Social Security Overpayment Rules Are Changing Once Again

For the past year, Social Security beneficiaries have gotten a break from the sometimes-devastating policy of withholding 100 percent of benefits if the beneficiary was overpaid. Effective March 27, 2025, the Social Security Administration (SSA) will reinstate the 100 percent policy to recover overpayments, reverting from the previous 10 percent withholding rate established in early 2024. This change is anticipated to recoup approximately $7 billion over the next decade.

Reasons for the Policy Reversal

The SSA says its decision to revert to full withholding stems from a commitment to safeguard taxpayer dollars and ensure the integrity of the Social Security trust funds. Acting Commissioner Leland Dudek emphasized the agency’s responsibility to be diligent stewards of public resources, noting that returning to full withholding aligns with practices from the Obama administration and first Trump administration.

Overpayments can occur due to various factors, including changes in a beneficiary's income, marital status, or living arrangements that are not promptly reported or processed. By reinstating the 100 percent withholding rate, the SSA aims to expedite the recovery of these funds, thereby maintaining the program's financial health.

Effects on Social Security Benefits Recipients

Under the new policy, individuals who receive overpayments after March 27, 2025, will have their entire monthly benefit withheld until the overpaid amount is fully recovered. This measure does not affect those already repaying overpayments under the previous terms; their repayment arrangements will remain unchanged. Note that the withholding rate for Supplemental Security Income (SSI) overpayments will remain 10 percent.

Beneficiaries facing financial hardship due to full withholding can request a reduced recovery rate by contacting the SSA. They also retain the right to appeal the overpayment decision or seek a waiver if the overpayment was not their fault and repayment would cause financial distress. The SSA will pause recovery efforts while an appeal or waiver is under review.

Introduction of the Social Security Overpayment Relief Act

In response to concerns about the SSA’s overpayment recovery practices, U.S. Representatives Kristen McDonald Rivet (R-Mich.) and Zach Nunn (R-Iowa) recently introduced the Social Security Overpayment Relief Act to limit the SSA’s overpayment lookback period to 10 years. Senators Ruben Gallego (D-Ariz.) and Bill Cassidy (R-La.) introduced a companion bill in the Senate. This proposed legislation aims to limit the SSA’s overpayment lookback period to 10 years, thereby capping the timeframe during which the agency can reclaim funds from beneficiaries.

Currently, the SSA can seek repayment for overpayments indefinitely, potentially burdening beneficiaries with debts stemming from errors made decades earlier. The indefinite lookback period has led to collection notices totaling tens or even hundreds of thousands of dollars, causing significant financial strain for affected individuals.

The proposed 10-year limitation would apply to recipients of Social Security retirement benefits, Social Security Disability Insurance (SSDI), and SSI. However, this limitation would not extend to cases involving fraud or criminal activity.

Sen. Gallego emphasized that seniors should not be held accountable for the government’s long-standing errors, advocating for a fairer approach to overpayment recovery.

Overpayment of SSA Benefits

Social Security benefits recipients may get an overpayment when there’s a change in their life. For example, they may have married but the SSA then doesn’t update its system right away or makes a mistake. In some cases, the SSA may not uncover these errors until years later. When the SSA finds a long-running overpayment, it can be hard for the individual to pay it back.

If you receive notice of a Social Security overpayment after March 27, 2025, and cannot afford to repay it in full, contact the SSA at 1-800-772-1213 or visit your local SSA office. You may also want to contact an experienced elder law attorney near you. They will be able to offer you guidance on how best to respond.

For additional reading about Social Security benefits, check out the following articles:

• What to Do When Social Security Overpays
• How to Apply for Social Security Retirement Benefits
• Can I Collect Social Security and Still Work?
• 10 Ways to Maximize Your Social Security Retirement Benefits