Social Security Benefits Subject to Wage Withholding for Over a Million Recipients Starting July 24; Learn Strategies to Minimize or Elude This Financial Deduction Legally
The Social Security Administration (SSA) has recently started clawing back benefits from those who have been overpaid, effective from July 24. This move is aimed at collecting overpayments, with the SSA typically aiming to do so within 12 months, but extending repayments out to 60 months in some cases.
For beneficiaries facing financial hardship due to these repayments, there are legal tools available to avoid or reduce garnishment.
- Requesting a Waiver
If repaying the overpayment would cause severe financial hardship, beneficiaries can request a waiver from the SSA. The SSA reviews income, expenses, and assets; if the waiver is granted, the debt may be forgiven fully or substantially, avoiding garnishment. The waiver request must be filed within 90 days of the overpayment notice and should be supported by proof like bills and medical expenses.
- Filing for Reconsideration
Beneficiaries can also file for reconsideration to dispute the overpayment amount if they believe the SSA made a mistake. This can stop garnishment or allow negotiation of a reduced repayment amount or garnishment rate, sometimes down from 50% to as low as 10%, depending on the financial situation documented with income and expense details.
- Setting up a Repayment Plan
Beneficiaries can also spread the recovery over time by setting up a repayment plan with the SSA. This can lower the garnishment rate and make repayment more manageable.
- Protecting Your Bank Account
Using direct deposit or a dedicated account for Social Security benefits can help protect these funds from garnishment or levy, making it simpler to identify and protect these funds.
If garnishment has already started, acting promptly by submitting waiver or reconsideration requests or initiating repayment plans is crucial to mitigate the impact. Consulting a qualified attorney can also help understand rights and any complex garnishment situations.
In short, the key legal tools to avoid or reduce Social Security overpayment garnishment are timely waiver requests, reconsideration appeals, repayment plans, and protective banking practices.
The SSA offers three legal options for beneficiaries to satisfy their overpayment: Form SSA-632BK, Form SSA-561, and Form SSA-634. Beneficiaries should familiarise themselves with these forms to navigate the overpayment recovery process effectively.
It's important to note that beefed-up personal identification measures for beneficiaries have been implemented, and since President Donald Trump began his second term, multiple changes have been made to America's leading retirement program. The end to paper checks for Social Security benefits will occur by Sept. 30, 2025, due to a Trump executive order.
Over 1 million beneficiaries are experiencing a significant reduction in their monthly Social Security checks, with approximately $23 billion in Social Security overpayments remaining uncollected at the end of fiscal 2023, and the SSA being tasked with collecting overpayments from nearly 2 million beneficiaries.
For aging workers, workers with disabilities, and survivor beneficiaries, knowing how much they'll receive from the Social Security Administration is important. In each of the last 24 years, a majority of retired workers who receive a monthly benefit from Social Security have relied on it to make ends meet.
For those who have been overpaid, understanding their rights and the available legal tools is crucial to navigating this process effectively and minimising the impact on their financial wellbeing.
- Beneficiaries facing financial hardship due to Social Security overpayment garnishment can request a waiver from the SSA, which reviews income, expenses, and assets to determine if the debt should be forgiven or reduced.
- Those who believe they were incorrectly overpaid can file for reconsideration to dispute the overpayment amount and potentially negotiate a reduced repayment amount or garnishment rate.
- Beneficiaries can also set up a repayment plan with the SSA to spread the recovery over time, which can lower the garnishment rate and make repayment more manageable.
