A recent report by the US Social Security Administration’s Inspector General, named “The Social Security Administration’s Major Management and Performance Challenges During Fiscal Year 2023”, notes that the U.S. Social Security Administration (SSA) faces a daunting task: distributing over $1 trillion in benefits to millions of Americans every year, while ensuring that payments are accurate and compliant with regulations. However, like many social security systems worldwide, the U.S. SSA has struggled with improper payments—both overpayments and underpayments—which were estimated to have totaled $13.6 billion in fiscal year 2022 alone. Improper payments are a major challenge for which the Inspector General advises the US SSA to “Improve the Prevention, Detection, and Recovery of Improper Payments”.

These issues are not unique to the U.S. SSA; they are shared by social security systems around the world.  In many regions, outdated systems, manual processes, and a lack of integration and automation exacerbate the challenge. As more people rely on social security for income, health benefits, and other supports, the need to prevent, detect, and recover improper payments becomes increasingly urgent. Fortunately, modern solutions like Interact SSAS offer powerful tools to address these challenges, automating many aspects of social security management and ensuring greater compliance and accuracy across the board.

Findings from the U.S. SSA Report on Improper Payments

The report on the U.S. SSA’s improper payments highlights several key issues that can be directly applied to social security administrations globally:

1. Manual Processes and Human Error

One of the leading causes of improper payments in the U.S. SSA is the reliance on manual processes.  Even though many processes such as calculating benefits, processing contributions, or tracking changes in beneficiary status, are automated to a high degree already, there is always a need for manual interventions for certain exceptions which leave room for error. The report notes that in many cases, overpayments occurred due to incorrect data entry or delayed updates regarding a beneficiary’s eligibility status.

This challenge resonates in social security systems worldwide. In developing regions, where infrastructure may be limited and systems may rely heavily on manual operations, the risk of error is high. Without robust automation, social security administrators must manually verify beneficiary information, leading to delays and inaccuracies.

2. Incomplete Reporting from Beneficiaries

Another key issue raised in the report is the under-reporting of key changes by beneficiaries. Social security recipients may fail to notify the administration when their circumstances change—such as when they get a new job, experience a change in family status, or receive other income—which can lead to overpayments.

In many countries, particularly those with large informal economies or weak data-sharing systems, beneficiaries may not have the means or awareness to report such changes. This further complicates the administration’s ability to ensure that payments are accurate.

3. Challenges in Recovering Overpayments

While the U.S. SSA recovered over $4.9 billion in overpayments in FY 2022, it still had an uncollected overpayment balance of $23 billion. This highlights the difficulty in recovering improper payments once they occur. Recovery efforts are often hampered by system limitations, lack of timely information, and the complexity of tracking down recipients who have been overpaid.

For social security systems in the Caribbean, Africa, and Asia, recovering overpayments can be even more challenging, especially in countries where beneficiaries are dispersed across vast rural areas or lack stable banking connections.

A Global Challenge for Social Security Administrations

These challenges—manual processes, incomplete reporting, and difficulty in recovering overpayments—are not isolated to the U.S. Social security systems worldwide face similar issues, and without the right technological infrastructure, these problems are impossible to resolve. Social security systems are under increasing pressure to deliver benefits accurately and on time while avoiding fraud and improper payments. In some countries, these problems may be compounded by limited resources, lack of automation, and compliance challenges in rapidly growing or evolving economies.

How Interact SSAS Can Solve These Challenges

Interact SSAS is a powerful, all-in-one social security administration platform designed to address the exact challenges highlighted in the U.S. SSA report. With its comprehensive functionality, Interact SSAS can help social security systems globally improve their payment accuracy, streamline compliance processes, and efficiently manage payments. Below are key features of Interact SSAS that directly address the prevention, detection, and recovery of improper payments.

1. Automation to Prevent Improper Payments

Automation is critical to minimizing human error and preventing improper payments from happening in the first place. Interact SSAS automates many key processes, ensuring that benefit calculations, contributions, and reporting are all done accurately and consistently:

• Automated Data Population: Contributions, benefit payments, and other transactions are automatically calculated based on real-time data integration. This reduces the manual work involved and minimizes the chances of human error.  The flexibility of configuration through a policy-based setup ensures that all key calculations can be automated without the need for customization of source code.
• Integration with External Data Sources: Interact SSAS can connect to external data sources —such as government databases, financial institutions, and employers— using APIs, to verify eligibility and contribution information in real-time. This real-time integration ensures that payments are based on the most up-to-date information available.
• Preventive Compliance Management: The system tracks compliance at multiple levels, ensuring that contributors, beneficiaries, and employers provide accurate and timely information. Compliance audits and regular checks are automated to identify potential issues before they become improper payments.  At a minimum, this ensures, among others, that payments are only made to the right person, but beyond this, it also ensures that calculations are done based on the correct and most recent information.

2. Detection of Improper Payments Through Trial and Simulation Steps

If an improper payment is about to occur, Interact SSAS offers several layers of detection through a robust system of trial steps and simulations. Before any payment is finalized, SSA officers first have an extensive Review, Approval and Audit Workflow to ensure accuracy and following this they can review the payment through “Trial Processes” that provide detailed calculations and comparisons:

• Trial Steps and Simulations: The payment process goes through several “trial” steps before the transaction is finalized. These trial steps simulate the final outcome, allowing officers to check for discrepancies in the data. For example, before benefit payments are processed, the system runs a trial calculation to allow the user to verify the amounts.  Trial steps exist for benefit amount calculation, trial register reports, trial check runs, trial bank files and trial GL entries.
• Reports and Audit Trails: Each trial step is accompanied by comparison reports and audit trails, which enable officers to track any changes made to the data. If any irregularities are detected, such as unusually high payments or other discrepancies, the particular transaction(s) can be put on hold and a Case can be opened for further investigation.
• Red Flag Detection: The system’s reports will help with identifying suspicious transactions, opening Cases and obtaining additional information to help officers identify potential fraud or errors. Officers can investigate these red flags before approving the payment.

3. Recovery of Improper Payments with Receivables Management

When improper payments do occur, recovering those funds is critical to maintaining the integrity of the social security system. Interact SSAS simplifies the recovery process by providing detailed tracking, possible repayment plans, and automatic penalties for delinquent payments:

• Receivables Management: This module tracks overpayments and creates invoices for the recovery of improper payments. The system offers flexible options for beneficiaries to repay overpaid amounts, including installment plans. Beneficiaries can also receive penalties for late payments or non-compliance.
• Post-Transaction Adjustments: If a payment error is identified after the transaction has been finalized, SSA officers can make adjustments in compliance with Generally Accepted Accounting Principles (GAAP). These adjustments are tracked in audit trails and reflected in future transactions, ensuring transparency and accuracy.

Compliance, Delinquency, KYC, and Case Management: Enhancing Oversight and Accountability

One of the greatest strengths of Interact SSAS is its ability to enforce compliance, track delinquencies, and manage cases effectively. Social security systems worldwide need robust compliance features to prevent fraud, reduce errors, and maintain the integrity of their operations. Interact SSAS provides several modules to ensure that all stakeholders follow the rules and that any discrepancies are quickly addressed:

Compliance Management

• Automated Compliance Checks: The Compliance Management module ensures that all employers, contributors, and beneficiaries comply with social security regulations. Regular audits are scheduled, and any violations are flagged for follow-up. This helps prevent errors such as under-reporting or non-compliance with contribution obligations.
• Audit Scheduling and Findings: Audits are automated and conducted at regular intervals or on-demand, ensuring that all contributors are compliant with social security laws. Findings from audits can trigger corrective actions or penalties, which are tracked in the system.

Delinquency Management

• Tracking Delinquent Accounts: The Delinquency Management module monitors employers, healthcare providers, and individuals who fail to meet their obligations, such as missed payments or under-reporting employment and related contributions. The system automatically flags delinquent entities and sends reminders or notices for corrective action.
• Recovery of Delinquent Payments: The module integrates with receivables management, allowing social security administrators to recover unpaid contributions or penalties efficiently.

KYC (Know Your Customer) Management

• Ensuring Accurate Beneficiary Information: The KYC Management module ensures that all beneficiary and contributor information is accurate and up-to-date. This is crucial for preventing improper payments caused by outdated or incorrect information.
• Automated Document Audits: The system periodically audits beneficiary documents (e.g., ID, proof of address), prompting updates when necessary. This ensures that the administration always has the most current information on file.

Case Management

• Comprehensive Case Handling: Case Management is integrated into the entire system, allowing SSA officers to open, manage, and resolve cases related to fraud, improper payments, or compliance violations. Each case is tracked, with detailed notes and audit trails, ensuring that all issues are addressed transparently.
• Fraud Investigations: Fraudulent activities can be flagged for further investigation, and cases are automatically escalated to the appropriate officers for resolution.

Flexibility with Accountability: On-the-Fly Adjustments with Full Audit Tracking

Social security administrators often face unique cases that require deviations from standard rules. Interact SSAS allows for on-the-fly adjustments to payments or contributions when necessary, but with stringent oversight to maintain accountability:

• Real-Time Adjustments: SSA officers, with the right user access credentials and authorizations, can override standard rules and make manual adjustments to benefit payments or contributions when necessary. This is particularly useful for handling unique situations that fall outside the standard policies.
• Audit Trail and Approval Workflow: Every override or adjustment is tracked in the system, creating a comprehensive audit trail that shows who made the change, why it was made, and the impact on the transaction. These adjustments can be made to go through a workflow for approval, ensuring that no unauthorized changes are made without proper oversight.

Conclusion: A Global Solution for Social Security Administrations

The findings from the U.S. SSA report highlight the universal challenges social security systems face when it comes to managing improper payments, fraud, and compliance. For social security administrations in the Caribbean, Africa, and Asia, these issues can be particularly pressing, if limited resources and manual processes exacerbate the risk of error.

Interact SSAS provides a comprehensive solution to these challenges by automating processes, extensive reporting, review and approval workflow, ensuring compliance, and enabling detailed oversight through trial steps, audit trails, and flexible management tools. With features like Compliance, Delinquency, KYC, and Case Management, the platform provides the structure needed to enforce rules and ensure that all transactions are accurate, transparent, and accountable.

By adopting a solution like Interact SSAS, social security systems worldwide can improve their ability to prevent, detect, and recover improper payments, ultimately safeguarding the financial sustainability of their programs and building greater public trust in their operations.