What You Should Know About the Social Security Overpayment Policy

If you’ve recently received a notice from the Social Security Administration (SSA) about an overpayment, you’re not alone. The SSA continues to pursue recovery of billions in mispaid benefits — but recent changes to their approach have significantly altered how overpayments are handled.

How is Social Security calculated?

The SSA takes your average indexed monthly earnings (AIME) from your 35 highest-earning years, adjusts them for inflation, and applies a formula to determine your primary insurance amount (PIA). The PIA is the benefit amount you'll receive at your full retirement age. Factors like the age you begin claiming benefits and any additional earnings can also impact the final amount.

The Social Security Fairness Act, signed into law in 2025, eliminated the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), which had previously reduced benefits for certain retirees, such as teachers, firefighters, and police officers, if they received pensions from non-Social Security-covered employment . By December 2025, this change is expected to result in at least a $360 monthly increase in benefits for some beneficiaries.¹ 

Understanding the overpayment issue

Overpayments occur when beneficiaries receive more money than they are entitled to under Social Security rules. These errors can stem from various factors, including miscalculations by the SSA, beneficiaries failing to update their income or marital status, or complex rules that are difficult to navigate. While overpayments represent a small percentage of the SSA’s total payments, they still amounted to nearly $72 billion in improper payments between fiscal years 2015-2022.² 

For beneficiaries, overpayments can come as a surprise. Many assume that the SSA has calculated their benefits correctly and may not realize they have been overpaid until they receive a notice about repayment. This can be a distressing experience, especially for those who are on a tight budget. 

The new policy: What it means

 As of July 24, 2025, the SSA began withholding 50% of affected beneficiaries’ monthly payments, a reversal from the previously proposed 100% rate announced earlier this year. This decision came after widespread concern and media scrutiny over the hardship that full withholding would cause. The 10% rate introduced in 2024 is no longer applicable to new overpayment cases, although it still applies to SSI recipients. 

These changes are part of the SSA’s effort to recoup $23 billion in overpaid benefits from fiscal years 2015 to 2023 — a longstanding issue now receiving heightened attention from policymakers. 

Navigating the repayment process

1. Request a lower withholding rate

Beneficiaries who cannot afford the 50% withholding rate can contact the SSA to request a lower rate. This requires providing detailed information about income, expenses, and financial resources.

2. Appeal the overpayment decision

If beneficiaries believe the overpayment was not their fault or disagree with the amount, they can appeal the decision. The SSA does not pursue recovery while an appeal is pending.

3. Seek a waiver

Beneficiaries can request a waiver of the overpayment recovery if they can demonstrate that the overpayment was not their fault, and that repayment would cause financial hardship.

4. Stay informed

To avoid future overpayments, beneficiaries should regularly update the SSA with any changes to their income, marital status, or work situation. They can also review their benefit calculations to ensure accuracy.

The new Social Security overpayment policy represents a significant change that will have far-reaching consequences for beneficiaries. It’s crucial for individuals to understand their options and take proactive steps to address overpayment issues. Visit: SSA.gov to learn more.