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. As of May 2018, SSA reported that the agency considered this recommendation implemented as the recommended actions are part of its ongoing reporting process. However, we believe that SSA still needs to demonstrate that it is reporting limitations, such as small sample sizes, that would affect the reliability of its estimates of DI improper payments due to specific types and causes of errors and will consider closing the recommendation at that time.

    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 August 2018, SSA had taken a number of steps to implement this recommendation but SSA needs to clarify how recent efforts ensure work information for concurrent beneficiaries is monitored to ensure overpayments from non-electronic wage reporting do not occur. SSA previously reported that it had reinforced and updated its training for the Field and Processing Center staff, and had reminded staff about items surrounding overpayments and waivers. In addition, SSA officials reported that on July 25, 2017, the agency communicated a new policy encouraging staff to immediately enter the Employer Identification Number in the Modernized Supplemental Security Income Claims System and e-Work when processing wage and work reports. SSA also reported that it had taken a number of actions to increase electronic reporting by beneficiaries and others, thereby increasing the incidence that work information is entered directly in SSA. While these actions will reduce the incidence of non-electronic reporting and related errors, the agency has not reported how it will monitor alerts that are generated from non-electronic wage reporting to ensure that this information is reflected in the SSI and SSDI systems. Failing to ensure that work information is reflected in both systems could lead SSA to erroneously assess overpayments for concurrent beneficiaries who properly report work.

    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 disagreed with this recommendation and, as of May 2018, reported that existing processes address it. Under its current process, SSA accepts a beneficiary's return to work allegation (work report), but does not verify the information when the wages are reported, instead verifying it during its continuing disability review process. However, SSA accepts some work reports without a continuing disability review; therefore, absent an oversight process to ensure that work reports are properly screened, GAO believes this approach may be missing opportunities to prevent overpayments for unreported work.

    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: Open

    Comments: As of August 2018, SSA had taken steps to study the costs and benefits of automated reporting options as we recommended, although some efforts are still under way. SSA reported that it had drafted a business process proposal--pursuant to Section 826 of the Bipartisan Budget Act of 2015 (BBA) (Pub. L. No. 114-74)--to build an Internet and telephone wage reporting system for Social Security Disability Insurance (SSDI) beneficiaries. In September 2017, SSA implemented myWageReport (myWR), a new tool located in the my Social Security portal that is accessible via desktop, laptop, and mobile devices with internet capability. myWR initially allowed SSDI beneficiaries and representative payees to report wages electronically. Later in June 2018, SSA's myWR began allowing SSI recipients, concurrent beneficiaries, and deemors to also report wages. myWR determines the entitlement and automatically forwards the wage report to either the SSI system or eWork, the DI system. According to SSA, this tool automatically generates a receipt to the reporter. SSA also reported that Section 824 of the BBA allows the agency to enter into information exchanges with payroll providers to obtain wage data. In December 2017, SSA officials reported that the agency was developing the information exchange and was collecting and storing authorizations from SSDI beneficiaries and SSI recipients in order to obtain their payroll data via the exchange. SSA officials reported that SSA was negotiating a contract with a potential vendor and that implementing the information exchange is contingent upon successful contract negotiations. Finally, SSA reported that it planned to incorporate the wage and earnings data collected through the information exchange into its draft business process (Work Smart). According to SSA, Work Smart combines several business processes into one unified approach that will identify cases requiring a work continuing disability review. While these efforts partially address the recommendation, SSA has not provided information on the costs and benefits of a telephone reporting option for DI beneficiaries, which is currently available to SSI beneficiaries and would provide an automated option for those who lack access to smart phones or the Internet.

    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 August 2018, SSA reported taking several actions to address this recommendation, including sending information on wage reporting responsibilities to beneficiaries and advocacy groups information in conjunction with specific changes related to electronic wage reporting. SSA also reported it plans to work with its Headquarters and Regional personnel to review the scope of current and planned activities relating to increasing the frequency of reporting responsibilities to DI beneficiaries. After doing so, SSA reported it will assess if additional efforts or enhancements to current processes are needed. SSA also reported it plans to complete this assessment and begin taking additional action, if needed, by the end of January 2019. Without clearly and frequently reminding SSDI beneficiaries of the work reporting requirements, beneficiaries may fail to comply with SSA's complex program rules, and receive overpayments. We will consider closing this recommendation after we have reviewed SSA's assessment and actions.

    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 January 2019, SSA reported that in August 2017 its Investment Review Board approved the Overpayment Redesign Project, and that this multi-year project will include functionality to ensure that staff cannot administratively waive overpayments exceeding $1,000. SSA also reported that it anticipates completing this effort in fiscal year 2020. We will keep this recommendation open as we continue to monitor SSA's progress and expected timetable for completing this effort.

    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 May 2018, SSA reported that it has taken several actions to clarify its waiver policies and procedures. SSA officials reported that the agency produced a comprehensive training series on overpayment and waiver policies and procedures. The eight-part training series covered four areas: overpayment basics, overpayment request for reconsideration and waiver, waiver recovery, and personal conferences. SSA officials also reported that the agency built a "one-stop resource shop" of policy references, including easy access to useful tools for staff. Further, SSA officials reported that the agency clarified several policies that were identified in the Continuous Quality report, addressing, among other things, the Administrative Tolerance Decision Tree to assist staff with making appropriate decisions to waive low-dollar overpayments. Finally, SSA reported that its Office of Quality Review reviewed the accuracy of Supplemental Security Income waivers for overpayments under $2,000, and the Continuous Quality workgroup is reviewing the accuracy of DI waivers, but SSA has no plans to do these assessments regularly. In May 2018, SSA reported that it continues to believe that its actions resolve this recommendation. However, in the absence of regular, targeted reviews, SSA lacks assurance that waivers of DI overpayment debts-especially low-dollar amounts that lack supervisory review-are being processed correctly.

    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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