Getting overpaid by Social Security will soon come at a high cost, with the agency saying Friday it’s reinstating a plan to take 100% of a beneficiary’s monthly check to claw back the money, up from the current 10% rate.
The policy change highlights an issue that had caused financial hardship for some beneficiaries in years past, prompting the Social Security Administration under the Biden administration to limit clawbacks to 10% of a person’s monthly benefit check.
But the Trump administration’s reversal could lead to deep financial strain for some senior citizens who find themselves caught up in the overpayment issue. While overpayments are rare, they are often the result of Social Security’s own miscalculations — and can come as a surprise to beneficiaries, given that it can be difficult to know if you have been overpaid.
“People generally do not know they are overpaid — you were receiving benefits, assuming that the government was giving you the proper amount,” Nancy Altman, president of Social Security Works, an advocacy group for the benefit, told CBS MoneyWatch. “People are really desperate when they get a letter from the government saying, ‘You owe $10,000’ that they don’t have.”
The Social Security Administration didn’t respond to requests for comment.
Here’s what to know.
How many people get overpayments from Social Security?
Fewer than 1% of the Social Security Administration’s payments are what the agency terms as “improper,” which can include both over- and underpayments, according to a 2024 report from its inspector general. As the report noted, while it’s a small share of the overall $1.6 trillion in benefits paid each year, it still adds up to billions of dollars.
From fiscal year 2015 to 2022, the Social Security Agency paid about $72 billion in improper payments, most of which were overpayments, the report noted. That represents 0.84% of total Social Security payments during that time.
How do overpayments occur?
The agency says that they are usually due to two issues:
- Beneficiaries don’t update their earnings data or alert the agency to other changes
- Social Security employees don’t update beneficiaries’ records in a timely way
Sometimes beneficiaries may not understand that they need to update the agency with new information, partly due to the complexity of the Social Security system, which has more than 20,000 pages of rules, the inspector general said in its 2024 report.
And sometimes SSA employees, who must in some cases manually calculate complex benefits, also make mistakes, the report added.
However, there are cases where seniors receive “strategic overpayments,” said Ed Weir, a former Social Security manager who runs a YouTube channel about the benefit.
In a recent webcast about the issue, Weir noted that sometimes seniors who are under the full retirement age but who are still working after having claimed Social Security aren’t sure if they’ll bump up against the earnings limit of $23,400. Under its rules, Social Security will hold back $1 in benefits for every $2 in earnings above that threshold.
Some seniors decide, “‘I’ll let it ride, because I won’t know until November or December if I’m going over” that limit, Weir said.
But seniors who now opt for a “strategic overpayment” could end up losing one or two months of benefits due to the new clawback policy, Weir added.
When will the new policy go into effect?
The SSA said it will start claiming 100% of benefit checks to cover new cases of overpayments starting on March 27.
The withholding rate for people who had been overpaid before March 27 will remain at 10%, as will the rate for overpayments for Supplemental Security Income, a program for low-income seniors and disabled Americans.
What happens to Medicare if your Social Security check is clawed back?
Medicare coverage could be another pitfall for seniors whose benefit checks are subject to the 100% clawback, experts said. That’s because most seniors pay for their Medicare Part B premiums by having it automatically deducted from their Social Security monthly checks.
The Social Security Administration didn’t respond to requests for clarification about the issue.
It’s unclear if seniors would have to arrange to pay for their Medicare premiums through another payment system, or if the SSA would allow them to pay for their health care first before clawing back the remaining money, Altman of Social Security Works said.
“If you are on Medicare, it means you might not pay your Medicare possibly, so you might lose your Medicare,” Weir said. “It’s a trickle down effect.”
What if the clawback causes financial hardship?
Prior to the Biden reform to pare clawbacks to 10% of a person’s benefit check, some Americans had encountered financial hardship after receiving shock bills amounting to thousands of dollars. Some people were even driven into homelessness after their benefits were stripped away, KFF reported in 2023.
Beneficiaries have the right to request a waiver of overpayment recovery through SSA form 632, Weir noted.
“Two things have to be met for the payment to be waived: No. 1, it’s not your fault, and No. 2, you don’t have the ability to pay,” he said.
You can also appeal the overpayment, in case you think the overpayment amount is incorrect or you disagree that you were overpaid, through SSA form 561.
Lastly, you can also request a different payment amount if you can’t meet your living expenses due to the repayments, the SSA says.
“With Social Security, if you disagree with the decision, appeal it,” Weir said on his webcast. “Always appeal everything.”
