Some Social Security recipients will begin receiving reduced monthly payments starting in late July, as the Social Security Administration implements new overpayment recovery policies.
The SSA announced in April that it would begin withholding 50 percent of benefit payments from recipients who have been overpaid, representing a significant increase from the previous 10 percent withholding rate.
Why It Matters
This policy change affects approximately 2 million Americans who received Social Security overpayments, according to data from the SSA’s efforts to reclaim overpayments in fiscal year 2023.
The new 50 percent withholding rate could substantially impact household budgets for vulnerable populations who rely on Social Security as their primary income source. The change comes as the SSA seeks to recover $23 billion in uncollected overpayments as of September 2023.
What Are the Social Security Overpayment Changes?
The SSA’s new policy represents a middle ground between its original proposals and previous practices.
In March, the agency initially announced it would withhold 100 percent of benefits until overpayments were recovered. Following pushback, the SSA settled on the current 50 percent withholding rate, which still represents a five-fold increase from the previous 10 percent rate implemented in 2023.
Social Security overpayments occur when beneficiaries fail to report changes in income or when the SSA incorrectly calculates benefits. The agency paid out nearly $72 billion in improper payments between fiscal years 2015-2022, though these represented less than 1 percent of total benefits distributed during that period.
The SSA had previously reduced its recovery rate to 10 percent in 2023 after negative media coverage highlighted cases where aggressive collection practices had caused severe financial hardship, including some recipients losing their homes.
Social Security Payment Schedule: When Will July Payments Go Out?
Regular payments will continue on their standard schedule throughout July 2025. However, recipients who received overpayment notices beginning April 25, 2025, may see their payments reduced starting approximately July 24, 2025. The SSA provides a 90-day notice period between issuing overpayment notifications and beginning benefit withholding.
Recipients typically receive their Social Security payments on the second, third, or fourth Wednesday of each month, depending on their birth date. Those affected by overpayment recovery will receive their reduced payments on their regular payment dates.
Will My Benefits Be Withheld?
Recipients facing overpayment recovery have several options to address their situation. The SSA accepts repayment through credit card, online bill pay, or check. Additionally, beneficiaries can request waivers if they believe the overpayment was not their fault, if they cannot afford repayment, or if they consider the recovery unfair.
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What Happens Next
The SSA will continue issuing overpayment notices to affected recipients, with the first wave of 50 percent benefit withholding beginning in late July 2025. Recipients who receive these notices should review their options for repayment or waiver requests promptly.
The agency continues to refine its overpayment recovery processes as it works to address the $23 billion in outstanding overpayments while minimizing financial hardship for beneficiaries.