GAO-16-375SP: Income security: 32. Disablitiy Insurance Overpayments

Income security > 32. Disablitiy Insurance Overpayments

To help prevent the loss of billions of dollars, the Social Security Administration should take steps to prevent overpayments to beneficiaries of the Disability Insurance program and improper waivers of beneficiaries’ overpayment debt.

Why This Area Is Important

The Social Security Administration’s (SSA) Disability Insurance (DI) program is one of the nation’s largest cash assistance programs for workers with disabilities. In fiscal year 2014, about 11 million individuals with disabilities and their dependents received approximately $143 billion in DI benefits. During the same year, SSA reported detecting $1.3 billion in new DI benefit overpayments, which occur when SSA pays benefits in excess of what is due or continues to pay those who are no longer eligible.[1] Overpayments often result when a beneficiary returns to work and starts earning income above a certain level, but the earnings activity is not properly reported to or processed by SSA. Overpayments can pose a financial hardship for beneficiaries responsible for repaying the debt. They may also result in the loss of taxpayer dollars when beneficiaries do not repay their overpayments or when SSA grants a waiver of the overpayment. Further, overpayments can contribute to the weakened financial status of the DI trust fund.[2]



[1]SSA provided GAO summary data on new DI beneficiary debt detected each fiscal year for fiscal years 2005 through 2014. SSA cites the source of these data as the agency’s fourth quarter report for the Treasury Report on Receivables (TROR) for each fiscal year.

[2]According to SSA, the DI trust fund reserves will be exhausted in 2022.

What GAO Found

In October 2015, GAO found that over the last 10 years, more than half of DI overpayment debt resulted from SSA paying benefits to individuals whose  earnings  exceeded program limits (referred to hereafter as “work-related” overpayments). According to data provided by SSA, the agency overpaid DI beneficiaries a total of about $20 billion during fiscal years 2005 through 2014, of which $11.5 billion was work related.[1] These data also showed that, on average, 28 percent of all overpaid beneficiaries received excess benefits because their work activity exceeded program limits.[2] The average work-related overpayment per beneficiary was almost $12,000 during this period, compared to about $3,300 for other types of overpayments.

SSA’s process for handling work reports by beneficiaries has internal control and other weaknesses that increase the risk of overpayments, even when DI beneficiaries follow program rules and report work and earnings. These weaknesses include the following:[3]

  • Processing weaknesses. GAO found that, due to unclear guidance and other process vulnerabilities, SSA staff may bypass established procedures and not (1) initiate tracking of work activity in eWork, which would help prevent overpayments and (2) issue a receipt to the beneficiary—as required by law—that proves the beneficiary’s work was reported.[4] For example, GAO found that SSA’s 800-number teleservice staff may send work reports to the field office for manual entry and processing, rather than directly entering the information into eWork. Work reports handled this way can be more easily missed or overlooked and are at risk of being deleted or marked as completed without action being taken. In addition, insufficient automation coupled with weak procedures for monitoring alerts may result in work information submitted by concurrent beneficiaries—i.e., those receiving both Supplemental Security Income (SSI) and DI benefits—being tracked for one but not both programs.[5] Data are not available to determine the full extent to which such vulnerabilities result in overpayments.
     
  • Limited oversight. While SSA tracks timeliness of staff action on work reports, it lacks procedures for how staff should screen such reports and oversight procedures to help ensure that the actions taken were appropriate.
     
  • No automated reporting options.The DI program lacks automated tools to report work, such as an automated telephone system and a smartphone application.[6] Although SSA officials said there is an internal proposal to automate DI work reports, they did not provide details on how or when this would occur. Without automation, SSA must rely on its current approach of manually entering into its systems work reports provided by beneficiaries in person or by phone, mail, or fax, which is vulnerable to error. Automated reporting options similar to those currently used in the SSI program could help minimize the potential effect of vulnerabilities. 
     
  • Inadequate beneficiary guidance.  GAO found that beneficiaries may receive inadequate and inconsistent guidance on when to report their work due to (1) unclear work reporting requirements and complex rules that SSA staff may not fully understand and (2) infrequent reminders and limited information sent to beneficiaries about potential liability for overpayments.[7] SSA provides some additional written materials to beneficiaries to inform them about their benefits, but this information is only distributed upon request and does not clarify requirements for reporting work.

GAO also found that over the last 10 years, $2.4 billion in overpayment debt was permanently waived by SSA, and more than half (60 percent) of those waivers were for work-related overpayments.[8] The averagenumber of waivers based on work activity annually was about 16,200, or 36 percent of the total. Moreover, a higher percentage of work-related overpayments was waived compared to the percentage of nonwork-related overpayments (17 percent versus 12 percent). The average annual work-related waiver amount was about $8,800 during the 10-year period compared to about $3,400 for nonwork-related waivers.

SSA’s processes for handling requests to waive overpayments lack sufficient controls to help ensure appropriate decisions are made, especially those involving low dollar amounts. Two recent reviews—conducted by SSA and SSA’s Office of Inspector General (OIG)—found high error rates in documenting DI and other waivers. For example, although SSA’s Debt Management System[9] is supposed to prevent staff from administratively waiving overpayments over $1,000, a 2015 SSA quality review report noted that the system currently inappropriately allows SSA staff to do so.[10] A 2015 SSA OIG study found significant variation in DI and other waiver documentation and approval rates among field offices. The study also noted that some field offices with high waiver approval rates also had a high incidence of waivers under $1,000, which require less documentation.  In response to the reviews, SSA has already taken some steps to improve waiver policy and training.  Nevertheless, SSA’s quality reviews conducted at the discretion of local offices do not target the appropriateness of DI waiver decisions—especially those under $2,000, which do not require supervisory review and comprise almost a third of all waiver decisions—for the purpose of performance monitoring and improvement. Further, for waivers under $1,000, SSA’s practice is to document the waiver decision as a remark in the beneficiary’s Debt Management System record, then delete such remarks after 6 months. Without additional oversight, such as targeted reviews of DI waivers, staff may systematically waive overpayments incorrectly, particularly for waivers involving low dollar amounts.



[1]SSA provided data on all DI overpayments that were work related for each year in the 10-year period. SSA cites the source of these data as the agency’s Recovery of Overpayments, Accounting and Reporting (ROAR) system, which reflects the current amount of beneficiary overpayments and the date established. This differs from the TROR that SSA used to provide data on new DI beneficiary debt, which indicated a total of $14 billion in new SSA legally defined overpayments to beneficiaries. Specifically, SSA officials explained that TROR does not include what SSA characterizes as nonlegally-defined overpayments, such as benefits issued for the month of death.

[2]Tracking beneficiaries over a 10-year period, a recent SSA Office of the Inspector General (OIG) study found that within a national sample of 985 DI beneficiaries it reviewed, 26 percent (259) of DI beneficiaries were assessed overpayments and of these, about 12 percent (32) was due to work activity or changes in income. For this longitudinal study, see Social Security Administration, Office of the Inspector General, Overpayments in the Social Security Administration’s Disability Programs—A 10-Year Study A-01-14-24114 (June 4, 2015) at http://oig.ssa.gov/sites/default/files/audit/full/pdf/A‑01‑14‑24114.pdf.

[3]GAO reviewed relevant federal laws, regulations, and guidance. In addition, GAO identified agency policies and procedures for processing work reports and making overpayment waiver decisions, and assessed these against the Standards for Internal Control in the Federal Government, GAO/AIMD‑00‑21.3.1 (Washington, D.C.: November 1999).

[4]In 2004, SSA implemented the eWork system, which is the primary system for capturing beneficiary work-related information and processing work continuing disability review cases in headquarters and field locations.

[5]SSA’s SSI program is a means-tested disability benefits program.

[6]By contrast, SSA’s SSI program has both of these automated reporting options.

[7]SSA informs DI beneficiaries of reporting requirements when their benefit application is initially approved, and it reminds them of reporting responsibilities in annual cost-of-living adjustment letters.  In contrast, for the SSI program, SSA implemented a web-based service in 2014 that uses e-mails and text messages to remind recipients to report wages.  Although DI beneficiaries are not prevented from using this service, SSA does not systematically inform DI beneficiaries of this service.

[8]A beneficiary may request a waiver of an overpayment that is not in dispute, and SSA may grant that waiver request if two conditions are met: (1) the agency finds the beneficiary was not at fault, and (2) recovery or adjustment would either defeat the purpose of the program or be against equity and good conscience, as determined by SSA. 20 C.F.R. § 404.506. However, for overpayment amounts under $1,000, administrative waivers may be granted on the sole basis that the beneficiary was not at fault.

[9]The Debt Management System is SSA’s financial management system. It consolidates the agency’s program debt activities, including overpayments and actions against the debts, amounts collected and written off (e.g., waivers), and methods of collection and debtor requests for due process.

[10]Social Security Administration, Continuous Quality Area Director Review: Data Analysis Report Findings and Recommendations (Baltimore, MD: January 2015). In this report, 2,849 Title II initial waiver decisions and 1,152 personal conference waiver decisions were reviewed.

Actions Needed

To improve SSA’s handling of overpayments, work reports, and waivers, in October 2015 GAO recommended that SSA’s Commissioner take the following six actions:

  • To minimize the potential effect of vulnerabilities in the work reporting process, SSA should take steps to help ensure that work information is entered directly into eWork, the system of record for work information, and issue required receipts. Such steps could include:  improving and issuing guidance and training to field and 800-number staff to help ensure they log information into eWork and issue required receipts, and establishing policies to monitor alerts to help ensure that work information for concurrent beneficiaries is reflected in SSI and DI systems, and take steps to monitor and make enhancements to systems or guidance, as needed.
     
  • To further ensure the effective screening of work reports, SSA should monitor its process for handling work reports to determine whether staff are taking action on work reports in accordance with proper procedures, and provide feedback to staff as needed.
     
  • To enhance the ease and integrity of the work reporting process, SSA should study the costs and benefits of automated reporting options, including options similar to those currently available for SSI recipients but that do not go as far as automating the continuing disability review process.
     
  • To enhance beneficiary understanding of work reporting requirements, SSA should: clarify work reporting requirements provided to beneficiaries, and explore options for increasing the frequency of reporting reminders to DI beneficiaries, similar to those currently available to SSI recipients.
     
  • To improve compliance with waiver policies, SSA should develop a timetable for implementing updates to its Debt Management System to: align system controls with SSA policy so that waivers over $1,000 cannot be administratively waived, and ensure that evidence supporting waiver decisions is sufficiently maintained to allow for subsequent monitoring and oversight.
     
  • To improve compliance with waiver policies, SSA should take steps to regularly assess the accuracy of DI waiver decisions, particularly for administrative waivers and for some waivers under $2,000. This could include periodically reviewing approved and denied DI waivers through its continuous quality initiative.

Due to limitations in the data and information GAO received, GAO was not able to determine the exact amount of DI overpayments that SSA may have made when the agency did not take prompt action to adjust DI benefits for individuals who work, or the amount of DI overpayments that may have been waived in error. As such, GAO cannot quantify the amount of savings that SSA could realize by promptly adjusting DI benefits for individuals who work, improving beneficiary work reporting, or ensuring that overpayments are not improperly waived.

How GAO Conducted Its Work

The information contained in this analysis is based on findings from the products listed in the related GAO products section. GAO analyzed 10 years of SSA data on overpayments and waivers; reviewed relevant laws, regulations, guidance, and studies; interviewed staff at SSA headquarters and several field offices and teleservice centers in three SSA regions, selected to represent a range of relevant DI workloads; and reviewed 10 nongeneralizable DI cases involving waived overpayments.

Table 19 in appendix V lists the program that GAO identified that might have opportunities for cost savings.

Agency Comments & GAO Contact

In its comments on GAO’s October 2015 report on which this analysis is based, SSA agreed with all of GAO’s recommendations except the recommendation that SSA assess the quality and accuracy of work reports and provide feedback to staff as needed. In its response, SSA stated that work information provided by beneficiaries is not verified when provided in a work report, but instead during the process of conducting a work continuing disability review (CDR). In the report, GAO acknowledged the role of the work CDR process, but also noted that if a work report were improperly closed when a work CDR should have been conducted, an overpayment could result. GAO also noted that SSA staff do not receive feedback on their handling of work reports and that SSA lacks procedures for reviewing work reports that are closed without a work CDR. GAO clarified the recommendation to reflect these issues.

The Bipartisan Budget Act of 2015 included two provisions related to GAO’s October 2015 recommendations.[1] Specifically, sections 824 and 826 of the Act address the recommendation on automated reporting options. Under section 824 of the Act, SSA is allowed toobtain wage data for DI recipients, among others, from payroll providers. Individuals who provide authorization to SSA to obtain these data are exempt from any penalty for omissions or errors with respect to their payroll data as reported by their payroll provider.In addition, under section 826 of the Act, SSA must establish and implement a system by September 30, 2017, to allow DI beneficiaries to report wages by telephone and Internet, similar to options available under SSI.

GAO provided a draft of this report section to SSA for review and comment. In its response, SSA stated it is taking a number of steps to reduce overpayments, including expanding its use of quarterly earnings data from the Office of Child Support Enforcement to improve its disability enforcement operation.  According to SSA, these data will reduce overpayments by allowing it to identify and make work continuing disability review determinations sooner. The agency also stated that the Bipartisan Budget Act of 2015 will aid its efforts to reduce improper payments. Specifically, SSA stated that the Act provides another source of more timely earnings data by allowing the agency to contract with third-party payroll providers, and allows SSA to use evidence of earnings when paid to determine when work was performed.
 
SSA, also stated that it is taking steps to address GAO’s finding that staff may bypass established procedures and not (1) initiate tracking of work activity in eWork, which would help prevent overpayments, and (2) issue a receipt to the beneficiary—as required by law—that proves the beneficiary’s work was reported. Specifically, SSA issued an Operational Bulletin with a reminder on the processing of Title II Disability Work Reports via eWork on December 14, 2015. SSA also reported that it is evaluating the possibility of conducting refresher training to provide guidance to agents on handling DI work reports via eWork. Finally, SSA stated that it will work to incorporate clear reporting language that explains work reporting requirements into the online and telephone wage applications that it is required to develop under Section 826 of the Bipartisan Budget Act.

For additional information about this area, contact Daniel Bertoni at (202) 512-7215 or bertonid@gao.gov.
 


[1]Pub. L. No. 114-74, 129 Stat 584, (Nov. 2, 2015).