Social Security May Have Overpaid Disability Claims by $1.29 Billion

Roughly 36,000 individuals may have received Social Security disability payments for which they did not qualify, at a cost to the government of $1.29 billion, the Government Accountability Office reported.

In an audit released Friday to Sens. Tom Carper, D-Del., Carl Levin, D-Mich., and Claire McCaskill, D-Mo., GAO said that the “potential cash benefit overpayments” made by the Social Security Administration as of January 2013 may have gone to recipients who were already working.

A similar report in 2010 found a higher number of possible improper payments, totaling $1.62 billion, or 1.27 percent of total payouts under the Disability Insurance program.

Under the program established in 1956, applicants who claim they are unable to work due to a long-term disability are required to go through a five-month waiting period during which they may not earn more than $1,000 a month. There is a subsequent nine-month trial work period.

More than 10 million disability insurance beneficiaries received cash payments totaling more than $128 billion in fiscal 2011, not counting Medicare payments, “and the program is poised to grow further as the baby boom generation ages,” the report said.

Auditors over a 15-month period compared SSA disability insurance data against the National Directory of New Hires and found discrepancies, though they could not pin down a precise number. “SSA uses its enforcement operation to generate alerts for potentially disqualifying earnings, but the agency's enforcement operation does not generate alerts for earnings that occur in all months of the waiting period, which allows potentially disqualifying work activity to remain undetected,” GAO wrote. “SSA officials stated that modifying its enforcement operation could be costly, but the agency has not assessed the costs of doing so.”

GAO recommended that SSA assess the costs and feasibility of establishing a mechanism to detect potentially disqualifying earnings during all months of the waiting period and implement the mechanism.

SSA concurred, but said, “GAO did not replicate the process with which” SSA makes determinations for eligibility, “and GAO made assumptions that may not be consistent with our policy.” Hence SSA is seeking additional GAO data before fully responding.

GAO stood by its methods.