American seniors who have received Social Security overpayments may be in for a nasty surprise after the Trump administration announced the reversal of a Biden-era policy.
Specifically, the Social Security Administration (SSA) will revert back to withholding up to 100% of an individual’s benefit check in an attempt to claw back overpayments. The changes under Biden had capped that withholding at 10%, so for seniors who may have received overpayments and grown accustomed to only having their monthly benefits reduced by a relatively slight amount, the adjustment could blow a hole in their monthly budgets.
Announcing the reverted policy on Friday, the SSA said it will achieve $7 billion in savings over the next 10 years. The change affects overpayments made from March 27 onward, meaning overpayments made before that won’t be impacted.
“We have the significant responsibility to be good stewards of the trust funds for the American people,” said Lee Dudek, SSA’s acting commissioner, in a statement. “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.”
Why do SS overpayments happen?
Social Security overpayments happen for a number of reasons, including beneficiaries misreporting their income or forgetting to update a change in their living situation or marital status.
However, the SSA sometimes simply makes mistakes, as CBS reported last year, meaning an overpayment may be through no fault of the person receiving the benefits.
With the Social Security Administration reverting to the original overpayment policy, it’s possible that some Social Security recipients could see their benefits reduced to nothing—that is, until they’ve effectively paid back any overpayments they’d received in full. That could put many seniors in a challenging position in the months ahead.
The SSA says it will notify people later this month about the new withholding rate.
“The withholding rate change applies to new overpayments related to Social Security benefits,” reads the statement from the SSA. “The withholding rate for current beneficiaries with an overpayment before March 27 will not change and no action is required. The withholding rate for Supplemental Security Income [SSI] overpayments remains 10 percent.”
Further, it warns that any overpayments made after March 27 will be put into the full recovery rate immediately.
As for those who can’t afford to see their entire benefit zapped due to an overpayment by the SSA, the agency says to contact the SSA to see what can be done.
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