In the United States, a 20-year-old worker has a 25 percent chance of becoming disabled before retiring. When those disabilities are so severe that workers are unable to support themselves, the government provides financial assistance. However, a new report by the Government Accountability Office (GAO) revealed that in many cases, the government might be paying these benefits to the wrong people.
The report found that some recipients are going back to work and making money while continuing to receive the same amount of benefits, called Disability Insurance. These benefit overpayments occur even after recipients properly report their new work activity to the agency.
The report examined not only why recipients who returned to work were overpaid, but also how much of that money the Social Security Administration (SSA),the agency responsible for administering the benefits, is able to recover. It estimated that over the last nine years, the agency made $11 billion in overpayments to working Disability Insurance recipients. These overpayments place a burden on the recipients, who must repay the agency, and on taxpayers, who must pay if the recipient does not.
The report made several recommendations to help the agency reduce and recoup overpayments. The recommendations focus primarily on improving the agency’s internal operating procedures, such as employee oversight, training, and feedback. In response, the agency agreed with the majority of the report’s recommendations, but stressed that overpayments represent a very small margin of overall Disability Insurance payments, which totaled $143 billion in 2014 alone.
The agency also maintained that the majority of Disability Insurance recipients do not report that they have returned to work and that the agency cannot identify overpayments until it receives the recipient’s tax information from the Internal Revenue Service. But, in the cases where a recipient reports work activity, the agency expects program staff to process this information correctly so that Disability Insurance benefits can be adjusted appropriately.
However, the report discovered that this processing is not always the case.
The report identified two major causes of overpayments to working recipients. First, some agency staff do not adhere to internal agency documentation procedures after recipients report work activity. When a recipient’s work activity is not documented correctly, it cannot be processed appropriately, thus leading to overpayments.
Second, the report concluded that recipients are receiving limited and inconsistent information about work reporting requirements, including how quickly a recipient should report work activity to the agency. Unclear information causes recipients to report new earnings in an untimely fashion or not at all. During interviews with agency staff, the report found that some staff members were unsure of work reporting requirements themselves and relayed incorrect information to recipients. Even the agency’s standardized “Working While Disabled” pamphlet only says to report work activity “right away,” without providing any more concrete guidance.
To address these issues, the report recommended better monitoring of the work reporting process and increased training and feedback to staff. The GAO’s report also encouraged the agency to research the possibility of an automated work reporting system, which could reduce staff workload and errors. The report highlighted that the SSA had successfully automated the wage reporting process for Supplemental Security Income (SSI), a different cash assistance program for disabled individuals. SSI wage reporting is processed through an automated telephone system, and a smartphone application allows SSI recipients to submit relevant information to the agency. The agency pushed back against the suggestion to automate reporting because the complexity of the Disability Insurance program does not allow for the same automated calculations that are possible for SSI.
The GAO report also investigated another question: Can the SSA ever get the overpayment money back? In theory, when the agency discovers an overpayment, it is entitled to recoup that money from the recipients, unless the SSA decides to waive the recipient’s overpayment. When the SSA waives an overpayment, the recipient does not need to pay back any overpaid benefits. From 2005 to 2014, the agency waived $1.4 billion in work-related overpayments.
When granting waivers for overpayments, the agency considers two factors: whether the recipient is at fault and if requiring repayment would “defeat the purpose of the program or would be against equity and good conscience, as determined by SSA.”
The GAO report questioned the agency’s consistency in and oversight of the waiver process. In its analysis, the report focused on an agency policy that allows employees to waive overpayments under $1,000 with limited oversight. To waive these payments, an employee needs only to determine that the recipient is not at fault and need not inquire into the second waiver factor: an analysis of the recipient’s ability to repay. These waivers are not subject to review by upper-level agency employees. The GAO recommended the SSA begin assessing the accuracy of the waiver process, especially for administrative waivers.
Acknowledging the issues with overpayment waivers, the agency has already taken steps to improve its waiver process by releasing new training videos for agency staff who handle waivers. The agency plans to implement a decision tree tool this year, which will provide additional guidance.
Despite the GAO’s focus on disability insurance, overpayments are not unique to this program or even to the SSA. Last month, the GAO found in a different audit that improper payments are a government-wide problem: twenty-two federal agencies made $124.7 billion in improper payments over the last year. That report recognized that addressing improper payments is one way to improve the federal government’s long-term fiscal position.
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Elizabeth Warren is the senior United States Senator from Massachusetts. Senator Warren has served in the Senate since 2012, and she is the ranking member on the Economic Policy Subcommittee of the Committee on Banking, Housing, and Urban Affairs. She was the driving force behind the Consumer Financial Protection Bureau, and in 2008, she headed the Congressional Oversight Panel for the Troubled Asset Relief Program.
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Jed S. Rakoff
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Susan Dudley is the Director of the GW Regulatory Studies Center and distinguished professor of practice at GW’s Trachtenberg School of Public Policy and Public Administration. She serves as president of the Society for Benefit-Cost Analysis, and as a senior fellow of the Administrative Conference of the United States. She served from 2007 to 2009 as the Administrator of the Office of Information and Regulatory Affairs within the Office of Management and Budget.
Richard L. Hasen
Richard L. Hasen is the Chancellor’s Professor of Law and Political Science at the University of California, Irvine. A leading expert in campaign finance regulation and election law, he is the author of the book, Plutocrats United: Campaign Money, the Supreme Court, and the Distortion of American Elections, as well as the writer of the widely regarded Election Law Blog.
Wendell Pritchett is the Presidential Professor of Law and Education at the University of Pennsylvania Law School, and he is a recognized leader in the field of higher education. He was Deputy Chief of Staff and Director of Policy under Philadelphia Mayor Michael Nutter, who later appointed him to the School Reform Commission, where he served from 2011 to 2014. He also served as Chancellor of Rutgers-Camden from 2009 to 2014.
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Patricia L. Bellia
Patricia L. Bellia is Notre Dame Law School’s William J. and Dorothy K. O’Neill Professor of Law. A teacher and researcher in multiple areas including constitutional law, administrative law, and cyberlaw, Professor Bellia is co-author of a leading cyberlaw casebook and has published articles on internet law and separation of powers. She previously served as an attorney-adviser in the Justice Department’s Office of Legal Counsel.
Donald C. Langevoort
Donald C. Langevoort is the Thomas Aquinas Professor of Law at Georgetown University. He was previously Vanderbilt University School of Law’s Lee S. and Charles A. Speir Professor, and the U.S. Securities & Exchange Commission’s Special Counsel in the Office of the General Counsel. An authority in the area of securities regulation, he is the co-author of a securities regulation casebook and author of a treatise on insider trading.
Rena Steinzor is a professor at the University of Maryland Carey Law School. She is a founder, former president, and member scholar of the Center for Progressive Reform. She teaches and has authored and co-authored books on administrative law, consumer safety, public health, and environmental law. She has testified before Congress multiple times, addressing such issues as the impact of health, safety, and environmental regulations on the economy.
Richard L. Revesz
Richard L. Revesz is New York University School of Law’s Director of the Institute for Policy Integrity and the Lawrence King Professor of Law. From 2002 to 2013, Professor Revesz was the Dean of NYU School of Law. He is a nationally recognized expert in the fields of environmental and regulatory law and policy, with a focus on issues including the use of cost-benefit analysis in administrative regulation.
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