Social Security: Overpayment process changes underway after billions mismanaged

The Social Security Administration is reviewing its overpayment process after mispayment of billions worth of benefits that people must now pay back.

The Social Security Administration (SSA) said it plans to review how it handles overpayments of Social Security benefits. It wants to make it easier for impacted Americans to navigate the recovery and waiver processes if they believe they shouldn't have to pay the money back.

SSA pays $1.4 trillion in benefits to more than 71 million people annually and gets it right in most instances. However, in 0.5% of cases, beneficiaries may have received overpayments of Social Security benefits. That number rises to 8% for overpayments of the Supplemental Security Income (SSI) program. The agency, by law, is required to adjust benefits or recover debts.

How much that amounts to is calculated on a case-by-case basis and can be subject to appeal if the person disagrees that they've been overpaid, according to Kilolo Kijakazi, Acting Commissioner of Social Security. Kijakazi said that the agency wants to improve the process of appeals and waivers for Americans who may have been overpaid. 

Some changes have already happened, including a just-released streamlined waiver request form. The form is both easier to understand and makes requesting a debt recovery waiver less burdensome. SSA is also developing a new electronic payroll data exchange program that will automatically use wage information to adjust payment amounts when appropriate to prevent overpayments. Additionally, the agency intends to publish a proposed rule to streamline processes and reduce the burden so eligible individuals can more easily seek debt relief.

"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. "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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Kijakazi said that recent media claims that SSA is trying to clawback $21 billion in payments is incorrect. This figure was derived from the total amount of overpayments over the program's history. 

However, a separate SSA statement said that between the fiscal years of 2015 and 2019, the agency paid roughly $283.4 billion to SSI recipients – $21 billion (7.0%) was estimated to have been overpaid and $3.7 billion (1.3%) was estimated to have been underpaid. During the 2022 fiscal year, the agency recovered $4.7 billion of overpayments, according to a report by SSA's inspector general.

Overpayments can happen for several reasons, including:

People who have received an overpayment will receive an overpayment notice from SSA. The notice should explain the reason for overpayment, the amount, repayment options and appeal and waiver rights.

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If you agree that the overpayment occurred and that the overpayment amount is correct, review your options for repayment. Otherwise, you risk having your full benefit amount withheld monthly to pay the overpayment. Total withholding will start 30 days after SSA sends the notice of overpayment. For Supplemental Security Income (SSI), SSA keeps 10% of the maximum federal benefit rate each month, starting 60 days after notification.

Americans impacted by overpayments can petition to pay a smaller amount or ask the agency to waive repayment. Not repaying it can lead to both credit score damage and money taken from future tax refunds and benefit payments.

If you think the SSA made an error, you can file an appeal and use the form SSA-561 to explain why you believe you have not been overpaid or think the amount is incorrect. The SSA provides additional options for situations where a financial hardship makes it not likely you can pay back the money.

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