Government Overpayment Mistakes Have Consequential Human Costs
Lisa A. Gennetian
February 23, 2025
In July 2023, a loved one received an official letter from the Social Security Administration. The two-page document was a bill for $120,000 owed due to overpayment of benefits. Payment was due within 30 days.
This loved one, who has an intellectual and cognitive disability, works part-time, Monday through Friday, at a local postsecondary institution delivering mail and packages. He spends his money in the local economy on rent, food, and other local goods and services. He pays taxes. He is a reliable worker and follows a solid daily routine as a good citizen. As he has a very rudimentary understanding of finances, his transactions are automated as much as possible. Big numbers, including bills for $120,000, are hard for him to comprehend, so he did what any reasonable person would do upon receiving this official-looking letter: he shared it with his family members.
That’s how I began learning about the underworld of Social Security disability payments. His stable financial situation, which had lasted three decades and which he and his family members had all worked hard to generate and prioritize, was completely upended on the drop of a dime (or, more specifically, a letter).
In December 2023, over 7 million people received Supplemental Security Income (SSI) and over 8 million people received Social Security Disability Insurance (SSDI) benefits in the U.S. Just under 1 million of SSI recipients were children under the age of 18. Just over 53 percent are adults aged 18-64. The average monthly SSI payment was $675.
Approximately 7 percent of SSI benefits in 2021 were estimated to include overpayments. Overpayment is typically discovered well after recipients have received their payments and also well after the money is spent. The end result: a complex, lengthy legal and bureaucratic process. People with disabilities receiving SSI benefits are suddenly thrown into debt, and their formerly reliable source of income ceases with very little time to recover.
The majority of SSI and SSDI overpayments are a result of changes in employment or earnings and adjustments due to offsets. To be eligible and retain eligibility for SSI, a person must be unable to engage in substantial gainful activity, defined as earning a certain monthly amount net of disability-related work expenses. Substantial gainful activity in 2024 was defined as earnings of $1550/month. At a federal benefit rate of $943/month for an individual, that totals $29,916/year, approximately the official poverty level. This is a nice figure demonstrating how much a person can earn and retain SSI or SSDI benefits.
“Administrative and process errors by federal agency” as a root cause of overpayment is deemed negligible in the reported data, yet this is the one that could be the most consequential—the one with great human cost. The invoice received by our loved one from SSA provided a one-sentence explanation that “symptoms improved from 2012-2022.” Upon a request to receive more detail from the local SSA agency, we were offered nine additional pages of detailed monthly overpayments over this ten-year period. The size of the amount owed coupled with an indefinite stoppage of monthly payments was quite a blow; it nearly caused a heart attack for my elderly father upon hearing of our loved one’s predicament.
What happened next is a story of resources and capacity surrounding this loved one. We hired a lawyer, dug out the large box with detailed documentation of this loved one’s disabilities since birth, and jump-started a campaign to secure the attention of a government worker to review the case. Eight months later, SSDI payments resumed.
You might wonder how the reinstatement was revealed: our loved one noticed a large sum of money in his bank account in January 2024. That was it. No letter, no notification, and no acknowledgment of error.
This type of procedural error, likely due to an algorithm instated in response to general budget shortfalls, is potentially the cruelest type of eligibility cliff. This loved one contributes to the economy as a member of the service sector, similar to the occupations of about one-third of all working SSI recipients. In the current push for “government efficiency,” errors with unintended consequences like this risk further undermining these diligent workers’ financial security.
Perhaps more troubling is that there are solutions:
Prospective (versus retrospective) review of eligibility with recertification as proposed by Smalligan and Boyens (2023) would reduce work- and earnings-related overpayments.
Permanent eligibility determination would exclude individuals with intellectual and related disabilities (who nonetheless contribute to society as working individuals), like the loved one in our family, from overpayment reviews.
Improving efficiency of waivers for overpayment is yet another way to avoid such shocks.
Investing in caseworker and related supervisory capacity at SSA could also help; algorithms are only as good as the error-free evaluations and outcomes produced.
This loved one’s situation reveals an irony of U.S. safety net programs. Safety should not be premised on people having the capacity, agency, and resources that it currently takes to reinstate a net that is unexpectedly removed.
