Audit Finds Social Security Processed Small Overpayments It Could Not Cost-Effectively Recover

The Social Security Administration (SSA) Office of the Inspector General (OIG) has issued an audit report finding SSA spent more to recover certain low-dollar Old-Age, Survivors, and Disability Insurance (OASDI) overpayments than the amounts it ultimately recovered.

The audit, Follow-up on Cost-benefit Analysis of Processing Low-dollar Overpayments, reviewed SSA’s efforts to implement prior recommendations related to capturing the average cost of collecting overpayments and determining whether additional actions could improve the processing of low-dollar overpayments.

SSA previously agreed to update its methodology for calculating the average cost to collect overpayments and to reevaluate its process for pursuing overpayments when collection costs exceed the amount owed.  However, as of the date of the review, SSA had not implemented those recommendations.  According to SSA, establishing a new workload tracking system to address the prior recommendations would require additional resources the Agency did not currently have available.

For the current audit, OIG reviewed a sample of 250 low-dollar OASDI overpayments and found SSA took collection actions on 50 cases that auditors determined were not cost-beneficial because collection efforts likely exceeded the overpayment amounts.  Auditors estimated SSA spent approximately $14,492 attempting to recover these 50 overpayments, which totaled $8,129.

Projected across the broader population, OIG estimated SSA spent approximately $4.6 million to recover nearly 16,000 low-dollar OASDI overpayments totaling about $2.6 million—roughly $2 million more than the Agency could recover.

The report also found SSA policy does not clearly specify the criteria Agency employees should use to determine when collection costs are likely to exceed recovery amounts and should therefore be suspended or terminated.

“Effective stewardship of taxpayer funds requires agencies to ensure collection efforts are cost‑beneficial and consistently applied,” said Michelle L. Anderson, Assistant Inspector General for Audit as First Assistant.  “This audit highlights the need for clearer guidance and more consistent methodologies to help SSA make informed decisions regarding low-dollar overpayments.”

The audit makes recommendations for SSA to:

• Ensure consistency in methodologies used to calculate the average cost of processing overpayments;
• Take appropriate actions on identified low-dollar overpayments that are not cost-beneficial to pursue; and
• Update Agency policy to establish criteria employees should use to determine when collection actions are not cost-beneficial.

SSA agreed to implement the recommendations.

Read the full report here.

Download a PDF of the press release here.