Disability Insurance:

SSA Needs to Better Track Efforts and Evaluate Options to Recover Debt and Deter Potential Fraud

GAO-16-331: Published: Apr 13, 2016. Publicly Released: Apr 13, 2016.

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What GAO Found

In fiscal year 2015, the Social Security Administration (SSA) recovered $857 million in Disability Insurance (DI) overpayments that it erroneously made to beneficiaries; however, SSA is missing opportunities to recover more. More than three-fourths of the recovered overpayments in fiscal year 2015 were collected by withholding all or a portion of a beneficiary's monthly benefits. SSA's policy is to set withholding repayment amounts based on a beneficiary's income, expenses, and assets, but its policy regarding which expenses are reasonable is not clear. Moreover, SSA cannot know if repayment periods and amounts are consistently determined due to a lack of oversight, such as supervisory review or targeted quality reviews. Further, SSA lacks concrete plans for pursuing other debt recovery options, while GAO's analysis suggests that some options could potentially increase collections from individuals having their benefits withheld. For example, about half of withholding plans at the end of fiscal year 2015 extended beyond SSA's standard 36-month time frame, and could be shortened. Making the minimum monthly repayment 10 percent of a beneficiary's monthly benefit, instead of the current $10 minimum, would shorten the median length of all scheduled withholding plans by almost a third (from 3.4 years to 2.3 years) and result in an additional $276 million collected over the next 5 years.

While SSA officials reported an increase in recent years in the amount of civil monetary penalties imposed, SSA currently lacks reliable data to effectively track the disposition of penalties and administrative sanctions. For example, SSA cannot readily track the amounts ultimately collected from penalties, which are fines imposed by the Office of the Inspector General (OIG) and collected by SSA. Further, SSA currently has only two paths for collecting on penalties—withholding benefits and voluntary payment. A recent OIG audit found that the majority of uncollected penalty amounts it reviewed were from individuals who were not receiving SSA benefits and with whom SSA had no ongoing collection actions. SSA determined it is able to use certain alternative collection tools, such as wage garnishment, but only recently began drafting regulations to use them, and the regulations are still undergoing internal review. In addition, SSA lacks and had not explored obtaining authority to use other tools for collecting penalties that it uses for collecting overpayments—such as credit bureau reporting. Related to administrative sanctions, SSA could not provide reliable data on how often it imposes sanctions, a punishment in which benefit payments are temporarily stopped. SSA's process of manually entering sanctions information into a database may be subject to errors or omissions. Regional officials said this can result in incomplete information and staff not taking appropriate action on cases. SSA changed its procedure in 2013 to direct that all potential sanctions first be reviewed for potential prosecution or civil monetary penalties, but SSA's lack of reliable data prevents it from determining whether this new procedure achieved the intended effect of more consistent application of sanctions. In an internal evaluation of its procedures, SSA identified weaknesses with how sanctions decisions are tracked and communicated, but it is in the early stages of deciding how to address them. The shortcomings in SSA's use of penalties and sanctions potentially diminish the deterrent value of these actions against individuals who may fraudulently obtain benefits.

Why GAO Did This Study

SSA's DI program provides cash benefits to millions of Americans who can no longer work due to a disability. While most benefits are paid correctly, beneficiary or SSA error can result in overpayments—that is, payments made in excess of what is owed. In fiscal year 2015, SSA detected $1.2 billion in new overpayments, adding to growing cumulative debt. Further, when individuals inappropriately obtain benefits in certain situations, SSA can levy penalties or withhold benefits for a period of time. GAO was asked to study the use of these actions, and SSA efforts to recover overpayments.

This report examined how and to what extent SSA recovers overpayments, and imposes penalties and sanctions. GAO analyzed data on existing DI overpayments and repayment amounts at the end of fiscal year 2015 to determine the effect of potential improvements in recovery methods on collection amounts; and reviewed relevant federal laws, regulations, policies, and studies.

What GAO Recommends

GAO is making eight recommendations to SSA, including: clarify its policy and improve oversight related to debt repayment plans, pursue additional recovery options for overpayments and penalties, and improve its ability to track penalties and sanctions. SSA agreed with seven, but disagreed with a recommendation on debt recovery options. GAO maintains the options merit exploration, as discussed further in the report.

For more information, contact Daniel Bertoni at (202) 512-7215 or bertonid@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: SSA agreed with this recommendation and noted that it has already taken actions to clarify its policies regarding overpayments and waivers, such as delivering video training to its employees in 2015 on these topics. SSA added that it will continue to assess efforts and make other improvements to ensure consistent and accurate application of policy. To the extent that SSA's efforts also address unclear written policies, such actions could help meet the intent of the recommendation.

    Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should clarify its policy for assessing the reasonableness of expenses used in determining beneficiaries' repayment amounts to help ensure that withholding plans are consistently established across the agency and accurately reflect individuals' ability to pay.

    Agency Affected: Social Security Administration

  2. Status: Open

    Comments: SSA agreed with this recommendation and will explore options to improve the oversight of benefit withholding plans. However, it disagreed with requiring supervisory review of repayment plans. We present supervisory review as just one option for improving oversight, and there may be other approaches SSA could explore for improving oversight in this area. Nevertheless, we continue to believe that this option-recommended in prior GAO work-can be an effective option for ensuring that staff create appropriate repayment plans.

    Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should improve oversight of DI benefit withholding agreements to ensure that they are completed appropriately. This could include requiring supervisory review of repayment plans or sampling plans as part of a quality control process, and requiring that supporting documentation for all withholding plans be retained to enable the agency to perform such oversight.

    Agency Affected: Social Security Administration

  3. Status: Open

    Comments: SSA agreed with this recommendation and will explore the feasibility of using additional methods to independently verify financial information provided by beneficiaries when determining repayment amounts.

    Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should explore the feasibility of using additional methods to independently verify financial information provided by beneficiaries to ensure that complete and reliable information is used when determining repayment amounts. These additional tools could include those already being used by the agency for other purposes.

    Agency Affected: Social Security Administration

  4. Status: Open

    Priority recommendation

    Comments: SSA agreed with this recommendation and reported in October 2016 that the President's fiscal year 2017 budget submission included a legislative proposal to do so. We will continue to monitor SSA actions and close the recommendation when SSA adjusts the minimum withholding rate to 10 percent of monthly DI benefits.

    Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should adjust the minimum withholding rate to 10 percent of monthly DI benefits to allow quicker recovery of debt.

    Agency Affected: Social Security Administration

  5. Status: Open

    Comments: As of October 2016, SSA continued to disagree with this recommendation. For debt subject to benefit withholding, which is not considered delinquent debt, SSA asserted that these measures would not have a significant effect on the amount of debt recovered, especially compared to the option of making the minimum withholding rate 10 percent of monthly benefits. For delinquent debt, SSA stated charging interest on debts would require substantial changes to multiple systems that affect its overpayment businesses processes, and would require extensive training to its employees. We continue to believe there is merit in further consideration of these measures. While SSA reported it has studied the potential changes needed to charge interest on debt, without further consideration of, for example, the costs and benefits of charging interest or adjusting withholding amounts according to cost of living adjustments, SSA cannot know the extent to which these options would improve debt recovery efforts or help protect the value of debts against the effects of inflation, which can be substantial given that withholding plans can take decades to complete.

    Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should consider adjusting monthly withholding amounts according to cost of living adjustments or charging interest on debts being collected by withholding benefits. Should SSA determine that it is necessary to do so, it could pursue legislative authority to use recovery tools that it is currently unable to use.

    Agency Affected: Social Security Administration

  6. Status: Open

    Comments: SSA agreed with this recommendation and stated that it has begun drafting regulations to use existing external debt collection tools, as noted in our report. However, SSA lacks timeframes for completing this action. SSA reported that it is also developing a legislative proposal to allow it to use other tools it cannot currently utilize, such as reporting these debts to credit bureaus and withholding federal salary payments. Such actions, if implemented as intended, could help meet the intent of the recommendation.

    Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should pursue additional debt collection tools for collecting delinquent penalties. This includes taking steps to implement tools within its existing authority and exploring the use of those not within its authority, and seeking legislative authority if necessary.

    Agency Affected: Social Security Administration

  7. Status: Open

    Comments: SSA agreed with this recommendation and noted that it is developing workload tracking tools for both, which it expects to implement in FY16, and is in the planning stages of an overpayment redesign effort said that should result in more complete, accurate, and timely data for penalties. Such actions, if implemented as intended, could help meet the intent of the recommendations.

    Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should take steps to collect complete, accurate, and timely data on, and thereby improve its ability to track civil monetary penalties and their disposition.

    Agency Affected: Social Security Administration

  8. Status: Open

    Comments: SSA agreed with this recommendation and noted that it is developing workload tracking tools for both, which it expects to implement in FY16, and is in the planning stages of an overpayment redesign effort said that should result in more complete, accurate, and timely data for penalties. Such actions, if implemented as intended, could help meet the intent of the recommendations.

    Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should take steps to collect complete, accurate, and timely data on, and thereby improve its ability to track administrative sanctions and their disposition.

    Agency Affected: Social Security Administration

 

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