Here's what Long Islanders need to know about the new Social Security overpayment rule

Seniors and others receiving Social Security benefits who are mistakenly overpaid by the federal government could soon see some or all of their monthly checks withheld, depending on the size of the overpayment, under a policy change starting on Thursday.

The Social Security Administration announced earlier this month that overpaid beneficiaries would have 100% of the overpayment deducted from their checks, reversing a policy change enacted one year ago under President Joe Biden that called for a maximum 10% per check. 

"It is our duty to revise the overpayment repayment policy back to full withholding, as it was during the Obama administration and first Trump administration, to properly safeguard taxpayer funds," Lee Dudek, the acting Social Security commissioner, said in the announcement.

Still, AARP projected the 100% rule will result in some people receiving no benefits for a period.

Biden’s 10% rule aimed to reduce overpayments while easing the financial burden on beneficiaries “who receive overpayment notices and somehow had to come up with the money to repay the program or have their benefits docked,” said Dan Adcock, government relations and policy director at the National Committee to Preserve Social Security and Medicare, in a statement.

The 100% rule "needlessly punishes beneficiaries who receive overpayment notices — usually through no fault of their own," he said.

Here are some answers to questions about Social Security overpayments.

How big is the overpayment issue?

The SSA’s Office of the Chief Actuary estimated that reinstating the 100% rule will recover about $7 billion in overpayments over the next decade — less than 1% of total annual benefits.

In the 2022 federal fiscal year alone, overpayments totaled about $6.5 billion, or 0.5% of all the benefits paid that year, according to the Congressional Research Service.

What causes overpayments?

Errors in the SSA’s database occur for many reasons, including faulty processing by SSA employees, incorrect interpretations of regulations and beneficiaries failing to report a change in their circumstances, such as the death of a spouse, the research service found.

For years, the SSA hasn't devoted sufficient resources, including employee time, to maintaining the database, said Bill Sweeney, senior vice president of government affairs at AARP's Washington headquarters.

Now, he’s concerned that the agency’s updated overpayment policy could leave vulnerable people struggling with unexpected debts.

"The agency must take the steps necessary to protect those on fixed incomes from unintended consequences [of the rule change] and ensure the repayment process is fair and manageable," he said.

Who is affected by the 100% rule?

The policy change only affects Social Security overpayments after Thursday, including retirement benefits, family benefits and disability insurance. Previous Social Security overpayments and Supplemental Security Income overpayments are still subject to the 10% rule, according to SSA.

What should I do if I receive an overpayment notice?

Repayment must be made within 30 days of receiving a written notification.

Maria Freese, the national committee's senior legislative representative, said beneficiaries who receive a notification should immediately get on the telephone with the SSA for "as long as it takes, which could be an extremely long time," and schedule an appointment to challenge the claim or negotiate a repayment plan.

"If they can’t get through on the phone, they should write a letter to SSA detailing the information and fax it to the agency," she said.

Is there an appeal process?

Yes.

Call 800-772-1213 or visit the local SSA office to request a lower rate of overpayment recovery.

Beneficiaries can also request that SSA "waive collection of the overpayment if they believe it was not their fault or they cannot afford to pay it back. SSA does not pursue recoveries while an initial appeal or waiver is pending," the agency said.

More information is available at ssa.gov/manage-benefits/repay-overpaid-benefits.

Mitch Goldberg, president and financial adviser at ClientFirst Strategy Inc., a Melville-based investment and financial planning firm, said, "if someone is in dire straits, they need to reach out to SSA and ask for relief."

He added, "You need to be proactive and take control of the problem."

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.