The Social Security Administration is reinstating more stringent rules beginning on Thursday to recover overpayments to beneficiaries — setting a 100% withholding rate for benefits until the overpayments are returned to the government.
The strict order — part of Elon Musk’s Department of Government Efficiency’s efforts to curb the spiraling costs of federal entitlement programs — raises the withholding rate from the current 10%, a relaxed number that was introduced during the pandemic, in an aim to reclaim funds more quickly.
But critics say the move could have devastating effects for some retirees, sparking fiscal chaos if they aren’t able to pay or otherwise fail to do their paperwork.
The law requires the SSA to seek repayment when it has overpaid, which can stem from an individual’s failure to update his or her income or from the SSA incorrectly calculating benefits. In an August 2024 report, the SSA said it made “nearly $72 billion in improper payments, most of which were overpayments.”
Starting on March 27, the agency will begin mailing notices to individuals who received overpayments. The withholding rate will remain at 10% for beneficiaries who received overpayments before March 27.
In order to ensure one is not impacted by the 100% withholding rate, one should ensure his or her income is accurately updated and reflects their true SSA benefit needs.
Beneficiaries have the right to ask the SSA to waive the collection “if they believe it was not their fault and can’t afford to pay it back,” according to the SSA website.
“If someone cannot afford full recovery of their overpayment, they can contact Social Security at 1-800-772-1213 or their local office to request a lower rate of recovery.”
The SSA says it will wait at least 30 days from the date it sends its overpayment mail notice before it starts collecting the overpayment.
The rule reverses a temporary overpayment recovery program set in place during the COVID-19 pandemic, which withheld payments at a 10% rate. The SSA enforced the lower withholding rate to ensure “our overpayment policies are fair, equitable, and do not unduly harm anyone,” according to a March 2024 statement on the SSA website.
Martin O’Malley, Commissioner of Social Security, said in 2024 that “It’s unconscionable that someone would find themselves facing homelessness or unable to pay bills, because Social Security withheld their entire payment for recovery of an overpayment.”
This announcement comes amidst other widespread changes in the SSA. On March 18, the SSA announced a new in-person verification rule in efforts to protect against “fraudulent activity.” Those looking to change a direct deposit routing number or other bank information must visit a local office, prompting some concern for beneficiaries with disabilities that impact mobility.
The SSA office estimates $7 billion in program savings in the next decade from reinstating their 100% withholding system, according to The Office of the Chief Actuary’s statement on the SSA website.
