The Social Security Administration (SSA) has reneged on a previous promise to stop harsh penalties for seniors who have been overpaid benefits, which could mean some seniors will have to “pay for the government’s mistakes.”
Benefit overpayments result from the government’s mistake or from beneficiaries failing to comply with requirements, intentionally or otherwise.
Under the Biden administration, in an effort to ease the burden of overpayments on beneficiaries—many of whom have been incorrectly paid through no fault of their own—the SSA announced it would begin collecting 10 percent of a person’s total monthly Social Security benefit rather than 100 percent as it previously did to recover an overpayment.
However, the Trump administration has made quick work of undoing this: on March 7, the federal agency announced it would reinstate the 100 percent withholding rate. This means that any overpayment made by the SSA would see the recipient’s benefits withheld to pay off the balance.
The new withholding rate will apply to any overpayment made after March 27, and previous incorrect payments will not be impacted. It does not apply to overpayments for Supplemental Security Income.
“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.”
Newsweek reached out to the SSA via email for comment.
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The Scale Of The Problem
SSA overpayments made headlines in 2024 when several beneficiaries spoke about their experiences.
One woman told Newsweek she was hit with a $62,000 bill for overpayments relating to Social Security survivor payments she received after her father died while she was a child.
Another, a disabled veteran with bipolar disorder, told Newsweek he had received a letter from the SSA requesting he pay back $67,000. He said the SSA told him during a work review three years prior that there were no issues with his payments, but it turned out he had been overpaid and needed to pay up.
The agency has said overpayments typically occur for two reasons: beneficiaries fail to update their earnings information or report other changes, or Social Security employees do not update beneficiaries’ records promptly.
According to the inspector general’s 2024 report, some beneficiaries may not realize they need to inform the agency of updates, partly because of the Social Security system’s complexity, which includes more than 20,000 pages of regulations.
“People generally do not know they are overpaid. You were receiving benefits, assuming that the government was giving you the proper amount,” Nancy Altman, president of Social Security Works, told CBS MoneyWatch.
Still, the SSA has lost billions due to overpayments. From fiscal years 2015 through 2022, the SSA is estimated to have made nearly $72 billion in improper payments, the majority of which were overpayments. By the end of FY 2023, the SSA had an uncollected overpayment balance of $23 billion.
“The SSA made nearly $72 billion in improper payments between 2015 and 2022 – that’s not a small mistake, that’s a massive issue,” NationalBusinessCapital.com CEO Joseph Camberato told Newsweek. “So cutting down on these errors could lead to meaningful savings.”
“It could significantly increase overpayment recovery, but it’s not a complete fix. Under the previous 10 percent withholding cap, the SSA recovered $4.9 billion out of $10.3 billion in scheduled repayments,” Andrew Latham, financial planner
content director at Supermoney.com told Newsweek.
“By removing the cap and allowing 100 percent recovery, the agency could more than double the amount it claws back, assuming all affected beneficiaries can afford full withholdings.”
While the overpayment issue needs to be addressed, reinstating the previous rules is only going to hurt seniors who have had their benefits miscalculated, Latham said, saying it will be “a tough pill to swallow for many seniors, especially considering these overpayments are often the government’s mistake.”
“While fiscal responsibility is important, forcing retirees—many of whom live on fixed incomes—to immediately repay large sums could create real financial hardship,” he said.
The issue is raising eyebrows in Congress, too. Senator Ruben Gallego, a Democrat from Arizona, has introduced legislation that would make overpayments from more than ten years ago no longer recoverable by the SSA. The SSA is required by law to adjust benefits or recover debts when it has been established that someone received payments to which they are not entitled, regardless of how long it has passed.
“Seniors shouldn’t have to pay for the government’s mistakes, especially not mistakes that happened decades ago,” Gallego said, adding that his legislation was “commonsense” and that it would ensure “seniors aren’t blindsided by massive repayment amounts through no fault of their own.”
What To Do If You Get An Overpayment Notice
If you receive an overpayment notice, you can request the SSA waive the overpayment collection if you believe it was not your fault or cannot afford to pay it back. Repayments do not have to be made while the SSA makes a decision.