Benefit overpayments can occur when beneficiaries do not report work or  SSA does not take action on work reports in an appropriate or timely  manner. SSA’s DI cumulative overpayment debt has almost doubled over the last  decade, growing from $3.2 billion at the end of fiscal year 2004 to $6.3  billion at the end of fiscal year 2014, according to SSA data. Most DI Overpayment Amounts Are Associated with Work-Related Activity That Exceeds Program Limits

According to preliminary data provided by SSA, the agency overpaid DI  beneficiaries a total of about $20 billion during fiscal years 2005 through  2014, and more than half of this total ($11 billion) was a result of  beneficiaries’ work-related earnings exceeding program limits. SSA’s annual stewardship reviews provide limited insight into the causes  of overpayments. In its last six stewardship reports,  SSA reported that deficiency dollars related to beneficiaries’ incomes  being above DI program limits were consistently a leading cause of  improper overpayments in the DI program. SSA also attributed some of  these deficiencies to not taking appropriate or timely action to adjust  payments when it was notified of beneficiaries’ work activity. Process Vulnerabilities and Complex Program Rules May Pose Challenges to Correctly Handling Work Reports

		Vulnerabilities in Processing DI Work Reports

Based on our discussions with SSA staff in field offices and teleservice  centers, we identified a number of situations where beneficiaries report  work or earnings, but staff may not enter information into the system,  which is inconsistent with federal internal control standards, or may not  provide a receipt, as mandated by law. Issuing a receipt is required by law and valuable to the beneficiary for two  reasons: (1) the beneficiary can review the receipt to ensure that the  information is correct; and (2) a beneficiary who later receives an  overpayment can produce work report receipts to prove that he/she  properly reported work activity. However, SSA’s  ability to determine the extent of these vulnerabilities is hindered, in part,  due to data limitations. SSA’s eWork system does not capture data that  would help the agency determine how many work reports are filed by fax,  mail, or in person. However, the agency has not  established policies or procedures detailing the steps staff must take in  screening these reports. Without explicit policies or  procedures on how to screen a work report—that is, how to evaluate  whether it should be closed or referred to a work CDR to determine  whether the beneficiary’s benefits should be adjusted—there is an  increased risk that a report could be improperly closed, and result in a  beneficiary being overpaid. SSA also lacks guidance and processes for  ensuring the accuracy and quality of its work report decisions. In  accordance with federal internal control standards, agencies should  assure that ongoing monitoring occurs in the course of normal operations,  and assess the quality of performance over time. The absence of  oversight and feedback increases the risk that the agency may not  identify errors with work report decisions in a timely manner. SSA Has Not Automated DI Beneficiary Work Reporting

SSA does not offer automated reporting options for DI beneficiaries — similar to those currently used in SSA’s Supplemental Security Income  (SSI) program— even though such options could address vulnerabilities  we identified. They also told us these efforts were not resumed  because the automated reporting in the DI program would not have the  same return on investment as in the SSI program, due to the complexity  of DI program rules. Unclear Guidance and Complex Program Rules May Result in Confusion Regarding Work Reporting Requirements

Overpayments may arise because of unclear work reporting requirements  and staff’s differing interpretations of complex DI program rules. For  example, SSA’s regulations and its policy manual both state that DI  beneficiaries should “promptly” report changes to work activity, but SSA  has not defined this term, leaving this open to interpretation by both  beneficiaries and SSA staff. SSA has developed a proposal to reduce complexity in the DI program,  but has not tested or implemented this proposal to date. In its fiscal year  2012 budget request, SSA proposed the Work Incentives Simplification  Pilot (WISP), to test a streamlined approach to evaluating DI Program  work activity and reduce administrative workloads by making it simpler  and less time-consuming for staff to verify earnings and validate benefits. Nevertheless, one SSA representative/ manager  indicated that the page signed by beneficiaries when they are initially  approved for benefits could specifically include information about work  reporting requirements, which would make it more difficult for  beneficiaries who incur an overpayment to claim that they were unaware  of their reporting responsibilities. In contrast, in fiscal year 2014, SSA began providing a  web-based service designed to prompt SSI beneficiaries to report wages,  using notices, emails and reminders—an option not currently available for  DI beneficiaries. Finally, although the initial application and  annual letter mention potential liability for overpayments for beneficiaries  who fail to report work, SSA’s “Working While Disabled” pamphlet—which  contains details about work incentives and is provided to beneficiaries  who contact SSA about work—does not explain circumstances under  which a beneficiary could be found liable for an overpayment.
Why GAO Did This Study

SSA's DI program is one of the nation's largest cash assistance programs. To ensure that beneficiaries remain eligible, SSA regulations require that beneficiaries promptly report their work activity—including starting a job or a change in wages—to the agency in a timely manner. If the beneficiary does not report changes or if SSA does not properly process reported work information, SSA may pay out benefits in excess of what is due, resulting in an overpayment. 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 the loss of taxpayer dollars when they cannot be repaid.
In this statement based on ongoing work, GAO discusses preliminary observations regarding: 1) what is known about the extent of work-related DI overpayments; and 2) factors affecting SSA's handling of work activity reported by beneficiaries. GAO reviewed relevant federal laws, policies, and procedures, and prior GAO, OIG and SSA reports; analyzed 10 years of SSA data on overpayments; interviewed staff at SSA headquarters and at field offices and teleservice centers for three regions, selected to represent a range of relevant DI workloads.

What GAO Found

Over the last decade, preliminary data provided by the Social Security Administration (SSA) indicate that more than half of the $20 billion overpaid in the Disability Insurance (DI) program was associated with beneficiary work activity. Specifically, SSA's data indicate that between fiscal years 2005 and 2014, a total of $11 billion in DI overpayments were paid to beneficiaries with work earnings that exceeded program limits, with an annual average of 96,000 DI beneficiaries incurring an average work-related overpayment of $12,000. In its last 6 annual stewardship reports, SSA attributed some improper payments to its not taking appropriate action when notified of beneficiaries' work activity.
GAO identified a number of factors that affect handling of work activity reports by beneficiaries—factors that stem from weaknesses in SSA's policies and procedures that are inconsistent with federal internal control standards. Such weaknesses increase the risk that overpayments may occur even when DI beneficiaries diligently try to follow program rules and report work and earnings. These weaknesses include:
Vulnerabilities in processing work reports. Based on interviews with SSA staff, GAO identified process vulnerabilities that could result in staff not: (1) issuing a receipt that proves the beneficiary's work was reported—one of two criteria a beneficiary must meet for SSA to waive an overpayment; and (2) initiating tracking of work activity, which would help prevent overpayments. Data are not available to determine the extent to which this might occur.
Limited guidance for processing and monitoring work reports. While SSA has metrics to ensure that staff take action on work reports in a timely manner, it lacks procedures detailing steps staff must take in screening these reports and for ensuring that pending work reports are systematically reviewed and closed with appropriate action, consistent with federal internal control standards.
Not leveraging technology. In contrast to SSA's Supplemental Security Income (SSI) program—a means-tested disability benefits program—the DI program lacks automated tools for beneficiaries to report work. SSI recipients can report wages through an automated telephone reporting system and a smartphone app. SSA cited complex DI program rules and an unclear return on investment for not pursuing these options. However, this conclusion was based on a limited evaluation of costs. Meanwhile, SSA's current manual approach is vulnerable to error and may discourage reporting by beneficiaries who experience long wait times when they try to report work in person at offices or by telephone.
Confusing work incentive rules. The DI program has complex work incentive rules, such that SSA staff interviewed by GAO had varying interpretations of program rules and gave beneficiaries differing instructions on how often to report their work and earnings. In 2012, SSA developed a proposal to simplify program rules, but stated that it does not currently have the authority to test or implement such changes. SSA requested authority that would allow it to conduct such tests in its 2016 budget proposal.

What GAO Recommends

As GAO finalizes its work for issuance later this year, it will consider making recommendations, as appropriate. GAO sought SSA's views on information included in this statement, but SSA was unable to provide its views in time to be incorporated.