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By Claire Dickey
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In a significant policy reversal, the Social Security Administration (SSA) has announced that starting March 27, it will begin withholding 100 percent of Social Security payments to recover overpayments.
This marks a return to the agency's previous approach, reinstating a practice that was significantly curtailed just a year earlier when the withholding rate was reduced to alleviate financial hardships for beneficiaries.
Why It Matters
SSA acting commissioner Lee Dudek said reinstating the 100 percent withholding rate is essential for safeguarding the trust funds that support the program, as highlighted in a press release sent to Newsweek by the SSA.
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The release states the change will generate a savings of roughly $7 billion over the next ten years. This comes after a 2022 report from the Office of the Inspector General, which found that the SSA made about $6 billion in improper overpayments in 2021.
However, the change is likely to reignite debates about the impact of such policies on vulnerable populations—particularly elderly and disabled beneficiaries who rely heavily on their monthly Social Security payments.
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What To Know
The SSA previously reduced the overpayment recovery rate to 10 percent in March 2024, a change that was initially celebrated as a major relief for Social Security beneficiaries.
"It's unconscionable that someone would find themselves facing homelessness or unable to pay bills, because Social Security withheld their entire payment for recovery of an overpayment," Martin O'Malley, former commissioner of Social Security, stated in a March 2024 press release.
However, citing the need to protect the program's financial health, the SSA has decided to revert to the full 100 percent withholding rate starting March 27.
What Is Social Security Overpayment?
Social Security overpayments occur when beneficiaries receive more funds than they are entitled to, often due to administrative errors or changes in the beneficiaries' circumstances that are not promptly reported. By law, the SSA is required to recover these overpayments, which can sometimes result in financial difficulties for those affected.
When Did Social Security Roll Back Their Policy on Overpayments?
The SAA announced on Friday, March 7 that it would be rolling back its reduced overpayment recovery policy starting March 27.
Beneficiaries currently repaying overpayments will not see a change in their withholding rate; the policy strictly applies to new overpayments identified after the effective date.
The recovery rate for Supplemental Security Income (SSI) overpayments will remain unaffected at 10 percent.
How Many People Could Be Impacted?
While specific numbers of affected beneficiaries under the new policy have not been released, it is clear that anyone who receives an overpayment after March 27 will be subject to the 100 percent recovery rate.
"We do not report on the number of debtors," SSA spokesperson Nicole Tiggemann told KFF Health News in 2023.
This could potentially impact thousands of beneficiaries annually, given that the SSA serves roughly 73 million Americans, according to monthly SSA data.
Per the press release, beneficiaries facing financial hardship due to overpayment recovery can request a reduced rate by contacting Social Security at 1-800-772-1213 or their local office. They also have the right to appeal the decision or request a waiver if the overpayment was not their fault and repayment is unaffordable.
The SSA also halts recovery actions during the appeal or waiver process.
Donald Trump and DOGE Government Cuts
This SSA policy change occurs amid broader federal spending cuts initiated by the Department of Government Efficiency (DOGE) under the Trump administration. These government efficiency measures reflect a wider context of fiscal tightening that affects various federal programs, including Social Security.
O'Malley highlighted the consequences of these cutbacks in a series of X (formerly Twitter) posts on Friday.
"Because of the mass firings and deep cuts to Social Security being made by the Musk/Trump co-presidency, the incidence of these sort of improper payments are now going up, again, instead of down," he wrote.
What People Are Saying
The Social Security Administration pointed Newsweek to a statement from Lee Dudek, acting commissioner of Social Security: "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."
Mary Johnson, an independent Social Security and Medicare policy analyst, told Newsweek: "By law there are earnings restriction[s] which limits the amount one can earn and receive benefits at the same time. When earnings records are sent in by employers, SSA then adjusts benefits — sometimes to zero under certain circumstances. That changed in March of 2024 due to damaging publicity about the practice. The idea is that it penalizes low income, disabled people who work.
But even the worst damaging publicity hasn't stopped Musk/Trump DOGE — at least not yet. Trump promised not to touch benefits[.] This would be one example of how benefits can be reduced, and penalizing people for working in the process."
Krisstin Petersmarck, National Social Security Advisor (NSSA®) and investment advisor representative at New Horizon Retirement Solutions, told Newsweek: "There will be individuals that are not impacted as hard as others, such as people who do not rely solely on Social Security for income. Those that do solely rely on Social Security will be much more impacted. If someone is faced with a severe financial challenge, there is a phone number listed on the Social Security Administration's website that they can and should call."
Chuck Czajka, certified Social Security claiming strategist (CSSCS) and founder of Macro Money Concepts, told Newsweek: "Even if you were overpaid, you can still ask Social Security to waive it so that you might not even have to pay it back. Or, you can ask for a payment arrangement to pay it back over time. If you spent the money, this could lead to a temporary glitch of your financial stability.
Remember that Social Security has the burden of proof if you were overpaid. This is a change because it used to be that the burden of proof was on you. In some cases, if you can prove it was a financial hardship, you might not have to pay it back at all."
Martin O'Malley, former commissioner of the Social Security Administration, wrote on X (formerly Twitter): "Musk and the DOGE team at Social Security announced (at 5pm on a Friday), a return to the cruel-hearted policy of intercepting and clawing back 100 percent of a senior citizen's monthly benefit check in the event of an accidental overpayment."
"So, the return to the 100 percent interruption and clawback of a beneficiaries monthly payments, will now inflict dire financial hardship on greater numbers of innocent seniors who depend entirely on their monthly Social Security benefit to survive."
President Donald Trump said during his joint address to Congress on Tuesday: "A lot of money is paid out to people because it just keeps getting paid and paid, and nobody does [anything]—and it really hurts Social Security. It hurts our country... We're going to find out where that money is going, and it's not going to be pretty."
What Happens Next
The SSA plans to begin mailing notices to inform beneficiaries of the new policy in the weeks leading up to its implementation on March 27.
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