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: As of June 2020, SSA reported taking a number of steps to address this recommendation. According to SSA, it updated its guidance in 2017 to help ensure that staff consistently process various requests from overpaid individuals. SSA also reported that it is taking additional steps to update instructions on how staff should consider whether expenses reported by individuals are reasonable when approving withholding plans. The agency expects these instructions to be complete by the end of fiscal year 2021. We will close this recommendation once SSA releases additional guidance on assessing the reasonableness of expenses.

    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: Closed - Implemented

    Comments: SSA reported that it released new quality review sheets in October 2019 to provide consistent review of overpayment waiver decisions. These sheets are used to help assess the performance of SSA's field offices and processing centers. SSA's review sheets contain specific language and cites SSA policies related to collect overpayments, stop collections, and change the rate of withholding rates for overpayment collections. Additionally, SSA's review sheets include instructions for quality reviewers to determine if documentation was properly retained according to SSA policies. SSA's actions should improve its oversight and ensure that its decisions are in line with its policies.

    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: Closed - Implemented

    Comments: SSA reported that it explored the feasibility of using additional methods to verify information provided by beneficiaries, but determined that they would not be cost-effective. The agency reported that some tools would require special authorization from the overpaid individuals, specifically the National Directory of New Hires (NDNH), The Work Number, and Access to Financial Institutions. Additionally, SSA determined that NDNH provides quarterly reports of earnings information, which could change during the time that an overpaid individual requests a repayment plan.

    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 in 2017 estimated that this change would result in an additional $213 million in collections over a 5-year period. The fiscal year 2021 President's budget submission contained a legislative proposal to make this change, and budgets since 2017 have contained similar proposals. As of June 2020, SSA reported that it plans to continue to submit similar legislative proposals. SSA also included the proposal in its regulatory agenda, noting that the change can also be implemented via regulatory change. We will close this recommendation once SSA achieves resolution from Congress on its legislative proposal or from its own regulatory efforts.

    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: Although SSA initially disagreed with this recommendation, the agency reassessed its response in June 2019 and decided to take additional actions. As of June 2020, SSA is developing a system to track debts (the Debt Management Product) which will have the ability to store, track, and apply interest and penalties to overpayment debts. SSA also reports that it is seeking a regulatory change to clarify procedures to charge interest on debts. While SSA is pursuing these measures to position itself to charge interest on debts, the agency has not yet decided whether it will ultimately do so. We will close this recommendation once SSA makes a decision on how to proceed with charging interest on overpayment debts.

    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: Closed - Implemented

    Comments: SSA previously reported that its computer systems lacked the ability to track; apply interest, fees, and penalties; and report activities for civil monetary penalties. As of June 2020, SSA reports that the new Debt Management Product (DPM) system it is developing will include capabilities to track the status of debts, and support external collection tools, such as The Treasury Offset Program. SSA plans to begin introducing this system by September 2021, and plans to release at that time a Notice of Proposed Rulemaking related to using its debt collection tools. Implementing these changes should allow SSA to better collect delinquent civil monetary penalties, helping to ensure that penalties serve as a deterrent against individuals attempting to collect benefits for which they are ineligible.

    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: Closed - Implemented

    Comments: As of January 2018, officials reported that SSA has deployed its Civil Monetary Penalty Tracking System nationally. This system allows staff to track a number of data points regarding penalties, such when a penalty was imposed, the amount of the penalty and amounts being repaid, and the date that staff last checked the status of the penalty. Officials also noted that the system tracks penalties to ensure that they are posted to a debtor's record and will alert staff if this action is not taken within 30 days. Additionally, officials told us that the agency reviews the information in the system in order to set SSA goals for collections.

    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: Closed - Implemented

    Comments: As of June 2018, SSA reported that it has taken steps to improve its ability to track administrative sanctions and take timely and appropriate actions on cases. SSA implemented a new computer system to track the development and status of administrative sanctions cases, which provides reminders to staff to complete needed actions. To ensure that the database has complete data on cases, SSA no longer relies on a manual process to add potential sanctions cases to the database and now receives a weekly electronic update from OCIG. In addition, SSA reported that it is working to incorporate additional functionality into the system, such as an interactive decision tree to assist staff in making decisions on administrative sanctions cases. SSA also rolled out on-demand video training for its staff on the use of the administrative sanctions system.

    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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