Nation & World

Watchdog: Cash benefit program overpaid disabled workers by $11 billion over nine years

One of the largest federal programs that provides cash benefits to disabled workers overpaid $11 billion during the past nine years to people who returned to work and made too much money, a new study says.

The Social Security Administration, which runs the Disability Insurance program, gave up on recovering $1.4 billion of the excess payments because they were found to be the agency’s fault, not the workers’, the Government Accountability Office found. The program is on track for significant reforms in the two-year budget deal reached by Congress last week, changes designed to increase oversight and reduce fraud.

Auditors for GAO, the investigative arm of Congress, found weak oversight by employees, who did not properly monitor the incomes of workers who earn some money but continue to receive benefits. Basic checks and balances, such as providing workers with a receipt when they report any change to their income, are not in place.

The rules of the program are so complicated that both the employees who administer it and those who get benefits are confused, resulting in mistakes on both sides. And the system for people to report income is not computerized: It has no automated telephone system or smartphone app, opening the door to fraud and errors.

And when an overpayment of up to $1,000 is discovered, the government does not try to get it back. It’s automatically waived, auditors found.

“Despite the importance of avoiding overpayments, SSA’s multi-faceted processes for handling work reports contain internal control weaknesses and other vulnerabilities that may result in the agency not taking prompt action to adjust benefits and avoid overpayments,” GAO wrote in a report released late last week.

Between 2005 and 2014, the average work-related overpayment was almost $12,000.

Disability Insurance is one of the government’s largest cash assistance programs for workers with disabilities. It pays benefits to workers and their family members when the disabled person worked long enough and paid Social Security taxes. Another program run by Social Security called Supplemental Security Income pays benefits to the disabled based on financial need.

The average benefit for Disability Insurance in June was $1,165 a month, or $13,980 a year.

People on the program can earn a small amount of money and keep their benefits but they must quickly report any work or change in job or wages.

Disability Insurance was so financially strapped that the program was preparing to cut benefits next year until Congress intervened in the new budget deal, ensuring the program’s solvency through 2024. Auditors, however, said the overpayments — which came to $1.3 billion in fiscal 2014 alone — “represent an avoidable drain on the nation’s dwindling disability insurance trust fund.”

The report noted that the government’s mistakes can create hardships for “conscientious” workers who have properly reported incomes but were overpaid anyway and now have to repay the debt.

Social Security officials said in an e-mail that although the overpayments “look substantial expressed as real dollars, they represent a very small percentage of the $80 billion in payments we make each year.”

“That translates to a very high overall accuracy rate,” the statement said. “That said, we are committed to preventing overpayments and we are continually refining our processes and seeking new and innovative ways to leverage data

Auditors recommended several changes to help the program reduce overpayments, including automated reporting of income and better oversight of waivers and those who earn money while receiving benefits. Social Security officials agreed with all but one.