1213 to request a reduced rate of recovery.
Alessandra Malito provided more reporting.
Learn more about Social Security here:
Martin O’Malley, the nominee for commissioner, claims that Social Security is experiencing a “customer-service crisis.”
The guy who restored Social Security when it collapsed in the 1980s has some words of wisdom for lawmakers today.
Concerned about cuts to Social Security staff? The previous director of the agency advises setting aside funds right away.
