New Social Security policy could deeply impact your future benefit payments

WASHINGTON — A policy change at the Social Security Administration goes into effect today and it could impact your future benefit payments. Starting on March 27, the SSA is increasing the rate at which overpayments are collected.

Known as the “default overpayment withholding rate,” the policy allows for the agency to withhold 100% of the value of an overpayment from a future benefit payment. Last year, the policy was scaled back and called for 10% to be repaid monthly until the balance was paid off.

“We have the significant responsibility to be good stewards of the trust funds for the American people,” said Lee Dudek, Acting Commissioner of Social Security earlier this month. “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.”

Federal law requires the SSA to recover overpayments made by the agency. The Office of the Chief Actuary estimates the change in policy will result in about $7 billion in savings for the agency over the next decade.

Under the new policy, overpayments must be repaid in full through withholdings from future payments.

For instance, if you typically receive a monthly payment of $1,000, but in June, the SSA sends you a payment for $1,800, you are responsible for paying back the extra $800. Once the SSA realizes an overpayment is made, you will receive a letter informing you of the overpayment and that a portion of a future payment will be withheld.

So, if you received an $1,800 payment in June and are notified in September of the mistake, you have two options: either pay back the $800 immediately, or a future benefit payment will be reduced by $800, resulting in a monthly benefit payment of just $200.

Under the previous policy, the beneficiary would pay back $80 a month until the overpayment was fully recovered, meaning the beneficiary would still receive a monthly benefit payment of $920.

Beneficiaries who were overpaid prior to March 27, will continue to repay the money at the 10% rate.

The policy change also does not apply to overpayments made to those who receive Supplemental Security Income (SSI). Overpayments made on SSI benefits will still be recovered 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.

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.

If you submit a request for waiver or reconsideration before 30 days has passed from receiving the notice, SSA says it will not begin collection of the overpayment until a decision is made.