Record backlog in Social Security caused $1 billion in Wrong payments

According to Newsweek The Social Security Administration (SSA) is grappling with an unprecedented backlog, leading to record-breaking improper payments. As of February this year, the backlog had reached a staggering 5.2 million pending actions, resulting in $1.1 billion in improper payments.

The Inspector General highlighted this record-breaking backlog last week, noting that it has been steadily increasing since 2018. This backlog has led to widespread errors, including both overpayments and underpayments.

“The improper payments need to be controlled,” said Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, in an interview with Newsweek. “However, addressing this issue is easier said than done. Overpayments and underpayments are significant concerns, often leading to recipients receiving either too little or too much. In some cases, they are asked to return the excess funds, complicating their financial situations further.”

The SSA has attributed the backlog to a shortage of staff and a heavier workload, compounded by limited funding for overtime.

“Customer satisfaction has long been a concern for the SSA. This report underscores the urgent need for the agency to meet its performance goals and ensure beneficiaries receive their payments accurately and promptly,” stated Michelle Anderson, Assistant Inspector General for Audit and Acting Inspector General for SSA.

Overpayments pose a particular challenge, as they can force seniors to repay significant sums, often totaling thousands of dollars, which can be financially devastating. The SSA frequently does not detect these errors until years later, sometimes leaving beneficiaries with repayment demands of $50,000 to $100,000.

For example, an overpayment error resulted in a beneficiary receiving an extra $9,000 starting in June 2021. The SSA only identified the mistake in May 2023, by which time the overpayments had accumulated to $62,000.

Underpayments are equally problematic, leaving seniors and disabled individuals without essential funds needed for their monthly expenses.

The SSA has seen a dramatic decrease in its workforce over the past few years, with more than 650 fewer employees in processing centers compared to eight years ago. Meanwhile, the number of Americans receiving Social Security has surged from 64 million to nearly 72 million. This translates to roughly one worker for every 1,200 recipients, according to Kevin Thompson, finance expert and founder of 9i Capital Group.

Thompson explained that the imbalance between the number of new beneficiaries and the hiring rate is likely to worsen over time. “The system’s outdated infrastructure and inadequate funding for updates contribute to frequent payment errors,” he said.

Michael Ryan, founder of michaelryanmoney.com, described the backlog as a “mess,” attributing it to a combination of bureaucratic red tape and systemic failures. “We are dealing with a severe mismatch between resources and workload,” Ryan noted.

The scale of these improper payments could erode public trust in the Social Security system, which faces projected funding shortfalls by the mid-2030s. “It’s not just about immediate issues,” Ryan added. “It’s about losing faith in a system people depend on. If there’s uncertainty about whether checks will arrive on time, confidence in the entire system is at risk.”