Millions of seniors and folks with disabilities look forward to receiving their checks from the Social Security Administration (SSA) each month. But when administrative errors lead to overpayments, recipients are often left holding the bag.

Nearly 987,000 Americans were sent overpayment notices in the 2023 fiscal year, admitted SSA acting commissioner Kilolo Kijakazi during testimony before a congressional committee in October.

In the previous fiscal year, over 1 million people were sent overpayment notices, Kijakazi said.

The testimony followed an eye-opening investigation conducted by KFF Health News and Cox Media Group (CMG) that shone a light on the issue of Social Security clawbacks—and what happens when beneficiaries owe back funds that they no longer have on hand.

The investigation revealed there may be multiple problems rooted within the system, which has been underfunded for years, such as overcomplicated rules, insufficient staffing, and issues with collecting and verifying income information.

“We have an overpayment crisis on our hands,” Rebecca Vallas, a senior fellow at think tank The Century Foundation, said in the report.

“Overpayments push already struggling beneficiaries even deeper into poverty and hardship, which is directly counterproductive to the goals of safety-net programs,” she added.

Many Americans can’t afford to pay back the funds

In some cases, overpayments can occur because beneficiaries fail to report changes in wages or assets. But in one recent scorecard, the agency said $265 million of overpayments in the 2022 fiscal year were “within the agency’s control.”

Years can go by before the SSA catches the mistake and sends a notice to the beneficiary, demanding they pay back the funds. But at this point, the beneficiary may have already spent the money, or their total overpayments may have ballooned to a staggering amount over time.

The SSA can also reclaim the funds by slashing or stopping the beneficiary’s monthly payments, garnishing their wages, or intercepting their federal tax refunds.

“They’re saying you should have known that Social Security was giving you too much money, even though they didn’t know they were giving you too much money,” said Laurence Kotlikoff, an economist at Boston University, on an episode of CBS’s 60 Minutes.

The segment also spotlighted several cases, such as Chicago couple Steven and Becky Sword, who received a notice last year that stated they had 30 days to repay the $51,887 they'd been overpaid.

Steven, at 62, works as a security guard and makes $16 an hour. He started receiving Supplemental Security Income benefits in 2017 while recovering from a pancreatic disease.

The couple said the agency held them accountable for not realizing the payments were in excess of what they should have actually received, even though they’d been faxing Steven’s paystubs to the SSA each month.

The Swords worried they might lose their home when they received the notice.

Kotlikoff says people can appeal the decision or request a waiver, but it’s typically only granted if they’re extremely poor.

60 Minutes noted that all the beneficiaries interviewed for the segment had previously asked Social Security to waive their debts and were denied. But after the broadcast's correspondents reached out to the agency about their cases, the agency told them they would no longer have to pay.

The SSA says it has plans for improving the system

The SSA recovered $4.7 billion in overpayments during the 2022 fiscal year but still ended the year with a balance of $21.6 billion in uncollected overpayments, according to a November 2022 report from the Office of the Inspector General.

In Kijakazi’s testimony, she said the agency is already implementing or planning on making improvements that may make it easier for beneficiaries to request waivers or prevent overpayments in the first place.

One of these upcoming changes includes the Payroll Information Exchange, which will allow the SSA to tap into wage and employment data from a payroll data provider instead of relying on wage reports from beneficiaries themselves.

It is unclear, however, when this new system will be implemented after being unauthorized by Congress eight years ago.

The agency will also be appointing a team to review how it handles overpayments.