Key Points
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The Social Security Administration under President Trump is getting more aggressive about correcting overpayment errors.
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Retired workers who have been paid too much will have 50% of their Social Security benefits withheld starting in late July.
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Beneficiaries who believe a mistake has been made, or else cannot afford to make the payments, can appeal the decision.
President Trump campaigned on the promise to eliminate fraud, waste, and abuse from government programs. He took immediate action upon returning to the White House for a second term, quickly creating the Department of Government Efficiency (DOGE) and instituting a hiring freeze across federal agencies.
The Social Security Administration (SSA) has been working with DOGE to cut costs and boost productivity. Changes made to date include a 7,000-person workforce reduction, the implementation of a modern telephone system with new fraud prevention capabilities and expanded self-service options, and miscellaneous cost avoidance and efficiency initiatives estimated to save the agency $1 billion this year.
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In addition, the SSA will be more aggressive in future efforts to recover overpayments. Consequently, some retired workers will receive reduced Social Security benefits beginning in July. Read on to learn exactly who will be affected and to what extent.
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Social Security will increase the overpayment withholding rate to 50% in late July
The SSA reduced the overpayment recovery rate from 100% to 10% under President Biden. The agency then reversed its decision shortly after Trump took office. Initially, the SSA raised the withholding rate back to 100% but more recently revised it down to 50%.
The first overpayment notices were sent out on April 25. Social Security beneficiaries who received a notice were given 90 days to appeal the decision, but the grace period ends in late July. That means some retired workers — those who have been overpaid by the SSA — will have their benefit payments reduced 50% starting in late July. Benefits will be withheld until the overpayment balance is zero.
Importantly, in situations where the person no longer receives benefits, the SSA will recover overpayments by garnishing federal income tax returns or wages. The delinquency will also be reported to credit bureaus. However, affected individuals do have legal options for recourse: They can request a reconsideration, a reduced withholding amount, or a waiver.
Retirees can legally avoid overpayment recovery in certain circumstances
The SSA estimates that improper payments totaled $4.1 billion in fiscal 2023, which represents just 0.3% of the $1.4 trillion in total outlays. Overpayments account for most improper payments, and they usually occur because beneficiaries fail to update information like income or marital status. But the SSA in certain instances makes data entry and processing mistakes.
As mentioned, when the SSA determines a beneficiary has been paid too much, the agency notifies the person in writing and allows a certain amount of time — usually 60 days, but notices sent in April gave 90 days for them to request a reconsideration, lower withholding rate, or waiver. Here’s a further breakdown:
- Recipients who don’t think they’ve been overpaid can appeal the decision and request a reconsideration by filing a Form SSA-561.
- Recipients who can’t afford the payments detailed in the mailed notice can request a lower withholding rate by filing a Form SSA-634.
- Recipients who can’t afford to repay any portion of the outstanding balance can request a waiver of overpayment recovery by filing a Form SSA-632.
Here’s the bottom line: The SSA is working with DOGE to make good on President Trump’s promise to eliminate fraud, waste, and abuse. In keeping with that objective, the agency will increase the overpayment recovery rate to 50% in late July. In other words, affected retirees will have half their Social Security benefits withheld until the balance is zero.
However, there are legal options for recourse. Beneficiaries who believe a mistake has been made, or else would suffer a financial hardship if forced to make the repayments, should complete the most pertinent aforementioned form and submit it to their local Social Security office as soon as possible.
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