The Social Security Administration (SSA) announced on Friday that it will increase the amount it withholds from Social Security recipients who were overpaid, raising the withholding rate back to 100% from the current 10%.
This change will apply to new overpayments.
According to the Office of the Chief Actuary, the SSA expects this adjustment to lead to about $7 billion in recovered overpayments over the next 10 years. Social Security is set to pay out $1.6 trillion in benefits in 2025.
Lee Dudek, the acting commissioner of Social Security, stated that the change is necessary to properly manage taxpayer funds.
“We have the significant responsibility to be good stewards of the trust funds for the American people,” Dudek said.
He explained that the repayment policy is being revised to match the full withholding rate used during the Obama and early Trump administrations.
The SSA has a history of mistakenly overpaying some beneficiaries, many of whom are elderly, disabled, or low-income individuals.
Previously, the agency would withhold up to 100% of a person’s benefits to recover the overpayment, which often caused financial hardship.
In early 2024, under former commissioner Martin O’Malley, the repayment rate was lowered to 10%. Now, it will return to 100% in most cases.
Critics argue that the decision unfairly penalizes beneficiaries for mistakes made by the SSA.
“This action, ostensibly taken to cut costs at SSA, needlessly punishes beneficiaries who receive overpayment notices — usually through no fault of their own,” said the National Committee to Preserve Social Security and Medicare.
The announcement comes as Social Security faces a financial crisis. The Social Security trust fund is projected to run out of money by 2035, which would result in reduced benefits for current and future recipients.
Around 69 million Americans receive Social Security benefits each month, and it remains a key source of income for most people over 65.
Social Security has also been under scrutiny from President Trump and Elon Musk, who heads the Department of Government Efficiency.
Both have claimed there is fraud within the SSA, including allegations that some beneficiaries are receiving payments linked to individuals aged 150 to 300 years — claims that have been debunked.
Between fiscal 2015 and fiscal 2022, the SSA paid out $8.6 trillion in benefits, with about $71.8 billion (less than 1%) classified as improper payments, most of which were overpayments, according to the agency’s inspector general.
The SSA recently announced a major reorganization, including job cuts. Richard Fiesta, executive director of the Alliance for Retired Americans, criticized the policy change. “Going back to a 100% repayment rate is cruel,” he said.
“This will cause unnecessary harm and some of the most vulnerable Americans may see their monthly benefit reduced to zero until the repayment is satisfied.”
Starting March 27, the SSA will notify affected beneficiaries about the withholding rate increase.
The new policy applies only to overpayments identified after March 27. Overpayments discovered before that date will remain at the 10% withholding rate. Supplemental Security Income overpayments will continue to have a 10% withholding rate.
Beneficiaries can appeal the overpayment decision or the repayment amount. If they believe the overpayment wasn’t their fault or they can’t afford to repay it, they can request a waiver.
The SSA won’t seek repayment while an appeal or waiver is under review. Those unable to afford full repayment can contact the SSA at 1-800-772-1213 or visit their local office to request a lower repayment rate.
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