From Work-Related Overpayments to Social Security Disability Insurance Beneficiaries: Prevalence and Descriptive Statistics by Denise Hoffman, Benjamin Fischer, John T. Jones, Andrew McGuirk, and Miriam Loewenberg, published in the Social Security Bulletin (emphasis added):
For decades, Social Security Administration (SSA) efforts to increase employment among Social Security Disability Insurance (DI) beneficiaries have been a focus of considerable interest among both policymakers and researchers. However, beneficiary work activity sometimes results in benefit overpayments, and research on the extent of those overpayments—and the characteristics of affected beneficiaries—has been relatively limited. ...
DI overpayments account for a substantial sum of money and create administrative and fiscal management challenges for SSA. Work-related overpayment amounts ranged from $831 million in fiscal year 2010 to $980 million in fiscal year 2012. ...
Anecdotal evidence suggests that overpayments and their aftermaths can be traumatic experiences for beneficiaries and may function as disincentives to work. ...
[W]e find that overpayments are probable among at-risk beneficiaries (of whom 71 percent were overpaid). The median duration of work-related overpayments was 9 months and the median amount they accrued was $9,282. Overpayments were most prevalent among traditionally disadvantaged or vulnerable populations, including beneficiaries who are black or Hispanic, those with low monthly DI benefit amounts, those for whom medical improvement is not expected, and those with less than a high school education, holding other characteristics equal. ...
I don't know all of what should be done about this but, I guess, the first step would be to acknowledge that, in the main, this is a systemic problem rather than the fault of claimants trying to cheat. I think the second step would be to acknowledge that collection of these overpayments should not be the priority. The system is too complicated. We can't keep blaming the claimants for these overpayments. Most of these overpayments should be quickly waived if we want to avoid discouraging attempts to return to work.
Social Security's Inspector General, in particular, needs to give some serious thought to the pressure it puts on the agency to aggressively find and collect any and all overpayments.
11 comments:
While it's most likely never going to be fraud. Beneficiaries need to take responsibility for timely reporting of events/wages. The large majority of overpayments related to working after the trial work period are due to the fact that wages are not reported timely and are only discovered during a medical cdr/report of stoppage of work or posting of earnings to a earnings record. There could be a better education of earnings limits, but there has to be some responsibility on the claimant to provide us with the most accurate information possible.
A number of overpayments result from SSA's failure to process work reports timely. First step would be for SSA to ensure that disabled beneficiaries who return to work are able to report earnings quickly and easily, and get a receipt which acknowledges the reports. SSA has made some efforts to do this, but should re-double efforts to make this possible for T2 beneficiaries and T16 recipients. And for T2 beneficiaries subject to the Annual Earnings Test (retirement, dependents, and survivors), SSA should implement similar ability to report and get a receipt acknowledging.
1. Require monthly reporting of earnings by employers.
2. Ensure full communication between treasury and SSA, allowing an overpayment to be detected (at least due to earnings) within 1-2 months, as opposed to after 1-2 years.
3. Spread out overpayment recovery, changing it from immediate withholding of all benefits, to 10-20% of benefits for longer. The trial work period/unsuccessful work attempt rules and ticket to work program would address those which report earnings long enough to actually demonstrate an inconsistency with disability. If the claimant does in fact return to work, then enforce an overpayment against the former recipient who now can actually can afford to repay it given their sustained earnings.
These steps would reduce trauma due to decreasing the withholding amount and it would at least heavily reduce any disincentive to work, maybe even encourage it given a claimant who is barely (but able) to return to work is faced with either sticking on benefits of approximately $~1300/month, or trying to return to work where they would likely earn slightly but be faced with an overpayment where they could be liable for more than they even would be earning. Currently, the system says you should return to work if you can, but if you do, you may literally be left with nothing even assuming you actually recovered and are capable of working. On the other hand, if you return to work and relapse into disability, you could be left with nothing, plus have to go through the process again. So, best case scenario you are facing years of hardship.
I hear ya - but believe me, I see clients regularly who have reported their earnings religiously to SSA, only to have SSA charge them with an overpayment years later. There have even been a few well publicized stories of people who have written to SSA and asked them to stop benefits....guess what happens? The benefits continue for a year and then they get slapped with an overpayment. The point is, its not always the claimant's fault.
Sometimes SSA is slow to act on reports of earnings and folks are overpaid. BUT, frequently they are told they are earning too much and should be held accountable. Sometimes they aren't told they are over the limit. Some overpayments are clearly the fault of the claimant when they return to a job that pays $70-80K a year.
Part of the reason that work reports are not worked super quickly is that often that wages have to be verified with the employer or through pay stubs so as to ascertain what months are trial work period, what months are SGA etc. The problem is that in those cases the person may just be a bit over SGA and with those type earnings will be least able to repay any overpayment.
Re above comment--requiring monthly reporting my employers is a nightmare in my opinion. Perhaps the writer is too young to recall earnings were once reported monthly (until 1978) and processing work reports for 150+ million folks is enough work without multiplying that by 12.
In my experience, SSA is frequently at fault for not acting timely on reports but claimants sometimes don't report earnings and on rarer occasions hide earnings--state that they aren't working when they are requiring more development to prove that it is actually them working instead of someone else.
The default is to request repayment of overpayment in full but arrangements can be made to repay at low rates.
If someone does return to work and their benefits are terminated due to work (and that would have to be 3 years after their trial work period ended), they can request expedited reinstatement of benefits if they do so within 5 years of when they were terminated. They are paid immediately while a CDR is done to determine if they are still disabled.
@2:12
Yep, I'm too young to remember that. Even more, I'm not an employer, so I recognize I am ignorant as to that hardship. That history also might explain why SGA is a monthly figure, not an annual or quarterly figure. Only annual figures are documented in the earnings records and while sometimes there is other evidence at least of quarterly earnings through wage queries, it's always seems like a weird gap to not actually document monthly earnings systemically, when SGA is monthly. Always wondered why the system would rely on a figure which requires extrapolation.
As to the default being repayment in full, but arrangements can be made to repay at lower rates, I recognize that and am aware of the expedited reinstatement regulations. Those safeguards are available, and I'm not saying the system as it exists is not functioning. I just see monthly documentation and monitoring of wages being pretty feasible with modern technology, and any delay seems to be the root cause of a lot of these issues.
1:33 You are correct. I have seen a few instances of SSA suddenly discovering and 'overpayment' years later when reporting was done or a person's case was regularly reviewed and an overpayment wasn't discovered until 20 years later.
Welcome to the world of SSA work incentives
But before you come through our door, I have warnings quite preventive
You need to first acquaint yourself with our work incentive rules
A 60 page summary of which is in our Red Book tool
Don’t believe the stories, don’t believe the lies
It isn’t named the Red Book for making blood run from your eyes
The rules aren’t that hard to understand you see
(As long as you have a mathematics, and a law degree)
If you make any mistake, no matter how minimal
Don’t be surprised if you’re treated like a criminal
Found at fault, found to blame, with overpayment assessed
If you weren’t already so, now you’ll be depressed
Not being snarky but what does it meant "process work reports"? It would seem that this could be an automated process where as earnings are reported, electronically, they are immediately correlated with the records of disability beneficiaries and, automatically flagged for notices when the TWP is used up and notified re suspension when appropriate.
Yes, claimants should report directly but since virtually all employers file electronically in some way, these claimant reports should be superfluous. Self Employment and off the books work are, and will always be a problem, but for the vast majority of cases, a functioning reporting system should require minimal CR action and would avoid the one to two year lags that are the overpayments discussed here.
And, as a claimant's rep, I have very little sympathy for someone who reported and then collected benefits for three years even when they knew they should have stopped.
Hey, I know. How 'bout one goes to their bank and shuts off direct deposit from SSA? If a check shows up, send it back "Return to Sender", and keep doing it if they keep showing up. Eventually, they will stop sending them, and if they don't, they weren't cashed, so no harm done. If a person disappears, SSA will shut benefits off quicker than one can say "Here I am!". Make it hard on them, and it will stop.
Or here's another idea...if one knows they should no longer receive a payment, but they do anyway....keep it in your bank account and let it make some interest. Then, when the overpayment notice is received the money is there to pay it back. Just because a payment is issued, does not mean it is owed. Also, SSA does not charge interest on overpayments like other agencies do.
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