Social Security Head Promises to End Overpayment Error

The new head of the Social Security Administration has pledged to overhaul the agency's widespread overpayment errors so that Americans don't find themselves tens or even hundreds of thousands of dollars in debt.

An overpayment error on the SSA's part can occur over the span of several years and lead to a lifetime of debt for seniors and those living with disabilities. Many have reported receiving letters from the SSA informing them of its error and that they now owe a substantial amount they would likely never be able to pay off.

Martin O'Malley, who became SSA's commissioner in December, said he plans to reboot the agency's overpayment system, telling KFF Health News he would soon propose changes to help Americans avoid Social Security debt.

The commissioner said that "addressing the injustice we do to too many Americans because of overpayments, the rather cruel-hearted and mindless way that we recover those overpayments," would be one of his top goals moving forward.

What that looks like is unclear, but O'Malley suggested a statute of limitations as an early step. He also said he would like to make the agency liable for proof and establish a 10 percent cap on clawbacks for some recipients.

"We do have the ability and we do have the authority to address many of these injustices," O'Malley said.

The SSA has been found to reduce or even eliminate payments to those who were overpaid their Social Security benefits, even if the overpayments were solely the SSA's error.

"You would think in a world of automated payments, Social Security overpayments would be a thing of the past, but they still happen fairly regularly," Alex Beene, a financial literacy instructor for the state of Tennessee, told Newsweek. "Be it a technical error in how benefits were applied or a software miscalculation, they happen."

Because years or even decades can pass before the SSA recognizes its mistake, some recipients have been told they're on the line for $100,000 or more.

KFF Health News and Cox Media Group estimated that each year, more than 2 million Americans receive repayment demands related to overpayment errors.

Those who receive benefits from the SSA's Supplemental Security Income program often have no other income to rely on, as the benefits go to people who are elderly or disabled.

"Overpayments can have devastating consequences for people with disabilities who rely on these vital benefits to make ends meet," Darcy Milburn, the director of Social Security and health care policy at The Arc of the United States, told Newsweek. "With limited incomes and restrictive asset limits already pushing many into poverty, being hit with an overpayment that must be repaid can force agonizing choices between basics like food, housing, and medical care."

For this group of Americans in particular, asking for the cash back can be cruel, Beene said.

"You're dealing with one of the most vulnerable groups of Americans who rely on that income and normally don't want to have to go through the process of seeing whether extra money, no matter the amount, is an overpayment," Beene continued. "This is really an issue the SSA needs to tackle on the front end to ensure these overpayments never occur."

If O'Malley's rules go into effect, seniors and those living with disabilities wouldn't be punished for being unable to repay their debts.

"We're not fulfilling congressional intent by putting seniors out of their homes and having them live under a bridge when they didn't understand our notice," O'Malley told KFF Health News.

The SSA's overpayment problems haven't gone unnoticed by Congress either. Late last year, Senator Ron Wyden of Oregon said he would continue meeting with the SSA until the problem was fixed.

And in February, Senators Gary Peters and Debbie Stabenow of Michigan brought attention to the issue of overpayments in a letter.

In 2023 alone, the SSA brought in $4.9 billion in overpayments, but there is still $23 billion waiting to be repaid by beneficiaries, the agency said.

"To be honest, a lot of problems [are caused by] our notices being hard to read," O'Malley said. "In fact, one might argue that the only thing that's really clear about the notice is to call the 800 number."

Even when they call, Social Security recipients may face lengthy hold times, with the agency reporting an average wait time of over 30 minutes in 2022.

This situation is only exacerbated by the SSA's low staffing levels.

"We've been unpacking many of these customer service challenges," O'Malley said. "There's not one of them that hasn't been made worse by the short staff."