Aug 1, 2018

71% Overpayment Rate

     From Work-Related Overpayments of Social Security Disability Insurance Beneficiaries: Prevalence And Descriptive Statistics, a study by several researchers for the Mathematica Center for Studying Disability Policy:
Work-related overpayments occur when the Social Security Administration (SSA) issues a monthly benefit to which an individual is not entitled because of engagement in substantial gainful activity. ... 
We found that: 
  • 1.9 percent of all DI [Disability Insurance] beneficiaries in our sample were overpaid due to work in one or more months during the three-year study period. 
  • Among DI beneficiaries with sufficient earnings to put them at risk of a work-related overpayment, 71 percent were overpaid. 
  • Work-related overpayments lasted for a median of nine months. 
  • Work-related overpayments accrued to a median of over $9,000.
      71% of the time that a Social Security Disability Insurance Benefits recipient returns to work for long enough at enough pay that his or her benefits should be reduced those benefits aren't actually reduced and there's an overpayment of benefits? That's terrible. It's obvious that there are systemic problems. You can't just blame claimants for this high a rate of overpayments. There are undoubtedly many reasons for this situation but the incredible complexity of the rules applied in cases where beneficiaries return to work have to be a major part. I also think it's too difficult to report return to work.
     I'll make one simple suggestion which would probably help and it could be implemented without changing any laws. Send a yearly mailer to each person drawing disability benefits each January asking whether they have earned money in the preceding year. If they reply that they have, follow up with them to get the details. If they have worked but remain eligible for benefits at the time, send them quarterly mailers for at least the next couple of years and follow up on the responses. I'll admit that there's one huge problem with my suggestion. Social Security lacks the manpower to deal with the responses they would receive. I'll admit that it's also possible that it wouldn't be cost efficient since only 1.9% o benefits recipients are affected. Got any better ideas?

5 comments:

Anonymous said...

Just throwing ideas out there. Obviously simplify. Find a way that employers of those in pay status can easily report the beneficiary’s work income directly to SSA. Develop software that, once monthly income is entered, automatically calculates impact on SSI and SSDI benefits and creates a work order for an SSA employee to take appropriate action. Use it at SSA and make a version available to advocates and representatives.

Anonymous said...

@2:02

I am not sure all employers report income on a monthly basis. It is outside my experience, but as I understand it, at most, larger employers report on a quarterly basis.

I think an even simpler solution would be to stop attempting to terminate/reduce benefit based on work activity, instead fully fund, and maybe even speed up the CDR process. The ability to use other medical sources obviously provides significant cost reductions allowing for this change. If a claimant has medically recovered, then enforce an overpayment as medical findings are far less debatable than vocational evidence. A simple statement from the employer saying they are providing specific, significant accommodations undercuts the overpayment issue if all the overpayment is based on is a vocational finding.

Anonymous said...

let people earn more. reduce benefits $1 for every $2 they earn over SGA. If it took a while for SSA to learn about or process a beneficiary's earnings report, the overpayment would not be as big. People would have an incentive to work more, too. Most can't even work anywhere close to SGA (hence getting DI!) but for those who can why not let them try? Maybe it could be 2 for 1 for two years, then 1 for 1 for a year, and then your benefits stop. Eliminate the Trial Work Period while you're at it...it's super confusing.

Anonymous said...

IRS reports wages and self-employment income to SSA rather quickly these days. I've seen wages for 2017 posted in February 2018. I've seen self-employment net profit reported in April 2018 be posted to the earnings record in two months. Once upon a time, there was a lag in posting, but now the problem is that SSA doesn't work their own computer alerts of wages. But-- now, as of 6/2/2018, SSI recipients and deemors can report wages on their mySocialSecurity accounts. SSA says that SSA recipients already could report there. However, all dib recipients who work must report to a SSA office (not online) when they change employers.

Anonymous said...

Actually, W-2s filed by employers are filed with SSA. SSA assembles the information and passes it on to IRS. The increased speed, I believe, is due to electronic filing's replacing paperW-2s.