SSA: $1.29 Billion in Disability Overpayments a ‘Small Payment Error’

Disability payments improperly made to almost 36,000 individuals

• September 16, 2013 12:35 pm


The Social Security Administration (SSA) gave $1.29 billion in payments to individuals who were not considered disabled, a mistake the agency says is a "small payment error."

The SSA made improper payments to roughly 36,000 individuals who were able to earn more than $1,000 per month, rendering them ineligible for the Disability Insurance (DI) program, according to a Government Accountability Office (GAO) report released Friday.

The cost to the taxpayers was nearly $1.3 billion.

The SSA said that the overall rate of overpayment is low, but the sheer number of people involved in the program leads to large totals.

"While our overpayment accuracy rates are high, even small payment errors result in large costs to taxpayers and to DI beneficiaries," said Katherine A. Thornton, deputy chief of staff for the SSA, in the SSA’s response to the report.

"The true extent of overpayments is currently unknown," the GAO said, "but our prior work suggests that most overpayments are related to beneficiaries who worked while receiving benefits."

"This report demonstrates just how little importance the Social Security Administration places on policing its disability rolls," Sen. Tom Coburn (R., Okla.), ranking member of the Senate Committee on Homeland Security and Governmental Affairs, said in a statement.

"SSA has known for years that it could prevent millions of dollars in improper disability payments using quarterly wage records, but chose not to," he said.

The GAO based its findings on earnings data from the National Directory of New Hires (NDNH) database. SSA uses the database for oversight of its Social Security Insurance program but does not use the NDNH to conduct oversight of the DI program.

Social Security determines if a person is disabled on their ability to work. If a person made more than $1,010 a month in 2012, they were not considered eligible for disability.

A physician earning approximately well over the allowable monthly salary was still able to collect disability payments for over three years in one example.

"The beneficiary filed for benefits in November 2009 while he had substantial earnings from working as a physician," the GAO said. "He had substantial earnings from work in all five months of the waiting period, as much as $22,000 monthly, and continued to have substantial earnings from work in the month he started receiving benefits."

The physician took in $90,000 in disability payments on top of his salary, and was still receiving a monthly payment of $2,500 in May 2013.

Another man applied for DI payments in July 2006 for "personality disorders," and was approved by the SSA the following day.

"The day after he was approved for benefits, the beneficiary began working," the GAO reported. Ultimately the individual received $57,000 over five years in overpayments.

A month after the man’s payments were cut off, he applied for disability again, though he was still working and earning above the disability threshold.

"Even though SSA had information documenting that the individual did not report earnings before, the agency approved the application and continued to pay DI benefits as of May 2013," the GAO reported. 

The man is still receiving disability payments, though SSA is "withholding" $75 per month to recover his previous overpayments.

"At $75 per month, it would take 63 years for SSA to recover the $57,000 overpayment, at which time the beneficiary would be well over 100 years old," the GAO said.

Thornton blamed lack of funding for her agency’s inability to address improper payments.

"We recognize that improving payment accuracy is critical to preserving the public’s trust in our program," she said in her response to the GAO. "Our ability to increase payment accuracy is ultimately determined by available resources."

"We must conduct all agency work within the funding levels set by our annual appropriation," Thornton continued. "In the current fiscal environment, expansion of our earnings enforcement operation or work continuing disability review program would require additional administrative funding, or we would need to defer performing other agency priority work."

Thornton then praised President Barack Obama’s fiscal year 2014 budget, saying it has the "resources necessary to make meaningful increases in payment accuracy."

"We look forward to working with GAO, Congress, and others to improve the stewardship of the disability program," she said.

"The DI program provides an important safety net for disabled beneficiaries," the GAO said in its conclusion. "However, during a time of growing concerns about the solvency of the DI trust fund, it is important that SSA take every opportunity to ensure that only eligible beneficiaries receive payments under this program and that additional actions are taken to improve the financial status of the program."

Sen. Coburn said the program is in urgent need for reform, as it is approaching insolvency.

"With estimates showing the disability trust fund will be unable to pay full benefits as early as 2015, it is time for SSA to take action to protect the program for those who are truly unable to work because of a disability," he said.