Welfare Benefits:

Potential to Recover Hundreds of Millions More in Overpayments

HEHS-95-111: Published: Jun 20, 1995. Publicly Released: Jul 5, 1995.

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Pursuant to a congressional request, GAO reviewed states' efforts to recover benefit overpayments in the Aid to Families with Dependent Children (AFDC), Food Stamp, and Medicaid programs, focusing on: (1) overpayments collected from current and former welfare clients in 1992; (2) factors that help or hinder effective state recovery practices; and (3) how the federal government can help states recover more overpayments.

GAO found that: (1) the states with the highest recovery rates in fiscal year 1992 established claims for a greater portion of their overpayments; (2) successful practices to establish overpayments included using computer matching to identify potential overpayments, more timely efforts to verify overpayments and establish claims, and establishing overpayment claims on the more difficult collection cases; (3) states that used a broader array of recovery tools had greater collection rates than other states; (4) successful practices to recover overpayments included using lower average caseloads for eligibility staff, detailing more staff to recovery efforts, intercepting state income tax refunds, and using automated tracking and billing systems to recover overpayments; and (5) an additional $262 million could have been recovered in 1992 if all states had been as successful as the top performing states. GAO also found that: (1) two of the three federal agencies responsible for overseeing the programs do not help states identify the best recovery practices; and (2) eliminating client consent for temporary reductions in benefits due to administrative errors in the Food Stamp Program and intercepting federal income tax refunds to recover AFDC and Medicaid overpayments could increase overpayment recoveries by millions of dollars annually.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: A provision amending the Food Stamp Act of 1977 to authorize states to offset recipients' benefits without their consent to recover overpayments caused by agency errors is included in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, H.R. 3734--Section 844(b).

    Matter: Congress may wish to consider amending the Food Stamp Act of 1977 to authorize states to offset current recipients' benefits, without their consent, to recover overpayments caused by agency errors.

  2. Status: Closed - Not Implemented

    Comments: A provision allowing states to intercept federal income tax refunds to recover outstanding AFDC overpayments was included in an earlier version of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA); no similar provision was included for Medicaid overpayments. The provision for AFDC overpayments ultimately was omitted in the final version of PRWORA, which abolished the AFDC program and replaced it with a state block grant program, Temporary Assistance for Needy Families (TANF).

    Matter: Congress may wish to consider extending the authority for states to intercept federal income tax refunds to include the recovery of AFDC and Medicaid overpayments.

 

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