The Social Security Administration (SSA) has introduced new regulations concerning overpayments, which may lead to unexpected reductions in monthly benefits for numerous recipients. This change impacts those receiving Social Security Disability Insurance (SSDI) and Old Age and Survivor Insurance (OASDI) and took effect on March 27, 2025. Previously, the agency had the authority to withhold the entire monthly benefits to recover overpayments, regardless of whether the error originated from the agency itself.
What is overpayment? How does it occur?
An overpayment happens when the SSA disburses more funds than an individual is eligible to receive. Such errors typically arise from not reporting changes in income or living conditions, as well as mistakes in calculations or system failures within the SSA. A report from 2022 indicated that around 73,000 of these overpayments stemmed from institutional errors.
100% clawback rules and 50% adjustments
Until March 2024, the SSA could reclaim up to 100% of a recipient’s monthly benefits to address overpayments. Following public criticism, this was adjusted to 10%, providing some relief to low-income individuals and those with disabilities. However, starting in March 2025, the 100% clawback policy was reinstated under the direction of the Government Efficiency Bureau (DOGE) to recover funds lost to overpayments and fraud.
Who is at risk?
This poses a risk to recipients who may not be aware that many SSDI beneficiaries are below certain income thresholds and must report even minor changes in income or work. If their income surpasses $1,620 monthly and they do not report it, they could face retroactive overpayments, which may only be identified years later.
What steps can you take to protect yourself?
If you are receiving OASDI or SSDI benefits, consider the following actions to minimize the risk of overpayment:
- Thoroughly review all communications from the SSA and watch for discrepancies. Errors can occur, particularly during times of staff shortages.
- If you believe there’s an error, fill out a “Review Request” (Form SSA-561) to appeal the SSA’s decision.
- If the overpayment was not your fault and repaying it would create financial hardship, you may request a waiver. For amounts less than $2,000, you can use Form SSA-BK or contact the SSA directly.
- Discuss a repayment plan with the SSA by submitting Form SSA-634, which allows for a reduction in the amount deducted from your benefits.
- Report any life or work changes promptly to avoid complications. Changes to report include:
-
- Inheritances affecting income
- Workers’ compensation or unemployment benefits;
- Notable changes in wages or work hours;
- Changes to your address or living situation
- Keep track of your payments and report any unexpected increases in monthly income.
While reducing the withholding from 100% to 50% offers some financial relief, many beneficiaries still face potential financial strain. It’s important to monitor your monthly income closely to avoid losing part or all of your benefits.
For further information, visit the SSA’s official website or reach out to their helpline at 1-900-772-1213.
