Social Security overpayment: What to know about latest changes

The U.S. Social Security Administration is making it easier for seniors and others to repay benefits that they received but weren’t entitled to.

Beneficiaries who were mistakenly overpaid by the SSA will now have 50% of the excess funds deducted from their monthly check until all the money has been repaid, reversing a March policy that called for 100% per check.

The 100% rule reversed a change enacted one year ago under President Joe Biden that called for a maximum of 10% per check. The 100% rule dates to President Barack Obama and the first administration of President Donald Trump.

The latest change wasn’t announced in a news release but was outlined in an “emergency message” to SSA employees that was posted on the agency’s website.

An SSA spokesperson didn’t immediately respond to a request for comment on Tuesday.

The 50% rule became effective on April 25, according to the memo from the agency’s Office of Legal Policy and Office of Income Security Programs.

The decision comes after AARP, the National Committee to Preserve Social Security and Medicare and other advocates for seniors denounced the 100% rule, saying it would result in beneficiaries receiving little or no money for months until their overpayment was settled.

Martha Shedden, president and co-founder of the National Association of Registered Social Security Analysts in Melville, said, “50% is better than 100%, but 10% is even better.”

Shedden, whose company trains people who advise seniors on financial matters, said Social Security checks represent the majority of many people’s retirement income. “To take a substantial portion of that away each month because of an overpayment that’s not [the beneficiary’s] fault is a hardship,” she said. 

Here are some answers to questions about Social Security overpayments.

How serious is the overpayment issue?

In the 2022 federal fiscal year, overpayments totaled about $6.5 billion, or 0.5% of all the benefits paid that year, according to the Congressional Research Service.

The SSA had hoped to recover about $7 billion in overpayments over the next 10 years, or less than 1% of total annual benefits, by reinstating the 100% rule, said Lee Dudek, acting Social Security commissioner.

What causes overpayments?

Mistakes in the SSA’s database occur for many reasons, including faulty processing by SSA employees, incorrect interpretations of regulations and beneficiaries failing to report a change in their circumstances, such as the death of a spouse, according to a report from the agency’s independent inspector general.

Bill Sweeney, senior vice president of government affairs at AARP’s Washington office, said, “Oftentimes, these mistakes are actually [the SSA’s] fault — and slapping people with huge penalties for mistakes other people made just isn’t right.” 

Who is affected by the 50% rule?

The policy change only affects Social Security overpayments after April 25, including retirement benefits, survivor benefits, family benefits and disability insurance. Previous Social Security overpayments and Supplemental Security Income overpayments are still subject to the 10% rule, according to the SSA memo.

What should beneficiaries do when they receive an overpayment notice?

“As soon as an individual receives an overpayment notice [from the SSA], they should respond immediately whether they want to appeal, ask for a reduction or ask for a hearing,” said Shedden, of the Social Security analysts’ association. “Do not ignore the overpayment notice.”

Call 800-772-1213 or visit the local SSA office.

Shedden also said beneficiaries can request that the agency waive collection of the overpayment if they believe it was not their fault, or they cannot afford to pay it back. The SSA does not pursue recoveries while an initial appeal or waiver is pending.

More information is available at https://www.ssa.gov/manage-benefits/repay-overpaid-benefits.