Social Security overpayment: What to know about latest changes

The Social Security Administration is making it easier for seniors and others to repay benefits that they received but weren’t entitled to.

Beneficiaries who were mistakenly overpaid by the SSA will now have 50% of their monthly check withheld until all the money has been repaid, reversing a March policy that called for withholding 100% of each check.

The 100% rule reversed a change enacted one year ago under President Joe Biden that called for withholding a maximum of 10% per check. The 100% rule dates to President Barack Obama and the first administration of President Donald Trump.

Biden lowered the withholding to 10% in response to media reports and congressional criticism about Social Security beneficiaries having to repay tens of thousands of dollars in overpayments from years ago. Some said they were having trouble paying other bills for rent and food. 

The latest change wasn’t announced in a news release but was outlined in an “emergency message” to SSA employees that was posted on the agency's website.

An SSA spokesperson didn’t respond to a request for comment. 

The 50% rule became effective on April 25, according to the memo from the agency's Office of Legal Policy and Office of Income Security Programs.

The decision comes after AARP, the National Committee to Preserve Social Security and Medicare and other advocates for seniors denounced the 100% rule, saying it would result in beneficiaries receiving little or no money for months until their overpayment was settled.

Martha Shedden, president and co-founder of the National Association of Registered Social Security Analysts in Melville, said, “50% is better than 100%, but 10% is even better.”

Shedden, whose company trains people who advise seniors on financial matters, said Social Security checks represent the majority of many people’s retirement income. “To take a substantial portion of that away each month because of an overpayment that’s not [the beneficiary’s] fault is a hardship,” she said. 

Here are some answers to questions about Social Security overpayments.

How serious is the overpayment issue?

In the 2022 federal fiscal year, overpayments totaled about $6.5 billion, or 0.5% of all the benefits paid that year, according to the Congressional Research Service.

The SSA had hoped to recover about $7 billion in overpayments over the next 10 years, or less than 1% of total annual benefits, by reinstating the 100% rule, said Lee Dudek, who served as acting Social Security commissioner between February and earlier this month.

“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," he said on March 7 about the 100% rule.

What causes overpayments?

Mistakes in the SSA’s database occur for many reasons, including faulty processing by SSA employees, incorrect interpretations of regulations, and beneficiaries failing to report a change in their circumstances, such as the death of a spouse, according to a report from the agency’s independent inspector general.

The SSA "did not provide employees with a comprehensive tool to use when they had to manually calculate" benefit payments, the report states. "Without adequate automation tools, employees can make errors."

Bill Sweeney, senior vice president of government affairs at AARP’s Washington office, said the agency lacks sufficient resources, including employee time, to maintain the database.

"Oftentimes, these mistakes are actually [the SSA’s] fault — and slapping people with huge penalties for mistakes other people made just isn't right,” he said. 

Who is affected by the 50% rule?

The policy change only affects Social Security overpayments after April 25, including retirement benefits, survivor benefits, family benefits and disability insurance. Previous Social Security overpayments and Supplemental Security Income overpayments are still subject to the 10% rule, according to the SSA memo.

Overpayments predominantly occur with people receiving disability insurance and Supplementary Security Income, the inspector general's report states. 

What should beneficiaries do when they receive an overpayment notice?

Beneficiaries have 90 days to seek a reprieve from the SSA but they should act right away. 

“As soon as an individual receives an overpayment notice [from the SSA], they should respond immediately whether they want to appeal, ask for a reduction or ask for a hearing,” said Shedden, of the Social Security analysts’ association. “Do not ignore the overpayment notice.”

Call 1-800-772-1213 or visit the local SSA office.

Shedden also said beneficiaries can request that the agency waive collection of the overpayment if they believe it was not their fault, or they cannot afford to pay it back. The SSA does not pursue recoveries while an initial appeal or waiver is pending.

More information is available at ssa.gov/manage-benefits/repay-overpaid-benefits.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.