SSA To Seek 100% Recovery On Social Security Overpayments - Here's What This Means For Your Benefits

The Social Security Administration will soon begin taking 100% of monthly benefit payments from recipients to recover overpayments. This is a significant change from the current 10% withholding rate, which has been in place since the Biden administration adjusted the policy to reduce financial strain on beneficiaries. 

The new policy is set to take effect on March 27—and it could have serious financial implications for some Social Security recipients.

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Why Is the SSA Changing Its Overpayment Policy?

The SSA announced on March 7 that it will increase the default overpayment withholding rate to 100% to improve the recovery of improperly distributed funds. According to the SSA's Office of the Chief Actuary, the change is expected to result in program savings of about $7 billion over the next decade.

Lee Dudek, the acting SSA commissioner, said that the agency has “a significant responsibility to be good stewards of the trust funds for the American people.” Dudek noted that the move is intended to return the overpayment recovery policy to the standard used during the Obama and early Trump administrations.

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How Common Are Overpayments?

Overpayments from Social Security are relatively rare but still represent billions of dollars each year. A 2024 report from the SSA's inspector general found that fewer than 1% of Social Security payments were improper, but over time, these small errors add up. From 2015 to 2022, the SSA paid out about $72 billion in improper payments, most of which were overpayments.

Overpayments can happen for a variety of reasons, including:

• Beneficiaries not updating the SSA with changes in their earnings, marital status, or living situation.
• SSA employees failing to update beneficiary records in a timely manner.
• Complex benefit calculations that lead to miscalculations.

According to Ed Weir, a former Social Security manager, some seniors intentionally accept overpayments by continuing to receive benefits while working, even if they expect to exceed the annual earnings limit. Under current rules, Social Security withholds $1 in benefits for every $2 earned above $23,400 annually.

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What Happens If Your Benefits Are Clawed Back?

Under the new policy, beneficiaries who are overpaid after March 27 will automatically face 100% withholding of their monthly Social Security payments until the debt is repaid. Those with overpayment cases established before March 27 will continue to have a 10% withholding rate. The 10% rate will also remain in place for overpayments related to Supplemental Security Income.

For many seniors, the shift to a full withholding rate could create financial strain. Nancy Altman, president of Social Security Works, told CBS News that overpayments are often unexpected. “People generally do not know they are overpaid,” Altman said. “People are really desperate when they get a letter from the government saying, ‘You owe $10,000’ that they don’t have.”

How Medicare Payments Could Be Affected

A key concern is how the clawback could affect Medicare coverage. Most seniors have their Medicare Part B premiums deducted from their Social Security checks. If the full check is withheld to cover an overpayment, it's unclear how Medicare payments will be handled.

“If you are on Medicare, it means you might not pay your Medicare possibly, so you might lose your Medicare,” Weir said in his webcast. The SSA has not yet clarified how Medicare deductions will be handled under the new policy.

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What To Do If You're Facing an Overpayment

If you receive an overpayment notice, you have several options:

• Request a waiver – If the overpayment wasn't your fault and you can't afford to repay it, you can file SSA Form 632 to request a waiver.
• Appeal the overpayment – If you believe the overpayment is incorrect, you can file SSA Form 561 to appeal the decision.
• Request a lower repayment rate – If the full withholding causes financial hardship, you can ask the SSA to adjust the repayment rate to a lower percentage.

Beneficiaries have 30 days from the date of the overpayment notice to respond before the SSA begins collection. During this period, the agency will not take action if you file an appeal or waiver request.

The new policy marks a significant shift in how the SSA handles overpayments — and could lead to financial difficulties for some beneficiaries. If you receive an overpayment notice, acting quickly and understanding your options can help protect your benefits.

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