1 Billion in Improper Payments

The Social Security Administration is grappling with a "customer service crisis" as it contends with a "record-breaking backlog" of pending actions, resulting in an estimated $1.1 billion in improper beneficiary payments, according to a new report from the Social Security Administration Office of the Inspector General (SSA OIG).

The SSA OIG, responsible for independent oversight of the agency's programs and operations, found that the backlog of pending actions reached an all-time high of 5.2 million as of February. Among these cases, improper payment cases had an average processing time of 698 days, as revealed by a sample evaluated by SSA OIG.

Improper payments encompass instances where beneficiaries are overpaid or underpaid. If the pending cases had been resolved immediately, approximately 528,000 beneficiaries would have received improper payments totaling around $534 million. However, after 12 months, this amount ballooned to roughly $756 million. Many cases remained unresolved for more than a year, resulting in the reported figure of $1.1 billion in improper payments.

Earlier this year, the Social Security Administration implemented new policies to facilitate the resolution of overpayment issues for beneficiaries, easing previous rules that demanded the return of 100% of received funds. Despite these changes, the agency's workflow, compounded by processing delays, continues to leave it vulnerable to inaccurate payments.

According to the SSA OIG report, the findings are based on pending actions at the Social Security Administration's processing centers, which handle appeal decisions, debt collection, record corrections, and benefit determinations. The longer it takes for the agency to process these actions, the longer beneficiaries must wait for underpayments or face larger overpayments that need to be reimbursed, the report noted.

The report highlighted that while some instances of overpayments could be avoided if beneficiaries timely provide necessary information to the Social Security Administration, others are a result of the agency's slow processing times. Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities, emphasized the importance of expedited claim processing and adjustments, regardless of the source of the problem.

Although the Social Security Administration met its performance measure goals for pending processing center actions in four out of the six fiscal years between 2018 and 2023, unexpected staff reductions, increased workloads, and insufficient overtime funding prevented the agency from meeting its targets in two fiscal years, according to the Social Security Administration.

In response to the SSA OIG report, Dustin Brown, acting chief of staff at the Social Security Administration, acknowledged the agency's staffing constraints and growing beneficiary numbers. Brown agreed with the report's recommendations, which include the development of a workload and staffing plan, establishment of performance measures for pending actions, and implementation of time frame targets. However, the successful execution of these recommendations is contingent upon sustained adequate funding for hiring, overtime, and improved technology, Brown emphasized.

Van de Water warned that the Social Security Administration's customer service crisis, characterized by long phone hold times, delays in disability determinations, and inaccurate payments, is likely to exacerbate without adequate funding in its budget. While a Senate proposal aims to increase funding for the fiscal year starting in October, a House version calls for cuts to the agency's funding. Van de Water expressed concerns about overcoming processing delays within such tight budget constraints.

As the Social Security Administration continues to grapple with its backlog and improper payments, stakeholders emphasize the need for substantial funding to ensure efficient processing, accurate payments, and improved customer service.