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November 6 2015

Feds Dole Out $20 Billion in Disability Overpayments

Patrice J. Lee

As Americans, we are by and large committed to providing a safety net that is of limited duration and helps prevent people who fall on hard times from descending into permanent poverty. It’s outrageous when people scam the system, threatening the solvency of the safety net for those in genuine need. It even more of an outrage when fraud and abuse are permitted because of lazy oversight by the agency administering benefits.

According to a new watchdog report, the Social Security Agency (SSA) overpaid beneficiaries a total of $20 billion from 2005 to 2014. More than half of this ($11.5 billion) was because recipients returned to work and earned more than the program permits.

While about 90 percent of this was recovered, the agency ended up writing off $1.4 billion because the agency--not the recipients--were at fault. .

The Disability Insurance program, which dates back to 1956, was designed to provide monthly cash benefits to individuals who are unable to work because of severe or long-term disability. Every worker and employer pays for this insurance program through the payroll tax deducted from our weekly checks. The average monthly benefit for disabled workers was $1,165 in June (or $13,980 per year). Eligible DI recipients can also qualify for Supplemental Security Incomes (SSI) - cash assistance for aged, blind, and disabled individuals with limited income.

DI recipients can work, but must notify the Social Security Agency when their condition improves or when they return to work, or when they get a pay increase or boost in hours. Relying on recipients, who believe that the agency is probably not going to catch them, if they are dishonest, opens the door for benefit overpayments. Not only is checking lax, overpayments also occur when SSA doesn’t act on work reports in a timely or appropriate manner.

The Washington Post reports:

The program is on track for significant reforms in the two-year budget deal reached by Congress last week, changes designed to increase oversight and reduce fraud.

Auditors for GAO, the investigative arm of Congress, found weak oversight by employees, who did not properly monitor the incomes of workers who earn some money but continue to receive benefits. Basic checks and balances, such as providing workers with a receipt when they report any change to their income, are not in place.

The rules of the program are so complicated that both the employees who administer it and those who get benefits are confused, resulting in mistakes on both sides. And the system for people to report income is not computerized: It has no automated telephone system or smartphone app, opening the door to fraud and errors.

And when an overpayment of up to $1,000 is discovered, the government does not try to get it back. It’s automatically waived, auditors found.

The agency responded pish-posh, the dollars just look big but are really no big deal:

Social Security officials said in an e-mail that although the overpayments “look substantial expressed as real dollars, they represent a very small percentage of the $80 billion in payments we make each year.”

‘That translates to a very high overall accuracy rate,” the statement said. “That said, we are committed to preventing overpayments and we are continually refining our processes and seeking new and innovative ways to leverage data.

Auditors recommended changes that include automated reporting of income and better oversight of waivers and those who earn money while receiving benefits. It appears that despite them defending the low rate of over payments, they agreed with just about all of the recommendations.

Of course, the real problem is that since its inception, the program has grown far beyond what its architects envisioned. 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.

Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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