For the past year, Social Security beneficiaries have gotten a break from the sometimes-devastating policy of withholding 100 percent of benefits if the beneficiary was overpaid. Effective March 27, 2025, the Social Security Administration (SSA) will reinstate the 100 percent policy to recover overpayments, reverting from the previous 10 percent withholding rate established in early 2024. This change is anticipated to recoup approximately $7 billion over the next decade.
Reasons for the Policy Reversal
The SSA says its decision to revert to full withholding stems from a commitment to safeguard taxpayer dollars and ensure the integrity of the Social Security trust funds. Acting Commissioner Leland Dudek emphasized the agency’s responsibility to be diligent stewards of public resources, noting that returning to full withholding aligns with practices from the Obama administration and first Trump administration.
Overpayments can occur due to various factors, including changes in a beneficiary’s income, marital status, or living arrangements that are not promptly reported or processed. By reinstating the 100 percent withholding rate, the SSA aims to expedite the recovery of these funds, thereby maintaining the program’s financial health.
Effects on Social Security Benefits Recipients
Under the new policy, individuals who receive overpayments after March 27, 2025, will have their entire monthly benefit withheld until the overpaid amount is fully recovered. This measure does not affect those already repaying overpayments under the previous terms; their repayment arrangements will remain unchanged. Note that the withholding rate for Supplemental Security Income (SSI) overpayments will remain 10 percent.
Beneficiaries facing financial hardship due to full withholding can request a reduced recovery rate by contacting the SSA. They also retain the right to appeal the overpayment decision or seek a waiver if the overpayment was not their fault and repayment would cause financial distress. The SSA will pause recovery efforts while an appeal or waiver is under review.
Introduction of the Social Security Overpayment Relief Act
In response to concerns about the SSA’s overpayment recovery practices, U.S. Representatives Kristen McDonald Rivet (R-Mich.) and Zach Nunn (R-Iowa) recently introduced the Social Security Overpayment Relief Act to limit the SSA’s overpayment lookback period to 10 years. Senators Ruben Gallego (D-Ariz.) and Bill Cassidy (R-La.) introduced a companion bill in the Senate. This proposed legislation aims to limit the SSA’s overpayment lookback period to 10 years, thereby capping the timeframe during which the agency can reclaim funds from beneficiaries.
Currently, the SSA can seek repayment for overpayments indefinitely, potentially burdening beneficiaries with debts stemming from errors made decades earlier. The indefinite lookback period has led to collection notices totaling tens or even hundreds of thousands of dollars, causing significant financial strain for affected individuals.
The proposed 10-year limitation would apply to recipients of Social Security retirement benefits, Social Security Disability Insurance (SSDI), and SSI. However, this limitation would not extend to cases involving fraud or criminal activity.
Sen. Gallego emphasized that seniors should not be held accountable for the government’s long-standing errors, advocating for a fairer approach to overpayment recovery.
