Millions of American citizens get social security benefits. Now, the Social Security Administration (SSA) has made a significant announcement. Starting March 2025, the SSA is going to reinstate the overpayment recovery policy, which will enable deducting as much as 100% from the monthly payment amount of the beneficiaries.
Why the reinstatement of the overpayment recovery policy?
The Social Security Administration (SSA) is accountable for the safeguarding and well-being of the trust funds of the American people. Having this in mind, Acting Commissioner Lee Dudek discussed reinstating this policy.
He stated that it is the duty of the SSA to restore the policy of overpayment recovery to a deduction rate of 100%. Previously this policy was also in place under the administrations of Barack Obama and Donald Trump.
This shift will enable the SSA to safeguard its funds as well as operate more effectively than the existing system.
Based on the Office of the Chief Actuary, SSA, the policy change will significantly enhance the rate of overpayment recovery.
- This policy can be used to recover around 7 billion dollars in the span of a decade.
- It will improve the stability and efficiency of the Social Security system.
- It will allow the benefit to go to the intended individual at the correct time and quantity.
Objective of Social Security
The primary objective of the SSA is that each beneficiary receives the right payment and there is no mistake. But in certain situations, there can be incorrect payments, which cannot be prevented.
In such a situation, as per US law, SSA is entitled to recover this excess payment.
What changes will happen under the new policy?
- New 100% withholding rate – From March 27, 2025, SSA can withhold the full monthly amount of those beneficiaries whose overpayment cases are uncovered.
- Earlier only 10% deduction was made, but now it is raised to 100%.
- The new policy will only be applied to overpayments after March 27, 2025.
- This rate will be 10% for SSI, i.e., SSI beneficiaries will be exempted from this.
- notice of this new system will be provided by SSA by mailing a notice on March 27, 2025.
Effect of change on beneficiaries
This policy will help SSA, but it can also turn out to be an issue for a few beneficiaries. This can lead to financial distress for individuals who have already received overpayments and will have their monthly income entirely terminated.
TERMINATION
This new policy that is being introduced by the SSA aims at making social security funds stronger and preventing unnecessary payments. Nevertheless, it also imposes difficulties on certain individuals. While introducing this policy, the SSA must take care that poor citizens are not subjected to unnecessary hardships.
FAQs
Q1. What is the new Social Security overpayment recovery policy?
Starting March 27, 2025, SSA will withhold 100% of a beneficiary’s monthly payment to recover overpaid funds.
Q2. Why is SSA bringing back the 100% withholding rate?
SSA aims to protect trust funds and ensure financial stability, as it was done under previous administrations.
Q3. How much money does SSA expect to recover with this policy?
The agency hopes to recover approximately $7 billion over the next decade.
Q4. Does this policy affect all Social Security benefits?
No, the 100% withholding applies only to Social Security overpayments. For SSI, the withholding remains at 10%.
Q5. When will beneficiaries receive official notice of this change?
SSA will mail notices regarding the new policy on March 27, 2025.