Wasting Billions on Disability Insurance

June 9, 2015

The federal Supplemental Security Income (SSI) program provides income to low-income, disabled individuals, including children. In 2014, SSI paid benefits totaling $56 billion to 8 million people. A new Government Accountability Office (GAO) report suggests that a substantial share of that money was spent improperly.

GAO reports that in 2014, SSI wasted $5.1 billion, or almost 10 percent of SSI spending, on improper payments. GAO says that much of the problem is due to SSI’s “management challenges that constrain its ability to ensure program integrity.” SSI is not conducting proper reviews of current beneficiaries in a number of ways.

First, SSI is failing to review files to ensure that beneficiaries continue to be eligible for benefits based on their health. When a person’s health improves, they are supposed to exit the program. According to GAO, SSI’s review backlog totaled 1.3 million files as of January 2014.  Eliminating this backlog would save SSI billions of dollars as ineligible persons would be removed from the program. For instance, children comprise 15 percent of SSI beneficiaries. In 2012 SSI had 435,000 children cases waiting to be reviewed. Many of those cases had been pending for review for six years. Seventy percent of those pending for six years involved cases where the child was projected to improve within three years. Likely, thousands of children received benefits for years past their eligibility due to SSI’s inability to conduct to reviews. GAO estimated that eliminating the backlog of reviews for children would save $1.3 billion over five years. Eliminating SSI’s entire backlog would save millions more.

Second, SSI is also failing to conduct appropriate reviews of beneficiaries’ financial information. SSI beneficiaries must earn less than $721 in monthly income ($1,082 if married) and have less than $2,000 in assets. SSI is supposed to review financial information on an ongoing basis to ensure that beneficiaries continue to be eligible, but that isn’t happening according to GAO.  Inappropriate financial reviews compose a large share of SSI’s overpayments.  It represented 37 percent in fiscal year 2011.

When SSI does find that an individual received too much in benefits, it rarely makes an individual repay the overage. In 2011, SSI approved 76 percent of overpayment waivers, meaning the individuals got to keep their excess payments.

These problems mirror those within the Social Security Disability Insurance program (SSDI) which operates in tandem with SSI. A report from last year highlighted that over 630,000 individuals were waiting to apply for benefits with hundreds of thousands waiting on appeals. SSDI’s trust fund will also be exhausted in late 2016.

Both SSI and SSDI need large-scale reform. Congress should use the opportunity of SSDI’s trust fund bankruptcy to reform these two programs. The issues within the programs are well documented.

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