November 17 2015
Patrice J. Lee
The budget agreement signed into law earlier this month brought well-needed relief to the ailing Social Security Disability Insurance fund.
But the fund's financial woes are far from over, and a recently published study by the Government Accountability Office indicates that some of them are self-inflicted. That study found that between 2005 and 2014, the Social Security Administration added roughly $15.4 billion in debt, collecting back just over half of that. The government also waived $1.4 billion of overpayments because the beneficiaries were not at fault.
GAO found a number of procedural issues at the disability insurance fund that contributed to the overpayments including "unclear guidance" to staffers and some procedures for staffers screening potential beneficiaries' work reports.
"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" the Social Security Administration, the GAO researchers said, explaining why the office was asked to undertake the review.
The SSA recently conducted two reviews to identify the extent of these overpayments although they represent just a fraction of what the disability fund disburses: In fiscal 2014, the disability program paid out $141 billion in benefits, according to Social Security in its response to the GAO findings.
But at a time when the Treasury is lending the fund money to shore up its finances and the budget deal reallocates employer and employee contributions to the Social Security funds to help, the disability overpayments are making critics take note.
The Independent Women's Forum, a group that describes its goal as "increasing the number of women who value free markets and personal liberty" and "working to return the country to limited, constitutional government," was one group that noted the payments with disapproval.
"The real problem is that since its inception, the program has grown far beyond what its architects envisioned," wrote Patrice Lee, a senior fellow at the forum. "Part of this is that claims aren't checked and monitored properly, some of it is fraud, and much of it is that disability now includes such vague ailments that it is hard to evaluate claims. This is a program that cries out for a drastic overhaul, lest it go broke and leave the truly incapacitated in the lurch."
Part of the problem for the disability insurance fund seems to be the difficulty in automating some of the claims it receives, said Web Phillips, senior policy analyst for Social Security at the The National Committee to Preserve Social Security & Medicare. But, he added, the very part that has not been automated is inherently complicated and hard to streamline.
People who are too disabled to work simply file a straightforward claim, and if they are still disabled when they reach retirement age, the benefits convert to regular retirement benefits. But those who return to work have to file documents to indicate that their income is at a level to make them qualify, and that, Phillips said, is where the trouble starts.
"There is a lot of stuff that comes in — it's not electronic, it's paper," he said. "It could be faxed in, mailed in, an envelope with a packet of pay stubs. And something has to be done with every one of those reports."
Meanwhile, budget constraints limit the Social Security Administration's ability to add staff time for processing the claims, Phillips added. "Somebody calls in, somebody takes a note, you work those cases when you have some extra time."
Even so, Phillips said, the process needs to change. "Even though [the overpayment for disability claims for working] are a small part of the total, and even though more than half of it is immediately recovered from beneficiaries, it is not good for the program to have provisions that aren't effectively administered."
Fortunately for those thinking of filing for disability benefits, Social Security noted in response to the GAO findings that the absolute amount of the overpayments relative to all disability payments is so small that they "have virtually no impact on the long-term solvence of the [disability insurance] fund."
Still, Phillips said, "it has to be dealt with."