Social Security Overpayment Burden Reduced to 10%

The Social Security Administration announced it will decrease the default overpayment withholding rate for Social Security beneficiaries to ten percent (or $10, whichever is greater) from 100%, significantly reducing financial hardship on people with overpayments.

"Social Security is taking a critically important step towards our goal of ensuring our overpayment policies are fair, equitable and do not unduly harm anyone," said Martin O'Malley, commissioner of Social Security.

"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," she added.

When a person has been overpaid, the law requires the agency to seek repayment, which can create financial difficulties for beneficiaries. As of March 25, the agency will collect 10% (or $10, whichever is greater) of the total monthly Social Security benefit to recover an overpayment, rather than collecting 100% as was the previous procedure.

There will be limited exceptions to this change, such as when an overpayment resulted from fraud.

There will be a short transition period where people will continue to experience the older policy. People placed in 100% withholding during this transition period should call Social Security's National 800 Number at 1-800-772-1213 to lower their withholding rate.

The change applies to new overpayments. If beneficiaries already have an overpayment with a withholding rate greater than 10% and would like a lower recovery rate, they too should call Social Security at 1-800-772-1213 or their local Social Security office to speak with a representative.

If a beneficiary requests a rate lower than 10%, a representative will approve the request if it allows recovery of the overpayment within 60 months – a recent increase to improve how the agency serves its customers from the previous policy of only 36 months.

If the beneficiary's proposed rate would extend recovery of the overpayment beyond 60 months, the Social Security representative will gather income, resource and expense information from the beneficiary to make a determination.

Social Security launched a comprehensive review in October 2023 of agency overpayment policies and procedures to address payment accuracy systematically. This procedure change is a direct result of the ongoing review. This change and the adjustment to 60-month repayment are part of four recently announced key updates to address improper payments.

The agency also is working to reduce wage-related improper payments by establishing information exchanges with payroll data providers that will significantly reduce the number of improper payments once implemented.

The agency will continue examining programmatic policy and making regulatory and sub-regulatory changes to improve the overpayment process.

Additionally, people have the right to appeal the overpayment decision or the amount. They can ask Social Security to waive collection of the overpayment, if they believe it was not their fault and can't afford to pay it back.

The agency does not pursue recoveries while an initial appeal or waiver is pending. Even if people do not want to appeal or request a waiver, they should contact the agency if the planned withholding would cause hardship. Social Security has flexible repayment options, including repayment of as low as $10 per month.

Each person's situation is unique, and the agency handles overpayments on a case-by-case basis.