Social Security to Make Major Payroll Change

The Social Security Administration (SSA) is proposing a major change to reduce the amount of incorrect payments made to beneficiaries.

The SSA has requested that payroll data from employers be exchanged with the government department to reduce the reliance on self reporting from those who can access SSA payment programs such as Social Security Disability Insurance (SSDI) benefits and Supplemental Security Income (SSI) payments.

The SSA has faced considerable backlash recently for attempting to claw back overpayments made to beneficiaries, some that amounted to tens of thousands of dollars paid out over several years. Of the estimated $1 trillion in benefits paid out yearly, the SSA estimates it made $13.6 billion in overpayments during the 2022 financial year. The exact number of beneficiaries who owe money is unclear.

The agency has faced questions over how and why billions of dollars have been incorrectly paid out, which it is required by law to reclaim—even from some of the most vulnerable people in American society, including the elderly, disabled and survivors of former claimants.

The proposed change, known as Payroll Information Exchange (PIE), will reduce manual reporting errors and help identify wages that may go unreported, the SSA announced in a press release issued on February 15. The agency claims that "unreported, late reported, and incorrectly reported earnings are often a cause of overpayments" for those who claim SSDI and SSI.

The agency also acknowledges that despite it being law for the agency to reclaim extra money paid out, it can "create financial difficulties for beneficiaries."

A spokesperson for the SSA told Newsweek: "We are working to reduce wage-related improper payments by using our legal authority to establish information exchanges with payroll data providers. These exchanges will help ensure we receive timely and accurate wage data."

They continued: "PIE will help reduce manual reporting errors as well as the reporting burden for individuals who authorize Social Security to obtain their wage and employment information through these information exchanges and work for employers whose payroll data is available through the exchange. PIE will also help to more quickly identify wages that often go unreported or undetected and which can lead to improper payments.

The spokesperson said that the SSA's "payment accuracy rates are high, although overpayments can occur given the number of people we serve, the frequent changes in their circumstances, and the statutory complexity of the programs." Regarding all SSA programs, they said "only one half of one percent of paid amounts are overpayments—an extremely low percentage."

As the change is currently only a proposal, those who claim SSDI and SSI will not see any changes to how they report their income and circumstances to the government agency just yet. Public consultation over the changes is open until April 15.

"Social Security is taking a critically important step to reduce improper payments, including overpayments, by ensuring we receive timely and accurate wage data," commissioner Martin O'Malley said. "These automated payroll information exchanges will address the inefficiencies associated with self-reporting and manual verification by introducing a more streamlined approach."

A spokesperson for the SSA told Newsweek in September 2023: "Social Security is required by law to adjust benefits or recover debts when we establish that someone received payments to which they are not entitled and an overpayment occurs. We must maintain our responsibilities to taxpayers to be good stewards of the trust funds."

"Each person's situation is unique, and we handle overpayments on a case-by-case basis. Overpayments can occur for many reasons, such as when a beneficiary does not timely report work or other changes that can affect their benefits," the spokesperson continued.

"We continually strive to improve stewardship of our programs and reduce improper payments. While staffing losses and resource constraints have challenged our service delivery, our payment accuracy rates remain very high."

Update 2/21/24, 2:27 a.m. ET: This article was updated with comment from the SSA.