The SSA said its chief actuary estimates the change will save about $7 billion over the next decade.
The Social Security Administration (SSA), as of March 27, will again start holding back 100 percent of a beneficiary’s monthly benefits to recover overpayments.
Prior to March last year, when the SSA overpaid a beneficiary, the department withheld 100 percent of the recipient’s monthly benefits until the overpaid amount was recouped. On March 29, 2024, the Social Security Administration said it was changing the withholding rate, with the agency only collecting 10 percent of monthly benefits or $10, whichever is greater, for recovering overpayments.
On March 7, SSA announced it is ending this policy and reverting back to the original policy.
The agency said it “will increase the default overpayment withholding rate for Social Security beneficiaries to 100 percent of a person’s monthly benefit.”
The SSA said its chief actuary estimates the change will save about $7 billion over the next decade.
The updated withholding rate only applies to new overpayments. The withholding rate for overpayments made before March 27 will not be affected and will continue with the 10 percent or $10 policy.
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Rep. John B. Larson (D-Conn.) criticized the SSA move, highlighting that overpayments are typically not the fault of beneficiaries. The new policy would result in many overpaid recipients losing their entire monthly benefits, he said.
“Many Social Security beneficiaries already struggle to make ends meet. Their benefits are what allows them to put food on the table, keep a roof over their heads, and put gas in their cars.”
Lee Dudek, acting commissioner of Social Security, justified the policy reversal, saying the agency has a “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.”
Beneficiaries Pressured
SSA said it mostly disburses the correct amount, but when overpayments are made, the agency is legally obliged to claw it back.
Those who cannot afford the 100 percent rate of recovery for overpayments can contact the department to request a lower recovery rate.
Beneficiaries are allowed to appeal overpayment decisions made by the SSA, including requesting a waiver if they are incapable of paying back and believe the overpayment was not their fault.
“The agency does not pursue recoveries while an initial appeal or waiver is pending.”
According to a 2023 financial report issued by the agency, the SSA had paid roughly $1.26 trillion in social security benefits during the 2022 fiscal year, out of which $6.5 billion were overpayments.
Last year, Sen. Maggie Hassan (D-N.H.) said she heard from her constituents that the recovery of overpayments by social security “was causing extreme financial stress.”
In December 2024, multiple lawmakers sent a letter to the Government Accountability Office, asking for a review of the Social Security Administration’s efforts to improve customer service dealing with overpayments.
“It is impossible to overstate the importance of SSA benefits to the American people—or the potentially dire consequences if a beneficiary’s monthly payments are put at risk due to the need to recoup an overpayment,” the lawmakers wrote.
“While in the vast majority of cases, SSA pays the correct amount, recent media reports have highlighted the plight of beneficiaries who unknowingly received overpayments for months or even years, in some cases adding up to tens of thousands of dollars or more.”
The overpayment policy change at the agency comes as it has initiated new measures under the Trump administration to boost its efficiency.
This month, the Social Security Administration said it had identified more than $800 million in cost savings for fiscal year 2025 in several areas, including payroll, space savings, and contracts.
Last month, SSA dissolved the Office of Civil Rights and Equal Opportunity to enhance operations. It also eliminated the Office of Transformation, calling it a “wasteful department.”
