Audit Highlight: Top 5 Reasons Social Security Overpayments Happen

Beyond the Numbers

Thursday, July 9, 2015
Posted by: 
The Communications Division

Has Social Security ever told you (or a family member) that your benefit payment amount was too high, you were overpaid, and you owe money to the Agency? Ever wondered how overpayments occur and what SSA is doing to correct and prevent these errors?

We’ll assume you answered “yes” above, so sharpen your pencil, grab a calculator, and take a seat. It’s time for a quick lesson on Social Security benefit overpayments.

We bring this up because, in a recent audit report,  we estimated that over 10 years, SSA paid 4 million people about $16.8 billion more than they were supposed to receive. To make these estimates, our auditors reviewed about 1,500 in-pay Disability Insurance (DI) and Supplemental Security Income (SSI) cases from 2003.

The overpayment totals are one thing, but what causes those payment errors? 

Overpayment Causes

Social Security overpayments occur for a number of reasons, as the audit listed:  

1. Work Activity or Change in Income

Payment errors related to work activity or income changes can happen a number of ways: beneficiaries don’t report these changes to SSA when they’re required to, SSA doesn’t schedule work activity reviews with beneficiaries as it’s encourage to do, or beneficiaries actively conceal the information from SSA (this is fraud, by the way). You can read more about these types of overpayments here

2. Medical Improvement

When SSA finds beneficiaries medically improve, the agency terminates benefits. Beneficiaries, however, can appeal the termination decision and request that benefits continue during the appeals process—if the termination decision is upheld, payments made during the appeals process are “overpayments,” but they’re considered unavoidable because law requires SSA to make payments during the appeal.

3. Multiple-Reason Combined Overpayment

This one, actually, is self-explanatory.

4. Imprisonment or Fugitive Status

The Social Security Act prohibits payments to people in prison or fugitive felons actively fleeing law enforcement. The Inspector General recently discussed with Congress our and SSA’s efforts to prevent payments to prisoners and fugitive felons.

5. Payment Issues after Death

We’ve long encouraged SSA to maintain accurate death records to terminate payments to deceased beneficiaries, limit overpayments, and prevent deceased payee fraud. You might remember the Inspector General discussed this issue with “60 Minutes” and Congress earlier this year.

Recovering and Preventing Overpayments

We estimated SSA had recovered $8.1 billion of the $16.8 billion in overpayments, meaning people repaid the money to SSA. It can take SSA years to recover an overpayment (beneficiaries can dispute overpayments, overpayments can be reconsidered, beneficiaries can pursue a payment plan or a settlement, etc.) 

Overpayment notices aren’t hard and fast, however. SSA also waived or cancelled $2.4 billion of the overpayments identified in the audit. SSA can waive an overpayment collection if the beneficiary isn’t at fault and meets other criteria. 

SSA is also taking steps to avoid overpayments.  For example:   

  • Proposing computer data matches so it can receive wage information on beneficiaries and ensure correct benefit amounts;
  • Using third-party databases to verify beneficiaries’ property and resources (which can affect payment amounts); and
  • Prioritizing regular reviews to make sure people are still eligible for payments, according to SSA rules.

For perspective, last year SSA paid $141 billion to 11 million DI beneficiaries, and $51 billion to 8 million SSI recipients. Still, we and SSA take payment accuracy seriously, so it’s worthwhile to review this information, to identify overpayments, and to alert the Agency and Social Security stakeholders about these issues.   

For much more information, check out the report, Overpayments in SSA’s Disability Programs – A 10-Year Study. Class dismissed!