Congress is bailing out the financially troubled Social Security Disability Insurance program as part of a two-year bipartisan budget deal that received final approval on Friday.
The costly program – which provides $143 billion annually to 11 million people unable to work because of significant illness or impairment -- has undergone intense scrutiny by lawmakers and the Government Accountability Office. It will undergo substantial reforms in the coming months in order to reduce wasteful spending and fraud that have jeopardized the program’s financial stability.
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While the program has long been an indispensable source of income for Americans with conditions that prevents them from participating in “substantial gainful activity,” it also has been wracked by incompetent oversight and outright fraud.
The average benefit paid to disabled workers in July 2015 was $1,165 a month, or about $13,980 a year. The Social Security Administration requires that beneficiaries promptly report their work activity, including starting a new job or a change in wages.
But according to a GAO report issued on Thursday, the SSA staff has frequently bypassed established tracking procedures or provides limited oversight that have led to billions of dollars of unwarranted “overpayments” to beneficiaries.
Between fiscal 2005 and 2014, for example, the Social Security Administration made $11 billion in disability insurance “overpayments” to beneficiaries who had returned to work and had earnings above the program limits, according to the GAO.
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The administration has taken action to recover much of those unwarranted payments. However, the SSA made an additional $1.4 billion of unwarranted benefit payments during that period that were never recovered because the beneficiary was found not at fault.
“Avoiding overpayments is imperative as they pose a burden for beneficiaries who must repay excess benefits and result in lost taxpayer dollars if they are not repaid or are waived by SSA,” the GAO report stated.
Beyond that, the disability insurance program has been targeted for fraud or rip-offs for years. Federal authorities have repeatedly uncovered schemes involving hundreds of millions of dollars’ worth of fraud in which doctors issue phony diagnoses of physical or mental impairment for beneficiaries.
Moreover, about 117,000 Americans double-dipped in the program by cashing unemployment and Social Security disability checks during the height of the Great Recession and the ensuing jobs crisis, a maneuver that while not technically illegal cost taxpayers a combined $856 million in fiscal 2010 alone.
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Mounting concern about abuses of the program prompted Congress to include measures to combat fraud and provide added incentives for disabled Americans to return to work in the two-year budget deal.
Those measures include requiring SSA to expand its cooperative effort with local authorities to ferret out fraudulent disability payments, suspending or terminating benefits for anyone caught concealing work activity, and beefing up penalties generally for Social Security fraud.
The half-century-old program – a companion to the Social Security retirement fund – was on track to begin cutting back benefits by 20 percent to beneficiaries beginning in late 2016 without congressional intervention. The budget deal will extend the solvency of the program through 2024 by shifting payroll tax revenues from the larger Social Security retirement fund.
Meanwhile, the GAO outlined seven recommendations for reducing overpayments, including that SSA study automated reporting options and improve oversight of work reports and waivers.
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“To further ensure the effective screening of work reports, SSA should monitor its process for handling work reports to determine whether staff are taking action on work reports in accordance with proper procedures, and provide feedback to staff as needed,” the GAO said.
