Disability Insurance:

SSA Could Do More to Prevent Overpayments or Incorrect Waivers to Beneficiaries

GAO-16-34: Published: Oct 29, 2015. Publicly Released: Oct 29, 2015.

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What GAO Found

From fiscal years 2005 through 2014, GAO found that Social Security Administration (SSA) overpaid $11 billion in Disability Insurance (DI) program benefits to beneficiaries who had returned to work and had earnings above program limits, and about $1.4 billion in overpayments related to work activity was waived—because the beneficiary was found not at fault—and therefore will not be repaid. SSA recently conducted two reviews to identify the extent of overpayments caused by errors in processing work reports; however, both reviews used sample sizes too small to produce reliable results—limitations which SSA did not note in its reports and that may impede SSA's understanding of root causes 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, including:

  • Processing weaknesses. Due in part to unclear guidance, GAO found that SSA staff may bypass established procedures and not: (1) initiate tracking of work activity, 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. Data are not available to determine the full extent to which this might occur.
  • Limited oversight. While SSA tracks timeliness of staff action on work reports, it lacks procedures for how staff should screen such reports, and for ensuring that work reports are systematically reviewed and closed with appropriate action.
  • No automated reporting options. In contrast to SSA's Supplemental Security Income (SSI) program—a means-tested disability benefits program—the DI program lacks automated tools to report work, such as an automated telephone system and a smart phone app. Although SSA officials said there is an internal proposal to automate DI work reports, they could not provide specifics on how or when this would occur. Without automation, SSA's current manual approach is vulnerable to error.

SSA's processes for handling requests to waive overpayments lack sufficient controls to 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 documentation and other errors in DI and other waivers. In addition, a 2015 OIG study found significant variation in DI and other waiver approval rates among field offices, and 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 reviews do not target DI waiver decisions—especially those under $2,000, which do not require supervisory review and comprise almost a third of all waiver decisions. Without additional oversight, such as targeted reviews of DI waivers, staff may systematically waive overpayments incorrectly, particularly those involving low dollar amounts.

Why GAO Did This Study

SSA's DI program provides cash benefits to workers with disabilities. Per program rules, SSA requires that beneficiaries promptly report their work activity—including starting a job or a change in wages—as failure to do so may result in an overpayment that must be repaid. In fiscal year 2014, SSA identified $1.3 billion in DI benefit overpayments. Avoiding overpayments is imperative as they pose a burden for beneficiaries who must repay excess benefits and result in lost taxpayer dollars if they are not repaid or are waived by SSA. GAO was asked to review SSA's handling of DI overpayments and waivers due to beneficiaries' return to work.

This report examines 1) the extent of work-related DI overpayments and waivers, 2) how SSA's handling of work activity reported by beneficiaries prevents overpayments, and 3) how SSA ensures appropriate decisions are made to waive overpayments. 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, selected to represent a range of relevant DI workloads; and reviewed 10 DI cases involving waived overpayments.

What GAO Recommends

GAO is making seven recommendations, including that SSA study automated reporting options, and improve oversight of work reports and waivers. SSA agreed with six recommendations but disagreed with overseeing work reports. GAO clarified that oversight should ensure staff are following proper procedures.

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 reported in January 2016 that it would include a discussion about the limitations of error deficiencies data in future reports. Consistent with our recommendation, SSA reported on the statistical precision of yearly Disability Insurance (DI) overpayments for fiscal years 2016-2018 in its 2019 Agency Financial Report (AFR). Related to our finding that SSA's DI sample size was not large enough to reliably attribute improper payment dollar amounts to major causes, SSA reported in its 2019 AFR that there were no statistically significant changes from year to year changes for estimates of DI improper payments that SSA associated with specific root causes. Finally, SSA reported in June 2019 that it included additional language in its FY 2015 payment accuracy report and its FY 2015 Work CDR report, and noted that the agency considered this recommendation implemented as the recommended actions are part of its ongoing reporting process. However, SSA's 2019 AFR-SSA's most recent public report on improper payments-lacks key information on the limitations of its DI overpayment analyses. Regarding root causes, the AFR did not explicitly report on the effect of small sample sizes on the statistical precision or reliability of estimates of DI overpayments associated with specific root causes. In addition, although SSA reported the significance of year-to-year changes in error rates for the combined Old Age Security Insurance (OASI) and DI programs (OASDI), SSA did not indicate whether changes in DI overpayment error rates alone were statistically significant from year-to-year. At the time, SSA's 2019 FAR shows the error rate for DI was 3-17 times higher than the stand-alone OASI error rate in fiscal years 2016-2019 and likely a key driver of changes in the combined OASDI error rate. In December 2019, SSA reported to GAO that changes in DI error rates since 2015 were not statistically significant, but that larger sample sizes would result in smaller changes being statistically significant. SSA also reported to us that its improper payment rates were based on annual reviews of about only 500 DI cases, compared to 1,100 cases for OASI (which has a lower error rate) and compared to 4,000 cases for Supplemental Security Insurance (which is a smaller benefit program than DI). Knowing the statistical significance of year-to-year changes in DI error rates-separate from OASI-has implications for whether SSA can assess the effectiveness of its corrective action plans addressing causes of DI overpayment errors. SSA is developing corrective action plans to address major causes of combined OASDI error rates-including one major cause (work reporting) that is associated with DI error rates. OMB circular M-18-20 directs agencies reporting improper payment estimates to annually measure the effectiveness and progress of corrective action plans to reduce improper payments. Because tracking DI error rates and identifying root causes are key to SSA's efforts to reduce combined OASDI errors, reporting the significance of year to year changes in DI error rates by themselves is key to understanding effectiveness of DI-related corrective action plans. We continue to believe that SSA needs to provide additional information on limitations regarding DI overpayment error rates and causes in its annual AFR. We will close this recommendation when SSA includes in its annual AFR: whether year-to-year changes in DI overpayment rates are statistically significant, the statistical precision or reliability of improper payment estimates associated with specific root causes of DI overpayments, and an explanation of the effect of the limited DI sample size on both of these pieces of information.

    Recommendation: To improve transparency in reporting processing errors, SSA should provide additional information on the margins of error or confidence intervals, and clearly identify any limitations in its findings on overpayment information provided to Congress and the public.

    Agency Affected: Social Security Administration

  2. Status: Open

    Comments: As of December 2019, SSA had taken steps to improve guidance and training to ensure staff properly log work reports, but has not clarified how it will monitor 800-number alerts to ensure work information for concurrent beneficiaries is properly captured. SSA agreed with this recommendation and previously reported that it has reinforced and updated training for Field and Processing Center staff, and reminded staff about items surrounding overpayments and waivers. However, SSA has not explained how it will monitor alerts that are generated from 800-number wage reporting to ensure that, for concurrent beneficiaries, reported wages are reflected in both SSI and DI systems. We will close this recommendation when SSA takes steps to ensure that 800-number work reporting is reflected in both systems, which could prevent instances where SSA erroneously assesses overpayments for concurrent beneficiaries who properly report work via non-electronic means.

    Recommendation: 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: (a) Improving and issuing guidance and training to field and 800- number staff to help ensure they log information into eWork and issue required receipts. (b) 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.

    Agency Affected: Social Security Administration

  3. Status: Open

    Comments: SSA continues to disagree with this recommendation as of December 2019. As we reported, when SSA accepts a beneficiary's return to work allegation (work report), staff have 30 days to determine whether additional action is needed, such as a continuing disability review (CDR) to assess continued eligibility and determine whether benefits should be adjusted. However, not all work reports result in a CDR, and GAO reported that SSA lacks an oversight process to help determine whether work reports are not resulting in CDRs when they should. SSA continues to maintain that its staff carefully review work reports and make independent determinations on the need for a CDR. Absent an oversight process to ensure that work reports are properly screened, SSA may be missing opportunities to prevent overpayments for unreported work. SSA further reported that it may decide to complete a CDR through alternative approaches, such as its Continuing Disability Review Enforcement Operation process using Internal Revenue Service data, its Quarterly Earnings Project using Office of Child Support Enforcement data, or its analysis of electronically reported wages. However, SSA did not indicate whether these alternative avenues for conducting CDRs could identify errors made by its staff handling work reports and result in feedback. Implementing this recommendation will help ensure that SSA staff appropriately take action on work reports.

    Recommendation: 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.

    Agency Affected: Social Security Administration

  4. Status: Closed - Implemented

    Comments: SSA developed a system-myWageReport-that is accessible through SSA's my Social Security portal, which allows Disability Insurance (DI) beneficiaries to report their wages online. SSA officials noted that beneficiaries are able to access this system through a mobile device. This system should make it easier for DI beneficiaries to report work and decrease the possibility that work reports are not properly recorded. SSA also reported it evaluated the option of developing a landline telephone reporting system very similar to that used by SSI recipients. Based on this assessment, SSA determined that-because DI beneficiaries generally are not required to report income as often as SSI recipients-developing this system was a low priority for the agency.

    Recommendation: 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.

    Agency Affected: Social Security Administration

  5. Status: Open

    Comments: As of December 2019, SSA reported taking several steps to clarify work reporting requirements. For instance, SSA reported it has developed outreach materials to share information with beneficiaries and advocacy groups. However, SSA has not provided sufficient documentation for GAO to determine if it has clarified issues identified in GAO's 2015 report, such as how and when to report work, and that beneficiaries may have to repay overpayments that occur even when they report work. Finally, SSA has not indicated whether it has assessed options for increasing the frequency of reporting reminders to DI beneficiaries. Until SSA can demonstrate that it has improved the clarity of its work reporting requirements and frequency of its work reporting reminders, DI beneficiaries may continue to incur overpayments, or be required to repay overpayments that occurred even though they reported work.

    Recommendation: To enhance beneficiary understanding of work reporting requirements, SSA should: (a) Clarify work reporting requirements provided to beneficiaries. (b) Explore options for increasing the frequency of reporting reminders to DI beneficiaries, similar to those currently available to SSI recipients.

    Agency Affected: Social Security Administration

  6. Status: Open

    Priority recommendation

    Comments: As of December 2019, SSA expects to release (1) an update to its Debt Management System in fiscal year 2021 to ensure that evidence is collected to support waiver decisions, and (2) another update by fiscal year 2022 that will include controls to prevent users from administratively waiving overpayments that are above $1,000. While SSA has set timeframes for these updates to the Debt Management System, it has yet to provide documentation confirming that both parts of GAO's recommendation will be addressed within these timeframes. We will close this recommendation once SSA provides documentation of its plans and timetable for updating its Debt Management System.

    Recommendation: To improve compliance with waiver policies, SSA should develop a timetable for implementing updates to its Debt Management System to: (a) Align system controls with SSA policy, so that waivers over $1,000 cannot be administratively waived. (b) Ensure that evidence supporting waiver decisions is sufficiently maintained to allow for subsequent monitoring and oversight.

    Agency Affected: Social Security Administration

  7. Status: Open

    Comments: As of December 2019, SSA reported taking a number of steps to clarify its waiver policies and procedures. SSA previously reported that the agency produced a comprehensive training series on overpayment and waiver policies and procedures. In December 2019, SSA reported that it clarified a number of policies as the result of its continuous quality review report that will help staff with making waiver decisions for overpayments of $2,000 or less. However, the policies SSA told us it had clarified apply to Supplemental Security Income overpayments, not DI. Additionally, SSA reported that its current Performance Quality Review process captures the amount of waivers, allowing SSA to measure the accuracy of low dollar waivers, although SSA has not yet provided documentation reflecting the agency's ability to distinctly measure the accuracy of low dollar waivers. We will close this recommendation once SSA provides additional documentation of its actions.

    Recommendation: 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.

    Agency Affected: Social Security Administration

 

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