Improper Social Security Payments Reach $1.1 Billion; Agency Backlog Hits All-Time High

The agency placed the blame partly on a shortage of workers and funding.

A Social Security card sits alongside checks from the U.S. Treasury in Washington on Oct. 14, 2021. Kevin Dietsch/Getty Images

The backlog of payment actions at the Social Security Administration (SSA) is now at a “record-breaking” level, causing the agency to make more than a billion dollars in improper payments to beneficiaries, according to the SSA’s Office of Inspector General (OIG).

The SSA’s backlog of pending actions hit an “all-time high” of 5.2 million as of February, the OIG said in an Aug. 8 statement, citing an analysis published in June. Pending actions at the agency’s claims processing centers that remain unresolved for a long period of time have resulted in “larger improper payments, including growing underpayments or increasing overpayments to beneficiaries.”

Overpayments put Social Security beneficiaries under a great burden since the agency will ask them to pay back the overpaid amount at any time. Some recipients may not be in a financial position to repay.

Meanwhile, underpayments mean beneficiaries don’t receive their correct monthly payment, which is financially challenging for many recipients.

The delay in resolving pending actions caused the SSA to make $1.1 billion worth of improper payments by February, the OIG stated.

“Customer satisfaction has been an ongoing concern for SSA,” said Michelle Anderson, acting inspector general for SSA. “This report continues to highlight the urgency for SSA to reach its pending actions performance goal and to ensure beneficiaries receive their proper payments as promptly as possible.”

SSA blamed the “record-breaking” backlog on increased workload, staff reductions, and lower-than-expected funding for overtime. Overtime funding could be used to pay workers to resolve more pending actions, thus reducing the backlog, the agency said.

The SSA had reviewed the draft version of the OIG report and sent a response to the watchdog in June. The agency agreed on the need to trim the processing centers’ pending actions backlog and processing delays. However, that would require “additional resources,” it said in its response.

The SSA pointed out that the agency has “over 650 fewer employees working on processing centers’ workloads now than we did eight years ago, while our beneficiary count has risen from roughly 64 million people to nearly 72 million in that same time period.”

Moreover, the SSA is experiencing staffing challenges with high separation rates in key roles. Without adequate funding, the agency is “left to prioritize growing workloads with our current resources in mind.”

Improper Payment Issue

The OIG pointed out in its report that the SSA failed to reduce its processing center pending actions over the past six years, causing the backlog to rise from 3.2 million in fiscal year 2018 to 4.6 million last year.

As the backlog kept growing, pending actions remained unresolved for longer periods, the report stated. Of 139 actions by processing centers (PC) analyzed by the OIG, almost three-fourths were pending for 300 days or more, with 43 percent unresolved for 500 days or longer.

“Once processed, PC pending actions can result in improper payments,” the report reads.

“The longer it takes SSA to process PC pending actions, the longer beneficiaries wait for underpayments due or they receive larger overpayments to pay back.”

In one instance, the SSA initially identified an overpaid beneficiary in June 2021 when the person had received $9,000 in excess money from the agency. However, the SSA only took action to collect overpayments about two years later, in May 2023. During this time, the overpayments continued, with the overpaid amount totaling $62,000.

Even though the beneficiary sought a waiver arguing that the agency was at fault and that the individual couldn’t afford to pay back the money, the person had to agree to make partial payments to resolve the case, the report stated.

For improper payments, the SSA has taken certain actions. In March, the agency announced a new rule easing burdens on overpayment recipients.

Earlier, the SSA would have withheld 100 percent of a beneficiary’s monthly benefits until the overpaid amount was collected.

However, the new rule dismissed this practice. Instead, the agency now collects 10 percent or $10, whichever is greater, of the overpaid amount from the monthly benefits to recover overpayments.

“Social Security is taking a critically important step towards our goal of ensuring our overpayment policies are fair, equitable, and do not unduly harm anyone,” Martin O’Malley, commissioner of Social Security, said at the time.

In February, the SSA proposed a rule for using information from payroll data providers in its calculations. The proposed Payroll Information Exchange is expected to reduce manual reporting errors, which could then reduce improper payments, the agency stated.