Social Security Eliminates Overpayment Burden for Social Security Beneficiaries

Apr 1, 2024 / By Elaine Floyd, CFP ®

The Social Security Administration has announced it will decrease the default overpayment withholding rate for Social Security beneficiaries to ten percent (or $10, whichever is greater) from 100 percent, significantly reducing financial hardship on people with overpayments.

The change applies to new overpayments. If beneficiaries already have an overpayment with a withholding rate greater than ten percent and would like a lower recovery rate, they should call Social Security at (800) 772-1213 or their local Social Security office to speak with a representative. If a beneficiary requests a rate lower than ten percent, a representative will approve the request if it allows recovery of the overpayment within 60 months—a recent increase to improve how the agency serves its customers from the previous policy of only 36 months. If the beneficiary’s proposed rate would extend recovery of the overpayment beyond 60 months, the Social Security representative will gather income, resource, and expense information from the beneficiary to make a determination.

Social Security launched a comprehensive review in October 2023 of agency overpayment policies and procedures to address payment accuracy systematically. This procedure change is a direct result of the ongoing review. The change and the adjustment to 60-month repayment are part of four recently announced key updates to address improper payments. The agency also is working to reduce wage-related improper payments by establishing information exchanges with payroll data providers that will significantly reduce the number of improper payments, once implemented. The agency will continue examining programmatic policy and making regulatory and sub-regulatory changes to improve the overpayment process.

Additionally, people have the right to appeal the overpayment decision or the amount. They can ask Social Security to waive collection of the overpayment, if they believe it was not their fault and can’t afford to pay it back. The agency does not pursue recoveries while an initial appeal or waiver is pending. Even if people do not want to appeal or request a waiver, they should contact the agency if the planned withholding would cause hardship. Social Security has flexible repayment options, including repayment of as low as $10 per month. Each person’s situation is unique, and the agency handles overpayments on a case-by-case basis.

As director of retirement and life planning for Horsesmouth, Elaine Floyd helps advisors better serve their clients by understanding the practical and technical aspects of retirement income planning. A former wirehouse broker, she earned her CFP designation in 1986.

 

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