SSA Acting to Address Improper Payments

Social Security Commissioner Martin O’Malley on March 20 outlined steps the Social Security Administration (SSA) will be taking to address overpayments and underpayments. The announcement came during his testimony before the Senate Select Committee on Aging regarding the current state of the Social Security system and plans to improve its operations and services. 

“Our overall accuracy rates are 99.34% for Social Security and 90.80% for SSI based on our stewardship reviews,” O’Malley told the committee. Nonetheless, he averred, “despite our best efforts, we sometimes get it wrong and pay beneficiaries more than they are due.”

To address overpayments, O’Malley reported, the SSA will be taking the following steps. 

• Default withholding. Beginning March 25, the SSA will stop what O’Malley called “the heavy-handed practice” of intercepting all of an overpaid beneficiary’s monthly Social Security benefit by default if do not respond to an SSA demand that the overpayment be returned. Instead, he said, the SSA will use “a much more reasonable default withholding rate of 10% of monthly benefits.”
• Burden of proof. O’Malley said that the SSA will be reframing its guidance and procedures so that Social Security claimants do not bear the burden of proving there was an overpayment when it is determining whether there is any evidence that the claimant was to blame for an overpayment. 
• Repayment period. O’Malley noted that the SSA recently changed its policy regarding repayment plans, and that it will approve repayment plans of up to 60 months. He said this will encompass “the vast majority” of beneficiaries who ask for a repayment plan. 
• To qualify, Social Security beneficiaries can qualify for a repayment plan if they provide a verbal summary of their income, resources, and expenses; he added that recipients of the means-tested SSI program would not need to provide even that. 
• Waivers. The SSA “will be making it much easier” for beneficiaries who overpaid to request a waiver of repayment if they believe that they were not at fault or cannot repay the overpayment. 

But SSA’s attention is not only focused on overpayments—they also are working to address underpayments, O’Malley said. “As of March 11, we have processed 46,319 underpayments and released approximately $120 million this fiscal year to our customers with these aged and priority underpayments. And we are on track to complete 98 percent of these underpayments by the end of FY 2025,” he reported. 

“Implementing these policy changes—with proper education and training across the people, policies, and systems of the agency—is an important but complex shift. And we are undertaking that shift with urgency, diligence, and speed,” O’Malley told the senators. 

The Big Picture

O’Malley told the committee that by the end of fiscal year 2024, the SSA will have served more than 7 million more beneficiaries, while at the same time they will have approximately 7,000 fewer full-time permanent staff than they did in FY 2015. Modernization has helped mitigate the effect of those simultaneous trends, he said, but nonetheless “there is no way around the fact that the agency cannot keep doing more with less.” 

Agency funding has been key to that state of affairs, O’Malley said, noting that the SSA budget was fairly level from FY 2018 through FY 2021, while the costs it incurred continued to increase. “We had to make difficult decisions to cut funding in certain areas, such as staffing and overtime,” he said, noting that the result was that by the end of FY 2022, the SSA had its smallest staff in 25 years.

Due to underfunding and understaffing, O’Malley said that Social Security faces a “dire” situation, and that “the public we serve is paying the price as they attempt to access the benefits that they have already worked their whole lives to earn.” 

The problem, he suggested, is not profligate spending by the agency; he said the committee members “may be surprised to learn” that it operates on funding that amounts to less than 1% of its annual benefit payments. “This is extremely low—much lower than private insurance companies,” remarked the commissioner. 

“We can and must do better. We want to work with Congress to sustain the funding increases in the President’s FY 2025 budget and beyond, to enable SSA to improve service levels and reduce wait times,” said O’Malley.