Social Security: Review Team Appointed in Overpayment Scandal — Could Situation Get Worse?

Caucasian Mature woman posing with her son, very sad looking through window worried about loss of her job due Covid-19 pandemic.
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The Social Security Administration is no stranger to controversy, having found itself under the gun in recent years for everything from poor customer service to an outdated system for dealing with inflation. Now the agency faces criticism for its handling of overpayments to hundreds of thousands of recipients.

Last week, SSA Acting Commissioner Kilolo Kijakazi told a congressional hearing that the agency has been sending about 1 million people a year notices that they were paid benefits they weren’t entitled to, CBS News reported. Kijakazi also said she has ordered a “top-to-bottom, comprehensive review” of how the SSA handles overpayments.

Whether that investigation fixes the problem — or eases the concerns of certain lawmakers — remains to be seen. Some U.S. House members have sharply criticized the SSA for sending out billions of dollars in overpayments and then later demanding that beneficiaries pay the money back, according to KFF Health News.

Many of those impacted by these “clawbacks” are poor and disabled. And many of the mistakes run into very high numbers. One woman had to repay more than $300,000 because of a mistake the SSA made.

“Ordinary citizens are being punished for a government failure,” said Rep. Greg Steube (R-Fla.), who cited a recent investigation by KFF Health News and Cox Media Group. “Imagine living paycheck to paycheck with no savings as a result of an injury preventing you from working again and receiving a message from the federal government saying you owe them tens of thousands of dollars because of the government’s mistake, not your mistake.”

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The SSA has pushed back at some of the criticism. In an Oct. 4 news release, the agency noted that it pays $1.4 trillion in benefits to more than 71 million people each year, but only 0.5% of Social Security payments are overpayments. About 8% of Supplemental Security Income (SSI) program payments are overpaid.

The SSA also said there is “misinformation in the media” about the amount of money the agency is trying to collect. In addition, it noted that if a Social Security recipient doesn’t agree that they’ve been overpaid — or believes the amount is incorrect — they can file an appeal and request that the SSA waive collection of the overpayment. There’s no time limit for filing a waiver, according to the agency.

As previously reported by GOBankingRates, benefits are often overpaid when the SSA can’t accurately calculate a benefit amount because its information is wrong or incomplete. This can happen if you don’t share updates with the SSA about life changes such as your ability to work, your living situation, your marital status and your income.

But other overpayments are caused by administrative errors on the part of the SSA, such as a beneficiary not being told about certain reporting requirements. The problem has become big enough that the SSA has been on an aggressive mission to address it.

“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,” Kijakazi said in a statement. “I have designated a senior official to work out of the Office of the Commissioner to lead the team and report directly to me.”

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The congressional hearing was held by the Social Security Subcommittee of the House Ways and Means Committee. It followed joint investigative reports by KFF Health News and Cox Media spotlighting “the trauma many poor, disabled and retired people experience when the government demands they repay benefits they have long since spent.”

Not all lawmakers were so quick to pin the blame solely on the SSA, however. Rep. Linda Sanchez (D-Calif.) said “years of underfunding has severely eroded the Social Security Administration’s customer service,” while Rep. Bill Pascrell (D-N.J.) called the hearing a “smokescreen” that “serves as a cover-up for an extremist agenda to gut Social Security.”

Social Security advocates have warned for years that without adequate funding, the agency is likely to keep making errors.

Officials with the American Federation of Government Employees (AFGE), a labor union that represents 750,000 federal and D.C. government workers, said the SSA is in a “state of emergency” during a June gathering on Capitol Hill in Washington, D.C.

“Due to over a decade of Congressional underfunding we are now an agency in crisis,” Jessica LaPointe, president of AFGE Council 220 representing SSA field office employees, told the gathering. “The fabric of America’s social safety net is deteriorated, and you and your loved ones and our nation’s most vulnerable are at risk of falling through.”

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