The Social Security Administration approved disability payments to children with fake disabilities, giving families over $700 each month per child.
The agency’s inspector general said families receiving cash benefits for multiple children raise red flags for fraud, identifying one case where a man was able to receive $77,000 a year in benefits claiming disabilities for all eight of his children.
The inspector general released an audit last week finding evidence that parents are "coaching" their children into pretending they are disabled in order to receive benefits. Additionally, the audit found that field offices are not flagging potential fraud cases or performing periodic reviews of children to determine if they still qualify for taxpayer-funded benefits.
"[Field office] personnel noted that parents had an incentive to get their children on [supplemental security income] SSI because of the cash payment," the inspector general said. "In fact, staff at several [field offices] … told us they believed some parents may have withheld medication, told a child not to speak, or coached a child to ‘act up’ to improve their chances of obtaining SSI payments."
"Others questioned whether parents should receive cash payments instead of treatment for the child’s disability," the inspector general said.
While the inspector general said it was "making no conclusions" about whether families should have been approved for disability payments, the audit identified several cases of potential fraud.
For instance, one family received payments of up to $733 for six children diagnosed with ADD or attention deficit hyperactivity disorder (ADHD). Prescription drugs that treat ADHD can cost as little as $15 per month.
Another household was approved for five children all in the same day.
In one case, an aunt coached a 13-year-old girl into feigning a disability, telling the agency’s disability investigations unit that she "could not read, write, or count."
"However, the school reported the child was not a special education student, was doing well in math, and had socialized well with others," the inspector general said. Payments to the aunt on behalf of the girl and three other children in the house were ultimately cancelled.
Another family received benefits for 12 children, all for mental impairments. At the 2015 maximum payment amount of $733 per child, per month, the family could have received up to $8,796 per month, or over $100,000 per year. An investigation determined that at least three of the children were not disabled.
The inspector general said that unlike benefits for retired and disabled workers, disability payments to families with multiple children are not capped, allowing no limit on how much they can receive from taxpayers.
"[W]e identified one household (father and eight children) that received over $6,400 per month, about $77,000 in total, in SSI payments in [calendar year] 2014," the inspector general said. "Furthermore, the State’s median annual income was about $58,000 for a household of seven or more persons."
Families receiving disability benefits for their children skyrocketed in the 1990s after the program was expanded to include children with mental conditions. By 2013, 1.3 million children were receiving disability payments.
The vast majority of children receiving the $10 billion a year in disability payments are for mental impairments. The most common accepted impairments are ADD and ADHD.
Once a child is approved for benefits, they are likely to receive benefits until they reach adulthood. The agency is supposed to re-examine a child’s disability every 3 years, or for children with long-term disabilities whose condition is not likely to improve, every 5 to 7 years.
"However, according to an SSA Research and Statistics Note, for many child SSI recipients, the age 18 is the first time SSA reviews their disability during their tenure in the program," the inspector general said.
The audit was based on data of nearly 85,000 approved disability claims between 2011 and 2013, of which there were 31,890 approved ADD/ADHD cases; 17,973 for speech and language delays; 15,900 for autism; 10,414 for intellectual disabilities; and 8,816 for mood disorders.
The agency does not even know how many households it has approved for benefits going to more than one child. The inspector general could not determine the total number, but identified hundreds of cases in its audit.
"However, our interviews with individuals … and reviews of 42 households (193 children) with 4 or more mentally disabled children, raised some concerns about the potential for individuals to exploit vulnerabilities in program controls," the inspector general said.
"We recognize that more than one child in a household may have legitimate disabilities; however, we believe SSA should consider households with multiple children applying for, or receiving, SSI for mental impairments as high-risk," the inspector general added.
In response to the audit, the agency said it already has a policy in place for reporting potential fraud in households that have multiple children receiving disability payments. The audit found, based on its sample, that field offices do not report this information 92 percent of the time.