Social Security Reinstates Full Overpayment Recovery, Raising Concerns for Beneficiaries
The Social Security Administration (SSA) is set to resume recouping 100% of overpayments made to beneficiaries, a move slated to begin on March 27th. This decision reverses a short-lived policy change implemented in March 2024, which limited withholding to 10% of a recipient’s benefits in cases of overpayment. The initial adjustment was intended to mitigate financial hardship faced by individuals burdened with overpayment debts.
The SSA’s prior approach to overpayment recovery faced considerable criticism in 2023, prompting scrutiny from media outlets like KFF Health News, Cox Media Group Television Stations, and CBS’s "60 Minutes." Reports highlighted instances where beneficiaries, some facing overpayments dating back over a decade, experienced severe consequences, including the loss of their homes due to benefit cuts aimed at recovering the funds.
Martin O’Malley, then-Social Security chief, acknowledged the potential for harm to innocent individuals, as reported by the Detroit Free Press, a part of the USA TODAY Network. The reinstatement of the full overpayment recovery strategy signifies a return to the agency’s previous practice. Starting March 27th, any newly discovered Social Security overpayments will trigger a 100% withholding of the recipient’s benefits until the overpayment is fully repaid.
However, the SSA has clarified that the withholding rate will remain unchanged for beneficiaries already in the process of reimbursing an overpayment. Additionally, the 10% withholding rate for overpayments of Supplemental Security Income (SSI) benefits will also stay in effect.
The change in policy coincides with efforts by President Donald Trump and the Department of Government Efficiency (DOGE), led by Elon Musk, to reduce federal spending. The SSA has also announced plans to reduce its workforce by over 12%, eliminating approximately 7,000 positions.
Despite these cost-cutting measures, Trump has publicly stated his commitment to preserving Social Security benefits. In an interview with Fox News’ Sean Hannity on February 18th, Trump asserted that "Social Security won’t be touched, other than if there’s fraud or something. It’s going to be strengthened. But it won’t be touched."
Trump and Musk have both alleged widespread fraud within the Social Security program. During his address to Congress on March 3rd, Trump alluded to "probable fraud," citing millions of benefit recipients over the age of 100 in the system. However, these claims have been disputed by a 2023 report from the nonpartisan inspector general for the Social Security Administration. The report identified approximately 18.9 million individuals aged 100 or older without death information in the agency’s records, but found no evidence that any of these individuals were currently receiving benefits.
A July 2024 report from Social Security’s inspector general revealed that less than 1% of payments are improper, with overpayments accounting for the majority of these errors. Lee Dudek, the acting commissioner of Social Security, emphasized the agency’s responsibility to recover overpayments in a notice posted on the agency’s website. He stated, "We have the significant responsibility to be good stewards of the trust funds for the American people. 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."
The SSA estimates that the policy change will result in overpayment recoveries of approximately $7 billion over the next decade, according to The Office of the Chief Actuary. Social Security distributes approximately $1.6 trillion in benefits annually to around 70 million people each month.
An overpayment occurs when a beneficiary receives more funds than they are entitled to. These errors can arise from various factors, such as a beneficiary’s failure to update their income, marital status, or work situation, or due to miscalculations by the SSA regarding the appropriate benefit amount, according to finance site NerdWallet. Regardless of the cause, beneficiaries who receive overpayments from the Social Security Administration are typically required to return the excess funds. Due to the taxpayer-funded nature of Social Security benefits, the SSA is legally obligated to recover overpayments.
During fiscal years 2015 to 2022, the agency disbursed nearly $8.6 trillion in benefits but identified $71.8 billion in improper payments, with overpayments constituting the majority. A 2022 report by the agency’s inspector general found that 73,000 overpayments were attributable to the SSA’s lack of "effective controls over benefit-computation accuracy."
When the SSA determines that a beneficiary has been overpaid, it will issue an overpayment notice. According to Friday’s announcement, any beneficiary found to have received an overpayment will "automatically be placed in full recovery at a rate of 100% of the Social Security payment." This means that benefits will be reduced until the overpayment is fully satisfied.
Individuals who cannot afford full recovery of their overpayment can contact Social Security at 1-800-772-1213 or visit their local office to request a lower rate of recovery, as stated in the agency’s notice. The SSA typically begins withholding benefits approximately 60 days after notifying beneficiaries of the overpayment.
Beneficiaries can repay the overpayment using various methods, including credit card, online bill pay, or check. Additional information regarding the repayment of overpaid benefits is available on the SSA website. The SSA also reserves the right to deduct funds from a beneficiary’s federal tax refund or garnish their wages if they have been overpaid and are no longer receiving benefits or have become delinquent in a repayment agreement. Delinquencies will be reported to credit bureaus.
Beneficiaries who receive an overpayment notice have the right to appeal the decision or the amount of the overpayment, the agency has stated. They can also request the SSA to waive collection of the overpayment if they believe it was not their fault and they cannot afford to repay it.
To minimize the risk of overpayments, NerdWallet suggests taking proactive steps such as promptly reporting any changes in income, marital status, or employment to the SSA. The reinstatement of full overpayment recovery underscores the importance of vigilance in managing Social Security benefits and promptly addressing any potential discrepancies.
Contributing reporters included Kinsey Crowley and Joey Harrison of USA TODAY, and Susan Tompor of the Detroit Free Press.
