Social Security Retreats on Plan to Claw Back 100% of Benefits for Overpayments

SSA will now withhold up to half of benefits from those who owe for past payment errors

Andy Markowitz,

AARP

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Published April 30, 2025

The Social Security Administration (SSA) is scaling back a policy shift that would have cut off benefits to people whom the agency overpaid in the past until the debt is repaid.

In an “emergency message” to employees dated April 25, the SSA set a default withholding rate of 50 percent of benefits to recoup money from beneficiaries who were paid more than they were eligible to receive.

The change comes less than two months after the SSA announced it would reinstate a longstanding policy of withholding 100 percent of benefits from people it determines had been overpaid. That reversed guidelines implemented last year to cap such clawbacks at 10 percent of monthly payments.

“We are glad to see the SSA taking a step in the right direction here,” says Bill Sweeney, AARP’s senior vice president for government affairs. “Oftentimes, these mistakes are actually Social Security's fault — and slapping people with huge penalties for mistakes other people made just isn't right.”

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90-day grace period

The 50 percent withholding applies to overpayments of retirement benefits, survivor benefits, family benefits and Social Security Disability Insurance (SSDI) of which recipients are notified after April 25. Most prior overpayments of those benefits will remain subject to the 10 percent cap, as will any overpayments of Supplemental Security Income (SSI), regardless of when they happened.

The universal 10 percent rate was instituted in March 2024 amid a public and congressional outcry over reports of beneficiaries, many with disabilities and low incomes, receiving four- and even five-figure bills for alleged overpayments — some years or even decades old.

The April 25 message from the SSA’s Office of Legal Policy and Office of Income Security Programs states that language about the 10 percent withholding rate will be updated to 50 percent in outgoing overpayment notices.

Recipients who receive a notice have 90 days to appeal the SSA’s claim that they were overpaid. They can also request a waiver of repayment, or a repayment rate below 50 percent, for reasons of financial need. Absent any of these actions, withholding will begin after 90 days. The SSA has a fact sheet with more information on appeal and repayment options.

Disability beneficiaries most affected

The SSA issues nearly $1.4 trillion in monthly payments a year to some 73 million Social Security and SSI recipients. The agency is required by law to try to claw back money when overpayments occur.

A July 2024 report from the SSA’s inspector general found that “improper” payments — those in the wrong amount — make up less than 1 percent of total benefit outlays. Most of these are overpayments, predominantly to people receiving SSDI and SSI, the two Social Security–administered programs serving people with disabilities.

Unlike retirement benefits, eligibility and payment amounts for these programs can change month-to-month due to strict limits on income from work (and, in the case of SSI, arcane rules on other financial and living arrangements).

Social Security allows some temporary exceptions to the earnings limits for disability beneficiaries who attempt to return to work. Jack Smalligan, a senior policy fellow at the Urban Institute, says research by his organization and others shows that overpayments often result from people “misunderstanding the [income] rules and not intentionally violating the rules.”

Reducing the recoupment rate “is helpful but not nearly enough,” Smalligan says. “Having their benefit reduced by 50 percent, potentially for several years, imposes a serious hardship on people who have been trying to leave the program by returning to work and haven't succeeded.”

Beneficiaries are primarily responsible for reporting changes in income or other circumstances that could affect their eligibility or payments. According to the SSA, incorrect or incomplete information from this self-reporting is a leading cause of payment errors but some do arise from mistakes by the agency.

“Social Security needs to make sure these mistakes don't happen in the first place,” Sweeney says, “but when mistakes do happen, Social Security needs to work with people to come up with a reasonable repayment plan."

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Andy Markowitz is an AARP senior writer and editor covering Social Security and retirement. He is a former editor of the Prague Post and Baltimore City Paper.