The Social Security Administration (SSA) is working to recover overpayments made in past months. As a result, many citizens will see their monthly income dwindle. Starting this month, 50% of monthly benefits will be withheld from those who have been overpaid. Under the Biden Administration, the withholding rate had been capped at 10% of the benefit amount, making the recently amended 50% withholding rate seem like a rather steep jump. The SSA informed beneficiaries of this cut in April 25th: “The purpose of this Emergency Message (EM) is to provide interim guidance and inform technicians that we are changing our policy for the default 10 percent benefit withholding to recover a Title II overpayment.”
“All outstanding overpayments will default to 50 percent benefit”
In fiscal year 2023, the SSA attempted to recover overpayments from approximately two million people. Although not all beneficiaries will be affected, those who are should prepare for reduced deposits and contact the SSA immediately to discuss refund options or appeal procedures.
“Any new Title II overpayment determinations will have the 50 percent benefit withholding automatically applied for overpayment notices sent beginning April 25, 2025, which is the first day of COM 05. If an overpaid individual has a prior overpayment and incurs a new overpayment, all outstanding overpayments will default to 50 percent benefit withholding at the end of the approximately 90-day period if the individual does not request reconsideration, a waiver, or negotiate a lower repayment rate,” as SSA says.
Those who want to claim still have time
As previously reported, overpayment notices were sent to affected beneficiaries on April 25. Following this initial announcement, beneficiaries will have 90 days to appeal the notice if they believe they have not been overpaid and that losing half of their benefits would impose a significant financial burden. Alternatively, beneficiaries could negotiate a lower withholding rate. The 90-day deadline ends around July 24, and if they do not act during this period, they will lose 50% of their benefits starting in August, until the overpayment balance is settled.
The problem may lie in that beneficiaries haven’t updated their personal information
It’s important to remember that even though the system is automated, the human factor can lead to calculation errors. The SSA cites errors that may arise because beneficiaries haven’t updated their personal information about their employment, family, or income status. “An overpayment of benefits is considered when we can’t accurately calculate your benefit amount because our information is incorrect or incomplete,” explains the official SSA website.
Approximately half of Social Security beneficiaries rely on their payments to stay above the poverty line
Many citizens will be affected by this cut. According to a study by the Center on Budget and Policy Priorities (CBPP), approximately half of Social Security beneficiaries rely on their payments to stay above the poverty line. Furthermore, the study also notes that the program helps more people rise above the poverty line than any other program in the country, and without it, 22 million more American adults and children would fall below the poverty line.
These figures, combined with the country’s current inflation and the rising cost of living, will make August a slightly more difficult month for low-income families. Despite the warnings issued in April, this isn’t enough time to prepare for a 50% cut in state aid. Many of these families are single parents or large families, so their monthly expenses are always lower than the previous month.
