Social Security to Withhold 50% of Overpaid Benefits Starting in July

Beginning in late July 2025, some Social Security recipients will receive smaller benefit payments due to the Social Security Administration’s (SSA) efforts to recover overpayments.

This reduction is unrelated to the projected funding shortfalls facing the Social Security program. Instead, it applies to individuals who previously received excess payments due to miscalculations by the SSA or unreported changes in income or other eligibility criteria.

Why Are Payments Being Reduced?

The SSA is implementing a new policy to recover overpayments by withholding 50% of affected individuals’ monthly benefit payments. This marks a shift from its prior approach, where only 10% of benefits were withheld. The change follows a March 2025 announcement in which the SSA initially proposed withholding 100% of benefits, a move that drew significant public criticism.

The SSA's Inspector General reported that nearly $72 billion in improper payments were made between fiscal years 2015 and 2022, with the vast majority being overpayments. Although these improper payments represented less than 1% of the total $8.6 trillion disbursed in benefits, as of September 2023, the agency had $23 billion in outstanding overpayments.

How the New Policy Will Work

Starting April 25, 2025, the SSA began issuing new overpayment notices. Beneficiaries have approximately 90 days to respond before the 50% withholding begins — with the first affected payments anticipated around July 24, 2025.

This policy adjustment follows backlash over previous aggressive recovery tactics that led to severe hardships, including loss of housing for some beneficiaries. "Innocent people can be badly hurt," former SSA Commissioner Martin O'Malley said, in reference to those negatively impacted by abrupt benefit cuts.

In the fiscal year ending September 2023, the SSA attempted to recover overpayments from approximately 2 million people, according to data obtained via a Freedom of Information Act request.

How to Repay an Overpayment

Beneficiaries who receive an overpayment notice have several repayment options:

• Online bill pay
• Credit card
• Check

More information on repayment options is available at the SSA's official website: ssa.gov/manage-benefits/repay-overpaid-benefits

Can You Request a Waiver?

Yes. Individuals who believe the overpayment was not their fault or who cannot afford to repay it may request a waiver. The SSA provides a form to request this waiver: Form SSA-632-BK

Source: usatoday