Many Americans were taken by surprise when they noticed smaller Social Security checks in July. While there hasn’t been an official cut to benefits, a few changes have led to lower payments. Let’s break down the reasons behind this, and what you can do if your check came up short.
Understanding the July Surprise
In July, retirees and disabled individuals who rely on Social Security benefits noticed that their payments were smaller than usual. The reason for this change wasn’t a policy cut, but rather adjustments linked to Medicare, past overpayments, and other factors.
The Social Security Administration (SSA) has been working to recover a significant amount of overpayments made over the past several years. A report shows that $72 billion in improper payments were made between 2015 and 2022. This has led to changes in how beneficiaries’ payments are being calculated.
Why Your July Check Is Smaller
There are three main reasons why Social Security checks for July are smaller than expected:
Overpayment Recoupment
The SSA has started taking stronger actions to recover overpayments. Since April 25, notifications have been sent out to those who were overpaid, and those who didn’t respond within 90 days face a 50% withholding on their future checks.
This means that if you were overpaid in the past, you might see a significant portion of your monthly check withheld to repay that amount.
Rising Medicare Premiums and IRMAA Adjustments
Many beneficiaries are seeing an increase in their Medicare premiums. Medicare Part B enrollees often have premiums automatically deducted, and in some cases, premiums have risen in the middle of the year due to changes in income or late penalties.
Additionally, higher-income beneficiaries may now face Income-Related Monthly Adjustment Amounts (IRMAA), which increase Medicare premium deductions based on their income.
Tax Withholding Changes
Another factor affecting checks is changes to IRS tax withholding rules. Some beneficiaries may see adjustments to their tax withholding based on changes in their income, especially if they have opted for voluntary withholding.
What You Can Do
If your July Social Security check is smaller than expected, there are a few things you can do:
Review Overpayment Notices
If you received an overpayment notice from the SSA after April 25, check the 90-day deadline mentioned in the letter. You can still appeal the decision, request a waiver, or negotiate a lower repayment plan if needed.
Check Medicare Premiums & IRMAA Adjustments
You can log into your account on SSA.gov to view your Medicare deductions. If your income has dropped in 2023, you may be eligible for a reduction in your Medicare surcharge. If needed, you can complete and submit Form SSA-44 to adjust your premium.
Evaluate Your Tax Withholding
If you have taxes withheld from your Social Security check, review your W4V form to ensure it reflects your current income. If your income has changed, updating your withholding might help reduce the amount deducted.
Broader Impact on Social Security Beneficiaries
The smaller payments in July are a reminder that Social Security benefits aren’t just about the fixed monthly payment you receive. Deductions for Medicare premiums, past overpayments, and taxes all affect the net amount you take home.
This can be a significant issue for many beneficiaries who rely on Social Security for their daily expenses.
With over 72 million Americans depending on Social Security, and millions more enrolled in Medicare, even small changes to premiums or tax rates can make a big difference in take-home pay. For many, even a $200 deduction can make a huge impact on their budgets, stretching their finances to the limit.
