More than two-thirds of people who earn enough money to affect their federal disability insurance benefits get more money than they are entitled to, creating problems for taxpayers and program participants.
The Social Security Administration’s Disability Insurance program has an overpayment problem that’s costly for beneficiaries and taxpayers, according to testimony from the U.S. Government Accountability Office.
Overpayments have been a longstanding problem for the program, which serves as a safety net for those who can no longer work because of physical or mental impairments. The program provided $146 billion in benefits to 8.95 million beneficiaries in fiscal year 2022.
“Overpayments can pose a financial hardship for beneficiaries responsible for repaying the debt,” according to the testimony. “Overpayments may also result in the loss of taxpayer dollars, either because beneficiaries do not repay their debts or because they are eligible to have their overpayment debts waived.”
Overpayments occur when beneficiaries are paid more than they should be for a given period. Program rules require beneficiaries to promptly report their work activity, such as starting a job or a change in wages. Failure to report such changes can result in overpayments. Other types of overpayments occur when SSA miscalculates benefits, people who knowingly mislead the agency and fraud.
Some 71% of beneficiaries who earn enough money to affect their benefits receive overpayments, which typically usually continue for about nine months. Those overpayments cost taxpayers $9,282 per recipient, according to a 2019 report cited in the GAO testimony.
That’s money that beneficiaries often can’t afford to pay back to the government and taxpayers can’t recover.
In each fiscal year from 2018 to 2022, SSA collected an average of 18.5% of debts owed to it annually across its programs. To recover these debts, SSA spent an estimated 6 to 7 cents per dollar recovered, according to the GAO testimony.
“The potential for an overpayment may create a disincentive for beneficiaries to further pursue work,” according to the testimony. “Furthermore, overpayments place a financial burden on the agency through the cost of recovering debts, and to the taxpayer through overpayments that are waived and never recovered.”
The SSA’s Disability Insurance program is small compared to other SSA programs such as Old-Age and Survivors Insurance (OASI), which provides retirement benefits to eligible older people and their families and to survivors of deceased workers and Supplemental Security Income (SSI), which provides benefits for aged, blind, or disabled individuals with limited income and resources. In fiscal year 2022, SSA paid $1.075 trillion in OASI benefits to about 57 million people. That same year, SSA paid about $58 billion in SSI benefits to a monthly average of 7.6 million people.
