The Social Security Administration Made $8 Billion in Improper Payments in 2009

According to Patrick P. O’Carroll Jr., Inspector General, Social Security Administration (“SSA”), the SSA made $6.5 billion in overpayments to people in 2009. Further, O’Carroll stated that SSA made nearly $1.5 billion in underpayments, raising the total amount of improper payments to $8 billion in the 2009 budget year.

Approximately $4 billion of overpayments in 2009 were made under the agency’s Supplemental Security Income program, which is designed to help aged, blind, and disabled people, who have little or no income, and to provide cash to meet basic needs for food, clothing, and shelter. Approximately 10 percent of the payments made by the agency’s Supplemental Security Income program were improper. O’Carroll told a congressional panel on Tuesday, June 14, 2011, that most of the overpayments went to people who did not report all their assets.

Error rates, however, were much smaller for retirement, survivor and disability benefits, which account for the overwhelming majority of Social Security payments. O’Carroll informed the congressional panel that approximately 99.5 percent of all retirement and disability payments were accurate in 2009. According to O’Carroll, the agency made $660 billion in retirement, survivors and disability payments in 2009, including an estimated $2.5 billion in overpayments and $600 million in underpayments.

In 2009, President Barack Obama directed federal agencies to reduce improper payments, and last year, Congress set a goal of reducing the payments by $50 billion by 2012. O’Carroll said the agency is working to improve accuracy, but acknowledged that more must be done. Throughout the federal government, improper payments totaled $125 billion in 2010, up from $110 billion in 2009. Only two other agencies – the United States Departments of Health and Human Services and the United States Department of Labor – had more improper payments than SSA.

SSA’s finances face intense scrutiny because the trust funds that support the retirement and disability program are projected to be depleted by 2036. At that point, SSA would collect enough in payroll taxes to pay approximately 75 percent of benefits. SSA administers the Supplemental Security Income program, but it is financed separately, by general revenues. Reducing overpayments by SSI could save taxpayers billions, but it would not affect the finances of the larger retirement and disability programs.