Receiving Social Security? A New Rule Could Impact Your Payments
In a recent ruling, the Social Security Administration (SSA) announced a significant change to its policy regarding benefit overpayments. Starting March 27, 2025, any overpayment will be “withheld at 100%.” This new rule could have a substantial impact on Social Security beneficiaries.
What Does This Mean for Recipients?
If you receive the correct amount in your monthly payment, no action is needed. However, if you notice an unexpected increase or a suspicious adjustment, it is crucial to be cautious and avoid spending the extra funds.
Previously, when the SSA overpaid benefits, it withheld 10% of a recipient’s monthly payment until the overpayment was fully recouped. For example, if someone’s regular monthly payment was $1,000 but they mistakenly received $2,000 (an overpayment of $1,000), the SSA would deduct $100 (10% of $1,000) from each subsequent payment until the overpaid amount was recovered. This meant the recipient would receive $900 per month for the next 10 months.
Under the new policy, instead of gradually recovering the overpayment, the SSA will withhold the full overpaid amount from the recipient’s next payment. In the example above, rather than receiving $900 the following month, the recipient would receive nothing at all. This could leave beneficiaries without a Social Security payment for that month, potentially causing financial hardship.
Are There Any Exceptions?
There are some nuances to this new rule. If a recipient believes they cannot afford to repay the overpayment in full, they have the right to appeal. Importantly, overpayments are not withheld while an appeal is active. Additionally, beneficiaries facing financial hardship can contact their local Social Security office to request a lower withholding schedule. However, such adjustments are exceptions rather than the norm.
What Should You Do If You Suspect an Overpayment?
If you believe you have been overpaid, set the excess money aside. The SSA may not immediately detect the overpayment, and the withholding may not occur in the very next month. To clarify the situation, contact your local Social Security office to confirm whether an overpayment has occurred. If so, notify them promptly to discuss potential repayment options. No one wants to be caught off guard by an unexpected loss of income for an entire month – or longer.
Final Thoughts
This new ruling underscores the importance of vigilance when managing Social Security benefits. Beneficiaries should regularly review their payment amounts and be aware of any discrepancies. If an overpayment is suspected, taking swift action can help minimize financial disruptions and work toward a smoother resolution.
Scooter Thomas
Financial Advisor
CFP®, ChSNC®, ChFC®