Starting in late July 2025, the Social Security Administration (SSA) will implement a significant change in how it recovers overpaid benefits. This new policy means that up to 50% of monthly Social Security payments could be withheld from individuals who were previously overpaid. If you’re receiving Social Security benefits, it’s essential to understand how this change could affect your monthly income.
Why Is the SSA Recovering Overpaid Benefits?
The SSA needs to recover approximately $72 billion in improper payments made from 2015 to 2022. These overpayments were often caused by errors such as unreported changes in income, marital status, disability status, living arrangements, or other administrative mistakes. In the past, the SSA had been withholding only 10% of monthly payments to recover these overpayments, but now, this will increase to 50%, unless individuals take certain actions to dispute or negotiate the amount.
Who Will Be Affected by This Change?
This change will primarily impact people who receive Title II benefits, including:
Survivors benefits
Disability insurance benefits
Individuals receiving Supplemental Security Income (SSI) will still have the previous 10% withholding rate.
What Are Your Options if You’re Affected?
If you are among those impacted by this change, there are a few options to reduce the withholding rate:
Fight the overcharge: If you believe the overpayment is not your fault, you can contest the decision.
Request a waiver: You can apply for a waiver if paying back the overpayment would cause significant financial hardship.
Negotiate a lower withholding rate: It’s possible to work with the SSA to lower the amount they withhold each month.
Key Dates to Remember
April 25, 2025: The SSA began issuing notices about overpayments.
July 25, 2025: This is the last day to respond to the SSA’s notice before they automatically start withholding 50% of your monthly payment.
August 2025: If you haven’t responded by July 25th, you can expect to see reduced payments starting in August.
Why Is This Important?
Social Security provides financial support to nearly 69 million people in the U.S., many of whom rely on it to avoid falling below the poverty line. For people living on a fixed income or dealing with health issues, even a small reduction in monthly payments can cause significant hardship. As Shannon Benton from the Senior Citizens League points out, “Any amount of clawback could be catastrophic.”
In response to feedback, the SSA allows people to pay back the overpayments online, request a waiver, or appeal the decision if the overpayment wasn’t their fault or if repaying it would create financial hardship.
The History of Overpayment Clawbacks
This new policy comes after the SSA faced criticism in 2023 when they initially attempted to take 100% of people’s benefits to recover overpayments. This decision led to public outcry, prompting the SSA to change the withholding rate to 50%. According to records from the Freedom of Information Act, over 2 million Americans were affected by this overpayment issue in 2023 alone.
What Should You Do Now?
With the July 25th deadline fast approaching, it’s important to take action if you’ve received a notice from the SSA about overpayments. Review your paperwork carefully and consider filing a request for a waiver or appealing the decision if you believe the overpayment was not your fault or if repaying it would cause severe financial strain. Acting quickly can help avoid significant reductions in your monthly payments starting in August.
