Social Security makes another change to how overpayments are collected, how much will it cost you?

WASHINGTON — A month after making a drastic change to how overpayments on Social Security benefits are collected, the Social Security Administration has backtracked on the plan. In an “emergency message” sent to staff last week, the agency said it will no longer collect overpayments at a 100% rate, dropping the percentage down to 50% until full repayment is made.

“Effective April 25, 2025, overpayment notices will provide a default Title II overpayment benefit withholding rate of 50 percent of the monthly benefit,” reads a portion of the message.

That change comes less than a month after the SSA instituted a 100% recovery rate. Lee Dudek, the Acting Commissioner of Social Security, announced the increase to the default overpayment withholding rate on March 7, with the new rate going into effect on March 27.

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The increase marked a significant jump in the recovery rate, which was set at 10% during former President Joe Biden’s term.

The SSA is required by federal law to recover overpayments, but the rate at which the money is repaid is not set by law. When an overpayment is discovered, the beneficiary receives a letter informing them of the overpayment and that a portion of a future payment will be withheld.

Under the prior plan, a beneficiary’s entire check could be withheld if an overpayment needed to be settled. Subsequent checks were also at risk if the overpayment balance was larger than the monthly benefit payment.

With the 50% rate now in place, beneficiaries are still at risk of losing a large portion of their monthly payments over a mistake they didn’t make.

For instance, if your typical monthly benefit payment is for $1,000 and the SSA sends you a payment for $750, you will owe the agency the extra $750. You can either pay back the $750 immediately, or future benefit payments will be reduced. The first reduction would take $500 out of a monthly payment and the second reduction would capture the remaining $250 owed.

“We are glad to see the SSA taking a step in the right direction here,” says Bill Sweeney, senior vice president for government affairs for the AARP. “Oftentimes, these mistakes are actually Social Security’s fault — and slapping people with huge penalties for mistakes other people made just isn’t right.”

The policy change also does not apply to overpayments made to those who receive Supplemental Security Income (SSI). Overpayments made on SSI benefits will continue to be collected at a 10% rate.

Beneficiaries who have received an overpayment will be notified via letter once the SSA realizes its mistake. The SSA will then wait at least 30 days (plus 5 mail days) from the date of the overpayment notice, before the agency begins the collection process.

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The SSA says those who cannot afford to pay the full recovery rates can contact Social Security at 1-800-772-1213 or contact their local office to request a lower rate of recovery.

You can also appeal the overpayment decision or the amount and ask the SSA to waive the overpayment collection if the mistake was not your fault and can’t afford to pay it back. The SSA says the appeals can be made within 90 days of the notice being issued.

If you submit a request for waiver or reconsideration before 90 days has passed from receiving the notice, SSA says it will not begin collection of the overpayment until a decision is made.