What the GAO Found About Improper Payments in Government Programs Since 2003
The GAO Report on Improper Payments: What It Means
The Government Accountability Office (GAO) reported in 2023 that federal agencies had made approximately $2.7 trillion in improper payments since 2003. This figure includes overpayments (money sent when it shouldn't have been), underpayments (money withheld that should have been sent), and duplicate payments. The report does not mean $2.7 trillion was stolen or that you personally received money you shouldn't have—it means the total across all federal benefit programs, tax refunds, and other payments contained errors that added up to that sum over two decades.
The programs most affected include Social Security, Medicare, Medicaid, unemployment insurance, and the Earned Income Tax Credit (EITC). Improper payments happen for many reasons: data entry mistakes, outdated income information, system failures, fraud, and administrative errors. Understanding what the GAO found helps you know what safeguards exist and what to watch for in your own accounts.
Key Takeaways
- The GAO found $2.7 trillion in improper payments across federal programs from 2003 to 2023, spread across Social Security, Medicare, Medicaid, unemployment, and tax credits.
- Improper payments include overpayments you may have to repay, underpayments you didn't receive, and duplicate payments—not just fraud.
- The largest improper payment rates occur in Medicaid, Medicare, and unemployment insurance, where may be able to access changes frequently and verification is complex.
- You can reduce your own risk by reporting income changes promptly, keeping records of your benefits, and reviewing statements for errors.
- If you receive an overpayment notice, you have the right to request a hearing and appeal before repayment is required.
Which Programs Had the Most Improper Payments
Medicaid and Medicare together accounted for the largest share of improper payments in the GAO report. Medicaid improper payments often stem from may be able to access verification failures—someone reports a change in income or household size but the state system doesn't update in time, or a person remains enrolled after they no longer may have access to. Medicare improper payments frequently involve billing errors, duplicate claims, and overpayments to providers that flow through to beneficiaries.
Unemployment insurance saw significant improper payments, especially during the pandemic when claims surged and verification systems were overwhelmed. Social Security improper payments typically involve work-related earnings that reduce benefits but are not reported, or continued payments after a beneficiary's death. The Earned Income Tax Credit (EITC) improper payment rate is high because may be able to access depends on income, filing status, and dependent claims that are difficult to verify in real time.
The common thread: programs where may be able to access changes frequently, where beneficiaries report their own information, or where data systems don't talk to each other are most vulnerable to error.
Why Improper Payments Happen
Most improper payments are not intentional fraud. They result from system gaps, timing delays, and human error. When you report a change to one agency, that information may not reach another agency for weeks or months. A state unemployment office may not know you started a new job until you file taxes months later. A Social Security office may not learn of your death until a family member reports it, and payments continue in the meantime.
Data matching between agencies is incomplete. The IRS, Social Security Administration, state workforce agencies, and Medicaid programs do not all share real-time access to the same income or employment databases. This means a person can be overpaid by one program while underpaid by another, and no one catches it immediately.
Staffing shortages and outdated computer systems also play a role. Many state benefit programs run on decades-old software that cannot easily cross-check information or flag inconsistencies. When a caseworker is handling hundreds of cases, errors slip through.
What Happens When an Improper Payment Is Discovered
If a federal agency or state program determines you received an overpayment, they will send you a notice explaining the amount, the reason, and how you can respond. You do not automatically have to repay immediately. You have the right to request a hearing, present evidence, and appeal the decision before repayment is required.
The process varies by program. Social Security overpayments can be appealed through the Social Security Administration's Appeals Council. Medicaid overpayments are handled by your state's Medicaid agency. Unemployment overpayments go through your state's workforce agency. In each case, you can request a hearing where you can explain your side—for example, if you reported the change but the agency failed to process it, or if you believed you were may have access to to the payment.
Repayment plans are often available. If you cannot repay a large overpayment in one lump sum, you can request a payment arrangement. Agencies may also offset future benefits or tax refunds to recover the overpayment, though they must notify you before doing so.
How to Protect Yourself From Overpayments
Report changes in your circumstances as soon as they happen. If your income changes, your household composition changes, you move, or your employment status changes, contact the relevant program immediately. Do not wait for the program to discover the change. Prompt reporting creates a paper trail that protects you if a dispute arises later.
Keep records of everything you report. Save copies of letters, emails, and the dates you called. If you report a change by phone, ask for a confirmation number. If you report online, print or screenshot the confirmation page. These records are your proof if the agency later claims you did not report the change.
Review your statements and benefit notices regularly. If you receive a notice that your benefit amount changed, read it carefully. If the reason does not match what you know about your situation, contact the agency immediately. Do not assume the notice is correct just because it came from the government.
If you work while receiving benefits, track your earnings carefully and report them on time. Many improper payments in Social Security and unemployment occur because work income was not reported or was reported late. Keep pay stubs and provide them to the program if asked.
What the GAO Recommends and What Agencies Are Doing
The GAO has recommended that federal agencies improve data matching between programs, invest in modern computer systems, and strengthen verification procedures. Some agencies have begun implementing these changes. The Social Security Administration has improved its death records matching. States have upgraded unemployment insurance systems. The Centers for Medicare and Medicaid Services has expanded real-time may be able to access verification in some states.
However, these improvements take time and money. Many state systems remain outdated, and federal agencies still do not share data in real time. The GAO continues to monitor improper payment rates and publishes annual reports on agency progress. You can find these reports on the GAO website if you want to see which programs are improving and which are still struggling.
Your Rights If You Disagree With an Overpayment Decision
You have the right to appeal any overpayment information. The first step is usually a reconsideration, where you submit new evidence or explain why you believe the decision is wrong. If the agency denies your reconsideration, you can request a hearing before an administrative law judge. At the hearing, you can present documents, witnesses, and your own testimony.
You do not need a lawyer to appeal, though you can hire one if you choose. Many legal aid organizations offer free help with benefit appeals. If you cannot afford to repay while your appeal is pending, you can request a stay of collection, which pauses repayment until the appeal is decided. Ask the agency about this option when you file your appeal.
Frequently Asked Questions
If I received an overpayment, do I have to repay it all at once?
No. You can request a payment plan. Agencies typically allow you to repay over several months or years, depending on the amount. Contact the agency's overpayment or collections department and explain your financial situation. They will work with you to set up a manageable plan.
What if I reported a change but the agency says I didn't?
This is why documentation matters. If you have a confirmation number, a letter, an email, or a screenshot showing you reported the change, bring it to your appeal hearing. The burden is on the agency to prove you did not report it. Your records are your defense.
Can the government take my tax refund to pay back an overpayment?
Yes, but only after notifying you. Agencies can offset federal tax refunds, state tax refunds, and sometimes other federal payments to recover overpayments. You have the right to request a hearing before the offset occurs. If you believe the overpayment was an error, appeal before your refund is seized.
How do I know if I'm at risk of an overpayment?
You are at higher risk if your income or household situation changes frequently, if you work while receiving benefits, or if you receive multiple benefits from different programs. Review your statements monthly, report changes immediately, and keep records. These steps reduce your risk significantly.
Where can I find the full GAO report on improper payments?
The GAO publishes annual reports on improper payments on its website at www.gao.gov. Search for "improper payments" or "payment integrity" to find the most recent report. The report includes data by program and agency, so you can see which programs have the highest error rates.