GAO-16-375SP: Income security: 31. Disability Insurance and Federal Workers' Compensation

Income security > 31. Disability Insurance and Federal Workers' Compensation

The Social Security Administration should take steps to minimize overpayments from the Social Security Disability Insurance program to individuals who also received federal workers’ compensation, which could help to achieve potential cost savings associated with millions of dollars of overpayments from the Social Security Disability Insurance program.

Why This Area Is Important

Both the Social Security Disability Insurance (DI) program and Department of Labor’s (DOL) Federal Employees’ Compensation Act (FECA) program provide an important safety net for workers by providing wage-loss compensation for workers with disabilities. The DI program, which is administered by the Social Security Administration (SSA), is the nation’s largest cash assistance program for workers with disabilities. In fiscal year 2014, the DI program paid more than $142 billion in benefits to approximately 11 million beneficiaries.[1] The FECA program, which is administered by DOL’s Office of Workers’ Compensation Programs, provides wage-loss, medical, and rehabilitation compensation to federal employees who suffer work-related injuries and illnesses. In fiscal year 2012, the FECA program provided nearly 243,000 federal workers and survivors over $3 billion in benefits for work-related injuries, illnesses, or deaths.[2]

SSA must offset DI benefits if the sum of an individual’s monthly DI and FECA benefit payments exceeds a certain statutory limit.[3] If SSA does not obtain timely and accurate information about an individual’s FECA benefits, overpayments can accrue. SSA officials reported that the agency made an estimated $371.5 million in DI overpayments stemming from concurrent FECA benefits from fiscal year 2009 through fiscal year 2013, but GAO was unable to determine how much of these funds SSA has recovered.The estimated $371.5 million in FECA-related overpayments accounts for about 6 percent of the total DI overpayments of more than $6.1 billion that the agency recognized during that period. Overpayments adversely affect program integrity and may also create economic hardship for individuals who have to repay overpayment debts once they have been detected. Further, overpayments in the DI program weaken the financial status of the DI trust fund. Based on provisions in the Bipartisan Budget Act of 2015, SSA projects that the DI trust fund reserves will be exhausted in 2022.



[1]Social Security Administration, Agency Financial Report, Fiscal Year 2014 (Nov. 10, 2014).   

[2]Department of Labor, Office of Workers’ Compensation Programs, Annual Report to the Congress, Fiscal Year 2012 (Washington, D.C.: February 2014). This fiscal year 2012 report was the most recent available at the time of GAO’s July 2015 report.

[3]42 U.S.C. § 424a(a); 5 U.S.C. § 8116(d)(1) . The applicable limit referred to here is the higher of either (1) 80 percent of the individual’s average current earnings or (2) total family benefits. SSA calculates the average current earnings based, in part, on previous wages earned. For more information on average current earnings, see SSA Program Operations Manual System (POMS), section DI 52150.010. SSA’s calculation of total family benefits includes the total of all monthly benefits for the primary beneficiary and any auxiliaries, such as spouses and children. For more information on total family benefits, see SSA POMS, section DI 52150.005.   

What GAO Found

In a July 2015 report, GAO analyzed DI and FECA beneficiary data and found that SSA detected concurrent FECA payments received by some, but not all individuals who received these concurrent payments during at least 1 calendar month of the period from July 1, 2011 through June 30, 2014, which was the time frame for GAO’s analysis.[1] Federal law requires SSA to reduce DI benefits for some individuals receiving workers’ compensation payments, including FECA payments, and SSA risks overpaying benefits if it does not do so. GAO found the following:

  • SSA successfully detected FECA payments for approximately 4,090 individuals, or about 52 percent of the approximately 7,860 individuals who received concurrent FECA and DI payments during that period.
     
  • SSA did not detect concurrent FECA payments for approximately 1,040 individuals, or about 13 percent of the population of individuals who received concurrent FECA and DI payments during that period.[2] These 1,040 individuals received a total of $48 million in DI benefits during this period, but the electronic data GAO received did not contain the detailed information necessary for GAO to determine the exact amount of DI overpayments that SSA may have made if the agency did not offset these overlapping benefits in accordance with federal law.[3]
     
  • Due to limitations in the SSA data GAO received, GAO was unable to determine whether SSA detected concurrent FECA benefits for about 2,730 individuals (about 35 percent) who received concurrent FECA and DI payments during that period.

GAO’s nongeneralizable case studies showed that SSA’s internal controls did not detect and prevent potential DI overpayments to any of the 20 beneficiaries GAO selected for additional review.[4] SSA’s internal controls for helping to prevent DI overpayments due to the concurrent receipt of FECA benefits rely on beneficiaries to self-report any workers’ compensation benefits, including FECA benefits. SSA officials agreed that relying on beneficiaries to self-report benefits presents a challenge in identifying overpayments related to the concurrent receipt of FECA benefits. Further, GAO has previously concluded that agencies’ reliance on self-reported data poses an internal-control weakness that affects program integrity.[5] For 7 of the 20 individuals GAO reviewed, SSA did not detect and prevent potential overpayments for more than a decade, resulting in potential overpayments totaling more than $100,000 for each of these 7 individuals. GAO’s analysis of the nongeneralizable case studies also found that SSA made potential overpayments to 8 individuals who reported their workers’ compensation payments to SSA because agency staff did not obtain sufficient proof of the workers’ compensation payments, as required by SSA policy, to offset their DI benefits and prevent these potential overpayments.[6] GAO referred these 20 cases to SSA for further review. However, GAO describes these as potential overpayments because SSA had not yet established overpayments for these individuals at the time of GAO’s July 2015 report.

SSA has not compared the costs and benefits of routinely matching SSA and FECA data, but it might benefit from doing so. SSA officials told GAO that they have spent more than a decade exploring the best way to match DOL’s FECA data with SSA data to prevent DI overpayments, but SSA is not currently performing a routine match of these data. SSA previously stated that it would not be cost-effective to perform a routine match of FECA data with SSA data to help prevent DI overpayments, but SSA did not consider specific cost and benefit information in making this determination. Standards for Internal Control in the Federal Government state that management should design and implement internal controls based on the related cost and benefits.[7] Additionally, the Office of Management and Budget (OMB) has issued guidance stating that a program may be justified if its benefits outweigh its costs. In this context, making such a determination would involve comparing the costs and benefits of alternatives to SSA’s current approach for reducing these overpayments, which relies on beneficiaries to self-report any FECA benefits they receive. These alternatives may include, among others, obtaining available FECA data to prevent overpayments. Comparing alternatives for reducing these overpayments would help SSA to determine which option presents the best opportunity to detect and prevent DI overpayments related to FECA benefits.



[1]The period of July 1, 2011, through June 30, 2014, represents DOL’s chargeback years 2012 through 2014. The term “chargeback” refers to the process by which DOL bills employing agencies for their compensation costs incurred during the preceding year. A single chargeback year is from July 1 through June 30. GAO’s analysis may understate the population of individuals receiving concurrent DI and FECA benefits for several reasons that are described in the July 2015 report on which this text is based. GAO identified whether SSA detected concurrent benefits using a specific variable in SSA’s data, in accordance with instruction from SSA officials.

[2]GAO’s analysis of the DI data GAO received also indicates that, at the time of GAO’s July 2015 review, SSA had not offset the DI benefits for these approximately 1,040 individuals who received concurrent FECA payments that the agency did not detect. SSA officials confirmed that GAO’s analysis indicates that the agency had not offset DI benefits for the approximately 1,040 individuals that the agency did not know were receiving FECA benefits at the time of GAO’s July 2015 review.   

[3]SSA’s rules for calculating the DI offset for FECA benefits stipulate that certain benefit increases, such as cost of living adjustments (COLA), are to be protected from offset. To do this, SSA must identify the first possible month that an individual received both FECA and DI—that is, the first possible month of offset, regardless of whether the offset is actually imposed—and exclude from offset any COLAs to the DI benefit that occur in subsequent months (DI 52150.055). Because the DI and FECA payment data GAO used to perform this work are limited to July 1, 2011, through June 30, 2014, GAO was unable to identify any DI or any FECA payments prior to July 1, 2011. Further, the FECA payment data do not contain a variable that indicates the first date that FECA benefits are payable, meaning that GAO could not use the data to identify whether the first possible month of offset occurred before the time frame of GAO’s data extracts. Thus, GAO could not use the electronic data GAO received to identify the first possible month of offset for all individuals in GAO’s population, and consequently GAO could not calculate the exact amount of potential DI benefit overpayments that occurred during this period in accordance with SSA policy.   

[4]As part of the work described here, GAO reviewed case files for a nongeneralizable sample of 20 individuals, selected based on their risk of DI overpayments. Specifically, we randomly selected 10 individuals who received 15 or more concurrent FECA payments during a single calendar year that were not detected by SSA. Individuals who received 15 or more undetected concurrent FECA and DI payments in a single calendar year represent approximately the top 5 percent of individuals who received undetected concurrent payments for a single calendar year. We believe the number of undetected concurrent payments these individuals received in a single year suggests that they may be at a higher risk of receiving overpayments. We also randomly selected 10 individuals who received 14 or fewer undetected concurrent FECA payments during a single calendar year. We then consulted with SSA staff to determine whether SSA overpaid these beneficiaries due to the concurrent receipt of FECA benefits. Because we selected a small number of individuals for further review, these examples cannot be generalized to the population of individuals receiving concurrent DI and FECA payments.

[5]GAO, Federal Employees’ Compensation Act: Preliminary Observations of Fraud-Prevention Controls, GAO-12-402 (Washington, D.C.: Jan. 25, 2012).   

[6]SSA POMS, section DI 52140.010, requires agency staff to document all allegations of workers’ compensation and public disability benefits and obtain all relevant payment rates, dates, lump-sum settlements, and any subsequent changes to these workers’ compensation or public disability payments.

[7]GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).   

Actions Needed

To improve SSA’s ability to detect, prevent, and recover potential DI benefit overpayments due to the concurrent receipt of FECA benefits, GAO recommended in July 2015 that the Commissioner of Social Security take the following four actions:

  • Review the potential DI overpayments resulting from FECA benefits identified in GAO’s case studies, as well as any indicators of fraudulent activity related to FECA benefits that were not self-reported by DI beneficiaries, and establish debt-collection efforts and fraud-related penalties, as appropriate.
     
  • Review the instances described in GAO’s report in which SSA staff did not obtain proof of FECA benefits that were reported by DI beneficiaries and (1) determine the reasons for these occurrences and whether this is a pervasive problem; and (2) if necessary, design appropriate controls or make other efforts, such as staff training, to help ensure SSA staff obtain proof of workers’ compensation payments, as required by SSA policy.
     
  • In accordance with OMB guidance, compare the costs and benefits of alternatives to SSA’s current approach for reducing the potential for overpayments that result from the concurrent receipt of FECA benefits, which relies on beneficiaries to self-report any FECA benefits they receive. These alternatives could include, among others, routinely matching DOL’s FECA program data with DI program data to detect potential DI overpayments.
     
  • Strengthen internal controls designed to prevent DI overpayments due to the concurrent receipt of FECA benefits by implementing the alternative that provides the greatest net benefits.

Due to limitations in the data GAO received, GAO was not able to determine the exact amount of DI overpayments that SSA may have made if the agency did not offset DI benefits in accordance with federal law for the population of individuals GAO identified as receiving potential overpayments. As such, GAO cannot quantify the exact amount of savings that SSA could realize by properly offsetting DI benefits for those individuals.

How GAO Conducted Its Work

The information contained in this analysis is based on findings from the July 2015 report listed in the related GAO products section. For that work, GAO compared DI beneficiary data to FECA beneficiary data to identify individuals who received concurrent DI and FECA benefits in at least 1 month from July 1, 2011, through June 30, 2014—the most current data available at the time GAO began its work. GAO reviewed agency documentation and interviewed officials to identify relevant internal controls. GAO also reviewed case files for a nongeneralizable sample of 20 individuals, selected based on their risk of DI overpayments. GAO also reviewed information on DI overpayments and recovery efforts.

Table 18 in appendix V lists the programs GAO identified that might have opportunities for cost savings or revenue enhancement. 

Agency Comments & GAO Contact

In commenting on the July 2015 report on which this analysis is based, SSA stated that although the agency believes improper payments caused by DI beneficiaries receiving FECA benefits represent a small portion of all DI overpayments, it agreed with all four recommendations GAO made. SSA said it would review the cases that GAO identified where SSA did not detect the receipt of FECA benefits. SSA also proposed reviewing a sample of individuals that GAO’s report identifies as being at risk of overpayments due to the concurrent receipt of FECA benefits, including some individuals receiving FECA payments that SSA had not detected at the time of GAO’s July 2015 report. Additionally, SSA said it will analyze alternatives to its current FECA benefit processes by December 31, 2015. SSA also stated that the agency is working with DOL on a new data exchange to access data on FECA payments. SSA said that once it conducts the analysis and case reviews, as described above, it will identify and decide on additional steps needed to strengthen internal controls on the concurrent receipt of DI and FECA benefits. Because SSA has not yet initiated specific actions to implement GAO’s recommendations, it is too early for GAO to determine whether the actions the agency outlined in its official comments on a draft of GAO’s July 2015 report would fully address the intent of the recommendations. However, if effectively implemented, the actions could prevent overlapping payments in the two programs and reduce the amount of improper payments made to recipients. GAO plans to continue to monitor the agency’s efforts in this area. In an e-mail GAO received on June 16, 2015, DOL’s Fiscal Branch Chief, Division of Federal Employees’ Compensation, did not provide comments on the findings but noted that SSA had contacted DOL to set up a meeting to discuss exchanging data, including FECA data.

GAO provided a draft of this report section to SSA and DOL for their review and comment. In response, SSA stated that the agency is continuing to have discussions with DOL to reach a data matching agreement that would allow SSA to obtain FECA data for DI beneficiaries who receive concurrent FECA payments. SSA also stated that the agency is reviewing its internal controls related to concurrent FECA payments. Finally, the agency stated that it expects to complete its reviews of the cases GAO referred to the agency and establish debt-collection efforts and any fraud related penalties as appropriate by June 30, 2016. Because SSA has not completed its work in this area, it is too early to determine whether these actions will address the problems GAO identified. GAO will continue to monitor SSA’s work in this area. DOL had no comments on this section of the report.

For additional information about this area, contact Seto J. Bagdoyan at (202) 512-6722 or bagdoyans@gao.gov.

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