SSDI Funding at Risk | Citizens Against Government Waste

SSDI Funding at Risk

The WasteWatcher

In fiscal year (FY) 2010, the Social Security Disability Insurance program (SSDI) shelled out approximately $123 billion in benefits to more than 10 million disabled workers and their dependents. Reforms in the SSDI program are long overdue; without them, the fund is expected to be depleted by 2018 according to a June 14, 2011 Government Accountability Office (GAO) report. One reason for SSDI’s financial woes is a 63 percent increase in overpayments, from $860 million in FY 2001 to $1.4 billion in FY 2010.

SSDI overpayments are often the result of a lack of timely earnings data and inconsistent handling of work continuing disability reviews (CDRs), which determine if beneficiaries are earning too much to continue receiving disability insurance. According to SSDI policy, beneficiaries are supposed to regularly report earnings, and those who begin to earn above $1,000 per month, known as substantial gainful activity (SGA), should no longer be eligible for disability insurance. SSA Inspector General (IG) Patrick P. O’Carroll, Jr. stated that, after reviewing the April 2009 audit of SSA work CDR reports, the administration was not conducting all necessary steps in the CDR process to determine if beneficiaries earned above the SGA. According to testimony before the House Subcommittee on Social Security and Oversight on June 14, 2011 by SSA Director of Education, Workforce, Income, and Security Daniel Bertoni, in 49 out of 60 cases reviewed there was no indication that earnings had been properly reported. This led to $1.3 billion in previously undetected overpayments.

To determine unreported earnings, SSA utilizes data matching with the Internal Revenue Service. This data may be more than a year old when it is received by SSA, and SSA staff may delay up to an additional 15 months before beginning the work CDR. The June 14 GAO study revealed that one-third of beneficiaries were overpaid for 18 or more months, resulting in $78,000 in overpayments in just the 10 percent of the cases that were reviewed.

The delay involved with the processing of CDRs likely occurs because SSA target timelines for developing cases are not enforced. The target is 270 days, but the processing time ranged from 82 to 992 days in the 60 cases studied by the GAO. These delays caused more than $1 million in overpayments.

Failure to prevent overpayments is also a product of backlogged medical CDRs. Currently, SSA has a projected backlog of 1.4 million medical CDRs. The SSA IG estimated that SSA would have avoided paying at least $556 million during the 2011 calendar year if these medical CDRs had been completed on time. SSA Deputy Commissioner Carolyn Colvin testified before the House Committee on Ways and Means on June 14, 2011 that every dollar funding CDRs yields at least $10 in lifetime program savings, including savings for Medicare and Medicaid.

Another contributor to the dysfunctional nature of SSDI is the Ticket to Work program. It provides beneficiaries with tickets that may be handed to service providers, known as employment networks (ENs), which are supposed to assist ticket holders in locating and maintaining steady jobs and incomes. Despite the revamping of the Ticket to Work program in 2008, the program continues to be a black hole for taxpayer dollars. Less than one percent of all ticket holders have utilized their ticket to receive program services, and yet the number of ENs approved to serve eligible beneficiaries has increased from 1,514 in FY 2007 to 1,603 in July 2010. This has increased payments to ENs by $9.2 million.

GAO discovered that many ENs scope out potential ticket holders who are already working or ready to work in order to ensure that they collect maximum payments from SSA. The three ENs with the greatest SSA payments admitted to providing minimal service to their ticket holders beyond presenting them with portions of SSA payments. Even though these ENs provided ticket holders with virtually no services, they received $4 million in SSA payments in FY 2009.

House Ways and Means Oversight Subcommittee Chairman Charles Boustany (R-La.) stated: “Regardless of whether a payment occurs because of an error or outright fraud, improper payments harm social security programs in the long term, jeopardizing benefits for those who may need them in the future. They also cost taxpayers billions of dollars each year.” Until SSDI reviews and processes are completed appropriately and in a timely manner, unqualified persons will continue receiving improper benefits.

  -- Courtney Frink

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