If you receive more Social Security benefits than you are owed, you may face a 100% default withholding rate from your monthly checks once a new policy goes into effect.

The change announced last week by the Social Security Administration marks a reversal from a 10% default withholding rate that was put in place last year after some beneficiaries received letters demanding immediate repayments for sums that were sometimes tens of thousands of dollars.

The discrepancy — called overpayments — happens when Social Security beneficiaries receive more money than they are owed.

The erroneous payment amounts may occur when beneficiaries fail to report to the Social Security Administration changes in their circumstances that may affect their benefits, according to a 2024 Congressional Research Service report. Overpayments can also happen if the agency does not process the information promptly or due to errors in the way data was entered, how a policy was applied or in the administrative process, according to the report.

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The Social Security Administration paid about $6.5 billion in retirement and disability benefit overpayments in fiscal year 2022, which represents 0.5% of total benefits paid, the Congressional Research Service said in its 2024 report. The agency also paid about $4.6 billion in overpayments for Supplemental Security Income, or SSI, benefits in that year, or about 8% of total benefits paid.

The Social Security Administration recovered about $4.9 billion in Social Security and SSI overpayments in fiscal year 2023. However, the agency had about $23 billion in uncollected overpayments at the end of the 2023 fiscal year, according to the Congressional Research Service.

By defaulting to a 100% withholding rate for overpayments, the Social Security Administration said it may recover about $7 billion in the next decade.  

“We have the significant responsibility to be good stewards of the trust funds for the American people,” Lee Dudek, acting commissioner of the Social Security Administration, said in a statement. “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.”

Social Security beneficiaries who are overpaid benefits after March 27 will automatically be subject to the new 100% withholding rate.

Individuals affected will have the right to appeal both the overpayment decision and the amount, according to the agency. They may also ask for a waiver of the overpayment, if either they cannot afford to pay the money back or if they believe they are not at fault. While an initial appeal or waiver is pending, the agency will not require repayment.

Beneficiaries who cannot afford to fully repay the Social Security Administration may also request a lower recovery rate either by calling the agency or visiting their local office.

For beneficiaries who had an overpayment before March 27, the withholding rate will stay the same and no action is required, the agency said.

At a March 2024 Senate committee hearing, O’Malley called the policy of intercepting 100% of a benefit check “clawback cruelty.”

At the same hearing, Sen. Raphael Warnock, D-Georgia, recalled how one constituent who was overpaid $58,000 could not afford to pay her rent after the Social Security Administration reduced her monthly checks.

Following the Social Security Administration’s announcement that it will return to 100% as the default withholding rate, the National Committee to Preserve Social Security and Medicare said it is concerned the agency may be more susceptible to overpayment errors as it cuts staff.

“This action, ostensibly taken to cut costs at SSA, needlessly punishes beneficiaries who receive overpayment notices — usually through no fault of their own,” the National Committee to Preserve Social Security and Medicare, an advocacy organization, said in a statement.

Total outstanding consumer debt stood at $5 trillion as of January, according to the Federal Reserve’s G.19 consumer credit report released on Friday. That is up slightly from a month earlier but down 0.6% compared to a year ago.

Revolving debt, which mostly includes credit card balances, jumped 8.2% year over year, while nonrevolving debt, such as auto loans and student loans, rose 3%.

“Some small cracks are starting to emerge,” said Ted Rossman, senior industry analyst at Bankrate.

Overall, “consumers are still spending, of course,” Rossman said.

However, “sentiment has been depressed — and has taken another few steps down in recent weeks due to tariff worries,” he added.

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The G.19 report shows “significant-but-not-crazy growth in revolving credit, and moderate growth in nonrevolving and overall credit,” according to Matt Schulz, chief credit analyst at LendingTree.

But economists say Trump’s tariffs on imports from China, Mexico and Canada are bound to raise prices for consumers, which is fueling concern among households. One recent consumer survey found that 86% of Americans said trade tensions are likely to hit their wallets and another 22% have also started stockpiling certain items, regardless of whether they can afford it.

In the last year, credit card debt rose to a record $1.21 trillion, with 34% of credit card borrowers saying they expect to take on more debt this year, according to a separate poll of 2,000 adults in February by CreditCards.com.

Credit cards are also one of the most expensive ways to borrow money. The average credit card currently charges more than 20%, near an all-time high.

“If you have credit card debt — and about half of cardholders do — my best advice is to sign up for a balance transfer card with a lengthy 0% promotion,” Rossman said. Cards offering 12, 15 or even 21 months with no interest on transferred balances are one of the best weapons Americans have in the battle against credit card debt, experts often say.

Working with a reputable nonprofit credit counseling agency is another solid option, Rossman added.

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Cuts to Medicaid will have to be on the menu if House Republicans want to meet their budget goals, the Congressional Budget Office said in a report this week.

The chamber’s budget blueprint includes $880 billion in spending cuts under the House Energy and Commerce Committee, which oversees the program.

Medicaid helps cover medical costs for people who have limited income and resources, as well as benefits not covered by Medicare such as nursing home care.

To curb Medicaid spending, experts say, lawmakers may choose to add work requirements. Doing so would make it so people have to meet certain thresholds, such as 80 hours of work per month, to qualify for Medicaid coverage.

Republicans have not yet suggested specific changes to Medicaid. However, a new KFF poll finds 6 in 10 Americans would support adding work requirements to the program.

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Imposing work requirements may provide a portion of lawmakers’ targeted savings. In 2023, the Congressional Budget Office found implementing work requirements could save $109 billion over 10 years.

Yet that change could also put 36 million Medicaid enrollees at risk of losing their health-care coverage, estimates the Center on Budget and Policy Priorities. That represents about 44% of the approximately 80 million individuals who participate in the program. The estimates focus on adults ages 19 to 64, who would be most likely subject to a work requirement.

The idea of work requirements is not new. Lawmakers have proposed work hurdles to qualify for other safety net programs, including the Supplemental Nutrition Assistance Program, or SNAP.  

The approach shows an ideological difference between the U.S. and European social democracies that accept a baseline responsibility to provide social safety nets, said Farah Khan, a fellow at Brookings Metro’s Center for Community Uplift.

“We view welfare as uniquely polarized based on which party comes into power,” Khan said.

When one party frames it as a moral failing to be poor because you haven’t worked hard enough, that ignores structural inequalities or systemic injustices that may have led individuals to those circumstances, she said.

When Arkansas implemented a work requirement policy in 2018, around 1 in 4 people subject to the requirement, or around 18,000 people total, lost coverage in seven months before the program was stopped, according to the Center on Budget and Policy Priorities. When New Hampshire attempted to implement a work requirement policy with more flexible reporting requirements, 2 in 3 individuals were susceptible to being disenrolled after two months.

“Generally, Medicaid work requirements have resulted in coverage losses without incentivizing or increasing employment and are a policy that is really unnecessary and burdensome,” said Laura Harker, senior policy analyst at the Center on Budget and Policy Priorities.

The “administrative barriers and red tape” from work requirements broadly lead to coverage losses among both working individuals and those who are between jobs or exempt due to disabilities, illnesses or caretaking responsibilities, according to the Center on Budget and Policy Priorities.

Notably, around 9 in 10 Medicaid enrollees are already working or qualify for an exemption, Harker said.

Separate research from the American Enterprise Institute finds that in a given month, the majority of working-age people receiving Medicaid who do not have children do not work enough to meet an 80-hour-per-month requirement.

Consequently, if work requirements are imposed on nondisabled, working-age Medicaid recipients, that would affect a large number of people who are not currently in compliance, said Kevin Corinth, deputy director at the Center on Opportunity and Social Mobility at the American Enterprise Institute.

Either those individuals would increase their work to remain eligible or they wouldn’t, and they would be dropped off the program, Corinth said.

“If you put on work requirements, you’re going to affect a lot of people, which could be good or bad, depending on what your view of work requirements are,” Corinth said.

Lawmakers may also cut Medicaid in other ways: capping the amount of federal funds provided to state Medicaid programs; limiting the amount of federal money per Medicaid recipient; reducing available health services or eliminating coverage for certain groups.