Social Security beneficiaries beware: Your entire check could be at risk because of government error
If you receive Social Security benefits, you may want to pay extra attention to your monthly payments. A mistake made by the Social Security Administration could end up costing you in the long run.
On Saturday, the SSA announced it is reinstituting a policy where the agency can withhold up to 100 percent of your monthly payment if the agency had previously overpaid you. Known as the “default overpayment withholding rate,” the policy was scaled back last year to a 10 percent withholding, but that rate is no longer applicable starting March 27.
“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. “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.”
Those who are currently paying back an overpayment or who receive an overpayment prior to March 27 will remain on the 10 percent withholding rate. Those who receive Supplemental Security Income (SSI) will also remain at a 10 percent withholding rate.
Federal law requires the SSA to recover overpayments made by the agency. The Office of the Chief Actuary estimates the new policy will result in about $7 billion in savings for the agency over the next decade.
The new policy means any overpayment received by a beneficiary will need to be paid back in full through a withholding of funds from future payments at a much higher rate.
For instance, if you’re supposed to receive a monthly payment of $1,000, but in June, they send 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 current 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.
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.