The Social Security Administration said Friday that it will increase the default overpayment withholding rate for Social Security beneficiaries to 100% of a person’s monthly benefit, undoing a policy change enacted less than a year ago that set the rate at 10%.
On March 27, the agency will begin mailing notices about the new 100% withholding rate, which applies to new overpayments of Social Security benefits.
"The withholding rate for current beneficiaries with an overpayment before March 27 will not change and no action is required," SSA said in a statement. The withholding rate for Supplemental Security Income overpayments remains 10%.
“We have the significant responsibility to be good stewards of the trust funds for the American people,” said Lee Dudek, SSA's acting commissioner. “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.”
The Office of the Chief Actuary estimates the change will save the trust fund $7 billion in the next decade.
Former Social Security Commissioner Martin O’Malley set the rate at 10% last February after an uproar over the financial hardship caused by withholding entire Social Security checks from retirees who had been overpaid.
Right to Appeal
Those who are overpaid after March 27 will automatically be placed in full recovery at a rate of 100% of the Social Security payment, SSA said. If someone cannot afford full recovery of their overpayment, they can contact Social Security at 1-800-772-1213 or their local office to request a lower rate.
Further, people have the right to appeal the overpayment decision or the amount by asking Social Security to waive collection of the overpayment "if they believe it was not their fault and can't afford to pay it back," SSA said. "The agency does not pursue recoveries while an initial appeal or waiver is pending."
‘Petty, Cruel and Thoughtless’
The new policy "is petty, cruel and thoughtless," the National Committee to Preserve Social Security and Medicare said in a statement.
"When former SSA Commissioner Martin O'Malley took on the overpayment problems at SSA, he not only sought to reduce overpayments, but to mitigate the financial pain of beneficiaries who receive overpayment notices and somehow had to come up with the money to repay the program or have their benefits docked," the group said. "The Trump administration now has reversed that policy ... This action, ostensibly taken to cut costs at SSA, needlessly punishes beneficiaries who receive overpayment notices — usually through no fault of their own. Many overpayments are the result of errors on SSA's part."
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