‘The government’s got to fix this’: Social Security's $20B overpayment problem

The federal agency that oversees Social Security announced Wednesday that it will review the way it handles “overpayments” — money it sends beneficiaries that it later determines they weren’t entitled to receive.

The Social Security Administration made the announcement weeks after KFF Health News and Cox Media Group reported that the agency has been trying to reclaim billions of dollars from beneficiaries, including many poor, retired, and disabled people who have spent the money and are unable to repay it.

During the 2022 fiscal year, the agency clawed back $4.7 billion of overpayments, while another $21.6 billion remained outstanding, according to a report by SSA’s inspector general.

“Despite our high accuracy rates, I am putting together a team to review our overpayment policies and procedures to further improve how we serve our customers,” Kilolo Kijakazi, acting commissioner of Social Security, said in a news release.

Kijakazi said she had chosen a “senior official” to lead the team and report directly to her.

During the 2022 fiscal year, the agency recovered $4.7 billion of overpayments, according to a report by SSA’s inspector general.

By the time the agency catches an error and notifies a beneficiary that they have been overpaid, years may have passed and the amount involved can reach tens of thousands of dollars or more.

In the wake of the KFF Health News/CMG investigation, some members of the House and Senate called on the Social Security Administration to be held accountable and to change its approach.

“The government’s got to fix this,” Sen. Sherrod Brown (D-Ohio), who chairs a Senate panel that oversees Social Security, said in a recent interview. “It’s a management problem, and people there should be held accountable,” Brown added.

In a tweet today, Sen. Rick Scott (R-Fla.), a member of the Committee on Aging, said he was “glad to see swift action being taken.”

The investigative report showed that overpayments can result from the government making a mistake or from beneficiaries failing to comply with requirements, intentionally or otherwise.

One major factor: to qualify for certain benefits, people are limited as to how much they can save, and the limits haven’t been updated for inflation in decades.

For individuals in one of the Social Security programs, the asset limit now stands at $2,000.

The troubles can also be attributed to rules that are hard for beneficiaries and federal workers to follow; manual processes at the agency that are susceptible to human error; and understaffing that makes it difficult for beneficiaries to get through to SSA employees and for employees to keep up with the workload.

Related: Survey: Crisis of confidence in Social Security system

By the Social Security Administration’s own account, many of the overpayments are a result of errors or lapses on the part of the agency.

Social Security pays $1.4 trillion in benefits to more than 71 million people annually, and about 0.5% of the payments are overpayments, the agency said in the Oct. 4 news release.

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