Social Security Garnishments Return: What Retirees Must Know to Protect Their Benefits

Understanding the Social Security Overpayment Recovery Policy

The Social Security Administration (SSA) has implemented a new overpayment recovery policy that has left many retirees in a difficult position. The policy, which allows for up to 50% of a beneficiary’s monthly payment to be withheld to recover overpaid funds, has raised concerns among those who rely on their benefits for basic living expenses.

This change comes after a series of shifts in the SSA's approach to overpayment recovery. During the Biden administration, the claw back rate was limited to 10%, providing some relief to seniors. However, under the Trump administration, there was a proposal to increase the rate to 100%, which was later reduced to 50% due to public backlash. Now, as of July 24, the agency is set to enforce the 50% rate, impacting millions of Americans.

Why Are Retirees Being Affected?

Overpayments can occur for various reasons, such as errors in SSA calculations or failure to report changes in income or location. In 2023 alone, nearly 2 million Americans were found to owe the SSA due to overpayments. For individuals on fixed incomes, losing 50% of their monthly payment can be devastating, making it difficult to cover essential expenses like food, housing, and medical care.

Kevin Thompson, CEO of 9i Capital Group, highlighted the importance of staying informed about one’s benefits. “Most recipients don’t realize they’ve been overpaid until they receive a letter from the SSA,” he said. “Without regularly reviewing your earnings history and benefit statements, overpayments can go unnoticed.”

What Can Retirees Do?

Retirees who receive an overpayment notice have several options to address the situation. One option is to apply for a waiver of the overpayment using Form SSA-632BK. This form is available if the overpayment was not due to the recipient’s fault and if repayment would cause financial hardship. To increase the chances of approval, it is important to provide evidence showing that the return of the money would make it impossible to cover minimum living expenses.

For those who believe the overpayment claim is incorrect, they can use Form SSA-561 to appeal the determination or contest the amount owed. According to Legal Aid NYC, “If you do not think you owe the money, you can ask SSA to reconsider the overpayment by filing a Request for Reconsideration Form.”

Temporary Assistance and Support

In cases where immediate assistance is needed, local social services agencies, older adult advocacy organizations, and food banks may offer temporary aid for rent, groceries, or medical expenses while waiting for the outcome of an appeal or waiver. These resources can help retirees manage their finances during this challenging time.

SOAR Works! also emphasizes the importance of keeping records of all communication with the SSA and maintaining copies of forms submitted. This documentation can be crucial if additional appeals are required.

A History of Policy Changes

The SSA’s overpayment recovery policy has historically fluctuated between 10% and 100%, depending on the administration in power. The current 50% rate is seen as a compromise, but many retirees still find themselves struggling to prioritize their bills each month. With the July 24 deadline approaching, taking action—whether through an appeal, a waiver request, or accessing local resources—could be the key to maintaining financial stability and peace of mind.