oversight

Income Security: Overlapping Disability and Unemployment Benefits Should be Evaluated for Potential Savings

Published by the Government Accountability Office on 2012-07-31.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States Government Accountability Office

GAO          Report to Congressional Requesters




July 2012
             INCOME SECURITY

             Overlapping Disability
             and Unemployment
             Benefits Should be
             Evaluated for
             Potential Savings




GAO-12-764
                                               July 2012

                                               INCOME SECURITY
                                               Overlapping Disability and Unemployment Benefits
                                               Should be Evaluated for Potential Savings
Highlights of GAO-12-764, a report to
congressional requesters




Why GAO Did This Study                         What GAO Found
The DI and UI trust funds face serious         In fiscal year 2010, 117,000 individuals received concurrent cash benefit
fiscal sustainability challenges. In           payments from the Disability Insurance (DI) and Unemployment Insurance (UI)
addition to other services, both               programs of more than $850 million, which is allowable in certain circumstances
programs provide cash benefits to their        under current program authority. While these individuals represented less than 1
targeted populations to replace lost           percent of the total beneficiaries of both programs, the cash benefits they
earnings. DI is available to workers           received totaled over $281 million from DI and more than $575 million from UI.
who are unable to engage in SGA                One individual GAO selected for further investigation received over $62,000 in
because of physical or mental                  overlapping benefits in a year. Based on GAO inquiries, state UI officials are
impairments expected to last at least
                                               reviewing the person’s UI eligibility because of earnings that may be related to
12 months or result in death. SGA is
                                               work that makes the person ineligible for UI benefits.
defined as work activity that involves
significant physical or mental activities      Beneficiaries Receiving Overlapping DI and UI Benefits in Fiscal Year 2010
performed for pay or profit. UI provides
temporary cash benefits to eligible
workers who are able to work but
remain involuntarily unemployed.
GAO was asked to determine the
extent to which individuals received DI
and UI benefits concurrently. To do so,
GAO matched unemployment files with
SSA disability files for fiscal year 2010.
GAO also reviewed DI and UI case
files for a nongeneralizable selection of
8 individuals – 4 from the top 50
recipients of concurrent DI and UI
benefits in fiscal year 2010, and 4 who
received UI benefits based on wages
from multiple states. These examples
cannot be generalized beyond those             Under certain circumstances, individuals may be eligible for concurrent cash
presented.                                     benefit payments due to differences in DI and UI eligibility requirements.
What GAO Recommends                            Specifically, the Social Security Administration’s (SSA) definition of a disability
                                               involves work that does not rise to the level of substantial gainful activity (SGA).
DOL should work with SSA to (1)                In 2010, a monthly income of $1,000 or more for a non-blind beneficiary
evaluate overlapping DI and UI cash            generally demonstrated SGA. In contrast, the Department of Labor allows states’
benefit payments, taking appropriate           determination of “able and available for work” eligibility criteria for UI benefits to
action for any improper payments, and          include work that does not rise to the level of SGA. Therefore, some individuals
(2) assess whether cost savings or             may have a disability under federal law but still be eligible for UI under state law
other benefits might be achieved by            because they are able and available for work that does not rise to the level of
reducing or eliminating overlapping DI         SGA. Although DI and UI generally provide separate services to separate
and UI cash benefit payments being             populations—and thus are not overlapping programs—the concurrent cash
made within the existing laws and
                                               benefit payments for individuals eligible for both programs are an overlapping
regulations, seeking congressional
                                               benefit when both replace lost earnings. While SSA must reduce DI benefits for
authority to do so as appropriate. DOL
and SSA agreed with the                        individuals receiving certain other government disability benefits, such as
recommendations.                               worker’s compensation, no federal law authorizes an automatic reduction or
                                               elimination of overlapping DI and UI benefits. As a result, neither SSA nor DOL
View GAO-12-764. For more information,         has any processes to identify these overlapping payments. Reducing or
contact Richard J. Hillman at (202) 512-6722   eliminating overlapping or improper payments could offer substantial savings,
or hillmanr@gao.gov.                           though actual savings are difficult to estimate because the potential costs of
                                               establishing mechanisms to do so are not readily available.
                                                                                            United States Government Accountability Office
Contents


Letter                                                                                                   1
              Background                                                                                4
              Concurrent DI and UI Payments Resulted in Hundreds of Millions
                of Dollars in Overlapping Benefit Payments                                               8
              Conclusions                                                                               12
              Recommendations for Executive Action                                                      13
              Agency Comments and Our Evaluation                                                        13

Appendix I    Comments from Department of Labor                                                         15



Appendix II   Comments from the Social Security Administration                                          17



Figures
              Figure 1: DI and UI Benefit Payments for Fiscal Years 2005 through
                       2011                                                                             8
              Figure 2: Beneficiaries Receiving Overlapping DI and UI Benefits in
                       Fiscal Year 2010                                                                 9


              Abbreviations

              CDR               continuing disability review
              DI                Disability Insurance
              DOL               Department of Labor
              NDNH              National Directory of New Hires
              SSA               Social Security Administration
              SGA               substantial gainful activity
              UI                Unemployment Insurance




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              Page i                                                        GAO-12-764 Income Security
United States Government Accountability Office
Washington, DC 20548




                                   July 31, 2012

                                   The Honorable Carl Levin
                                   Chairman
                                   The Honorable Tom Coburn
                                   Ranking Member
                                   Permanent Subcommittee on Investigations
                                   Committee on Homeland Security and Governmental Affairs
                                   United States Senate

                                   The Honorable Thomas R. Carper
                                   Chairman
                                   The Honorable Scott P. Brown
                                   Ranking Member
                                   Subcommittee on Federal Financial Management, Government
                                    Information, Federal Services, and International Security
                                   Committee on Homeland Security and Governmental Affairs
                                   United States Senate

                                   Both the Social Security Disability Insurance (DI) and Unemployment
                                   Insurance (UI) trust funds face serious fiscal-sustainability challenges.
                                   The Social Security Board of Trustees projects that the DI trust fund will
                                   be exhausted in 2016 and notes that changes designed to improve the
                                   financial status of the DI program are needed soon. In fiscal year 2010,
                                   more than 10 million beneficiaries received DI cash benefits. 1 Total
                                   benefit payments for fiscal year 2010 were $121.6 billion, and the aging of
                                   the baby-boom generation is set to further strain the program. Similarly,
                                   we reported in April 2010 that state UI trust funds were at historically
                                   weak levels, with most requiring federal loans to pay benefits. 2 In fiscal
                                   year 2010, 11.3 million beneficiaries received UI cash benefits totaling
                                   $156 billion, $93 billion of which was paid by the federal government. 3




                                   1
                                    This 10 million beneficiaries figure includes about 0.2 million spouses and about 1.8
                                   million dependent children.
                                   2
                                    GAO, Unemployment Insurance Trust Funds: Long-standing State Financing Policies
                                   Have Increased Risk of Insolvency, GAO-10-440 (Washington, D.C.: Apr. 14, 2010).
                                   3
                                    The federal government also provided $5.5 billion to the states in fiscal year 2010 for
                                   administration of the UI program.




                                   Page 1                                                         GAO-12-764 Income Security
In addition to other services, the DI and UI programs both provide cash
benefits to their targeted populations to replace lost earnings. The DI
program, which is administered by the Social Security Administration
(SSA), provides cash benefits to replace earnings for workers who are
unable to engage in substantial gainful activity (SGA) because of physical
or mental impairments expected to last at least 12 months or expected to
result in death. 4 SGA is defined as work activity that involves significant
physical or mental activities performed for pay or profit. 5 The federal-state
UI program, which is federally administered by the Department of Labor
(DOL), provides temporary cash benefits to eligible workers who are able
to work but remain involuntarily unemployed.

In response to your request, we determined the extent to which
individuals received DI and UI benefits concurrently by comparing
disability benefit files to national records of work-related income and
unemployment insurance. Under certain circumstances, individuals can
legitimately receive DI and UI concurrently, but concurrent receipt could
also be an indicator of improper payments. Although excluded from the
scope of this report, we plan to conduct subsequent work to evaluate the
internal controls of the DI program.

To determine the extent to which individuals received both DI and UI
benefits in fiscal year 2010, we matched the National Directory of New
Hires (NDNH) unemployment files with our extracts of SSA disability files
of DI beneficiaries as of December 2010, the most current data at the
time we began our work. To determine the subset of recipients who
received DI and UI benefits at the same time during fiscal year 2010, we
identified individuals who received DI benefits in all 3 months of the
quarter for which they received UI benefits. 6 For example, to be
considered in receipt of overlapping DI and UI benefits under our criteria,
an individual must have records in SSA disability files indicating the
monthly receipt of DI benefits in January, February, and March of 2010,
and must also have records in the NDNH indicating the quarterly receipt
of UI benefits in the corresponding quarter of fiscal year 2010, which is
the second quarter of fiscal year 2010. Because our population of


4
    42 U.S.C. § 423.
5
    20 C.F.R. §§ 404.1510, 404.1572.
6
 UI benefit payments are represented as quarterly totals in the National Directory of New
Hires.




Page 2                                                        GAO-12-764 Income Security
overlapping DI and UI beneficiaries includes only those individuals who
received DI in all 3 months of the quarter for which the NDNH reports the
receipt of UI, our analysis understates the population of individuals who
received overlapping DI and UI benefits in fiscal year 2010. For example,
individuals who received overlapping DI and UI payments in only 1 or only
2 months of a quarter are not included in our population of individuals
who received overlapping DI and UI benefits in fiscal year 2010. Because
of differences in the timing of DI and UI payments, the amount of
overlapping DI and UI payments for our population is estimated. For each
instance of concurrent DI and UI benefits, we used the monthly DI benefit
amounts in SSA’s disability files and the quarterly UI benefit amounts in
the NDNH to estimate the total amount of overlapping DI and UI benefits
in fiscal year 2010. Our estimate of overlapping DI benefits is understated
because it includes DI benefits payable for only 1 of the 3 months in a
quarter for which an individual also received UI benefits. Thus,
overlapping DI benefits that were payable in more than 1 month of a
quarter are not included in our estimate.

We also reviewed detailed DI and UI case files for a nongeneralizable
selection of eight individuals who received concurrent DI and UI benefits
to corroborate SSA DI data and UI data in the NDNH. To do this, we drew
a stratified random, nongeneralizable sample of eight individuals from two
different populations. The first four individuals we selected were from a
population comprising the top 50 recipients of concurrent DI and UI
benefits in fiscal year 2010. The second four individuals we selected were
from a population comprising the individuals who appeared to receive
concurrent DI and UI benefits, the latter from multiple states in fiscal year
2010. Because we selected a small number of individuals for further
investigation, the results cannot be projected to the population of
individuals receiving concurrent DI and UI benefits. For these eight
individuals, we obtained DI information from SSA and UI information from
state UI offices to determine the total amount of DI and UI benefits
received from 2008 to April 2012, the time frame for those benefits, and
any applicable employment information that illustrate instances of
individuals receiving concurrent DI and UI benefits. Although identifying
improper payments was not the primary purpose of this audit, some
individuals we selected for further review received improper DI or UI
payments.

To determine the reliability of the SSA disability records and NDNH UI
records, we reviewed documentation related to these databases and
interviewed officials responsible for compiling and maintaining relevant DI
and UI data. In addition, we performed electronic testing to determine the


Page 3                                               GAO-12-764 Income Security
                       validity of specific data elements in the databases that we used to
                       perform our work. We also reviewed detailed DI and UI case files for the
                       nongeneralizable selection of eight individuals selected as described
                       above who received concurrent DI and UI benefits to corroborate SSA DI
                       data and UI data in the NDNH. On the basis of our discussions with
                       agency officials and our own testing, we concluded that the data elements
                       used for this report were sufficiently reliable for our purposes.

                       We conducted this performance audit from December 2011 through July
                       2012 in accordance with U.S. generally accepted government auditing
                       standards. Those standards require that we plan and perform the audit to
                       obtain sufficient, appropriate evidence to provide a reasonable basis for
                       our findings and conclusions based on our audit objectives. We believe
                       that the evidence obtained provides a reasonable basis for our findings
                       and conclusions based on our objective.



Background
Disability Insurance   As the nation’s largest cash-assistance program for workers with
                       disabilities, DI provides benefits to eligible individuals under Title II of the
                       Social Security Act. An individual is eligible to receive DI benefits if he or
                       she has a medically determinable physical or mental impairment that (1)
                       has lasted (or is expected to last) at least 1 year or is expected to result in
                       death and (2) prevents the individual from engaging in SGA. 7 SGA is
                       defined as work activity that involves significant physical or mental
                       activities performed for pay or profit. 8 For individuals whose impairment is
                       anything other than blindness, earnings averaging over $1,000 a month
                       for calendar year 2010 generally demonstrate SGA. For blind individuals,
                       earnings averaging over $1,640 a month for the year 2010 generally
                       demonstrate SGA for DI. 9 The amount of earnings that generally



                       7
                           42 U.S.C. § 423.
                       8
                           20 C.F.R. §§ 404.1510, 404.1572.
                       9
                        74 Fed. Reg. 55614 (October 28, 2009). For calendar year 2012, earnings averaging
                       over $1,010 a month generally demonstrate SGA for individuals whose impairment is
                       anything other than blindness. For calendar year 2012, earnings averaging over $1,690 a
                       month generally demonstrate SGA for individuals who are blind. 76 Fed. Reg. 66111
                       (October 25, 2011).




                       Page 4                                                      GAO-12-764 Income Security
                         demonstrates SGA can vary from year to year. 10 For example, the SGA
                         amount for individuals with disabilities, other than blindness, was $980 in
                         2009. 11 Individuals with disabilities must also have a specified number of
                         recent work credits under the Social Security program at the onset of
                         medical impairment. 12 An individual may qualify on the basis of the work
                         record of a deceased spouse or the work record of a parent who is
                         deceased, retired, or considered eligible for disability benefits, meaning
                         one disability beneficiary can generate multiple monthly disability
                         payments.

                         DI benefits are financed by payroll taxes paid into the Federal Disability
                         Insurance Trust Fund by covered workers and their employers, on the
                         basis of each worker’s earnings history. Cash benefits are payable
                         monthly, as long as the worker remains eligible for benefits, until the
                         worker reaches full retirement age or dies. In fiscal year 2010, more than
                         10 million beneficiaries received DI benefits totaling $121.6 billion, and
                         the program’s average monthly benefit was about $922. As directed by
                         federal law, SSA must reduce DI benefits for individuals receiving certain
                         other government disability benefits, such as worker’s compensation. 13
                         However, SSA may not reduce DI benefits for individuals receiving UI or
                         for individuals earning less than SGA. As mentioned, the Social Security
                         Board of Trustees projects that the DI trust fund will be exhausted in 2016
                         and noted that changes designed to improve the financial status of the DI
                         program are needed soon.


Unemployment Insurance   Established by the Social Security Act of 1935, the federal-state UI
                         program temporarily and partially replaces the lost earnings of those who
                         become unemployed through no fault of their own. To be eligible for UI
                         benefits, unemployed workers must meet eligibility requirements
                         established by state laws that conform to federal law, including that they
                         have worked recently, be involuntarily unemployed, and be able and


                         10
                            DI benefits are based on the worker’s past average monthly earnings, indexed to reflect
                         changes in national wage levels (up to 5 years of the worker’s low earnings are excluded).
                         11
                              73 Fed. Reg 64651 (October 30, 2008).
                         12
                           Specifically, eligible individuals must have worked 5 out of the last 10 years or 20
                         quarters out of the last 40 quarters. 42 U.S.C. § 423(c)(1); 20 C.F.R. §§ 404.130, 404.132.
                         13
                           42 U.S.C. § 424a. According to SSA, the intent of the offset provision is to ensure that
                         the combined benefits from workers’ compensation and Social Security are not excessive.




                         Page 5                                                        GAO-12-764 Income Security
available for work. Whereas federal statutes and regulations provide
broad guidelines on UI eligibility, the specifics of UI eligibility are
determined by each state. According to DOL, all states require that a
claimant must have earned a specified amount of wages, worked a
certain number of weeks in covered employment, or must have met some
combination of the wage and employment requirements within his/her
base period. 14 To be eligible for benefits, claimants must also be free from
disqualification for acts such as voluntary leaving without good cause,
discharge for misconduct connected with the work, and refusal of suitable
work. In addition to these eligibility requirements, all states require that a
claimant must be able and available for work. However, “able and
available for work” requirements vary among the states, according to
DOL. For example, a few states specify that a worker must be physically
able, or mentally and physically able, to work. Likewise, while some
states require that a worker must be available for work, other states
require that a worker must be available for suitable work; still other states
require that a worker be available for work in the worker’s usual
occupation or for work in which the worker is reasonably fitted by training
and experience. According to DOL, in addition to being able and available
for work, all states require by law or by practice that a worker be actively
seeking work or making a reasonable effort to obtain work. 15 Finally,
some state laws expressly prohibit denying UI eligibility on the basis of
illness or disability under certain circumstances. 16

UI benefits and administrative costs are financed primarily by taxes levied
on employers. 17 These taxes are deposited in the appropriate accounts
within the Unemployment Trust Fund, which consists of 53 state accounts


14
  Under all state UI laws, a worker’s benefit rights depend on his/her experience in
covered employment in a past period, called the base period.
15
   This requirement did not become effective in Pennsylvania until January 1, 2012. See
2011 Pa. Laws 6, § 4.
16
   Specifically, at least 10 states have laws indicating that no worker shall be considered
ineligible due to illness or disability occurring after the worker has filed a UI claim and
registered for work, as long as the worker does not refuse suitable work when offered.
These states include: Alaska, Delaware, Hawaii, Idaho, Maryland, Massachusetts,
Nevada, North Dakota, Tennessee, and Vermont.
17
 The federal taxes on employers are under the authority of the Federal Unemployment
Tax Act (FUTA), and the state taxes are under the authority given by each state’s relevant
unemployment tax acts. At least three states, Alaska, New Jersey, and Pennsylvania also
withhold UI taxes from employee wages.




Page 6                                                          GAO-12-764 Income Security
and other federal accounts dedicated to special purposes. The severity
and length of the recent recession, and the slow pace of recovery, have
placed a heavy demand on state UI trust funds, resulting in very large
numbers of workers receiving benefits for very long periods of time. Since
mid-2008, Congress and the states have temporarily extended the period
of time that displaced workers can receive UI benefits to up to 99 weeks,
though the maximum number of weeks of available benefits varies among
the states. 18 In April 2010, GAO reported that state UI trust funds were at
historically weak levels, with most requiring federal loans to pay
benefits. 19 During fiscal year 2010, state agencies paid 11.3 million
beneficiaries $156.4 billion in federal and state unemployment benefits. 20
UI benefits vary substantially during a business cycle. As shown in figure
1, UI benefits varied substantially from 2005 to 2011, while DI benefits
steadily increased during those years.




18
   As of January 8, 2012, eligible unemployed workers could potentially receive the
maximum 99 weeks of benefits in 17 states, according to DOL’s data, though some
individuals may be eligible for fewer weeks in these states. However, pursuant to the
Unemployment Benefits Extension Act of 2012, part of the Middle Class Tax Relief and
Job Creation Act of 2012, the number of total weeks a recipient may receive benefits will
gradually decrease throughout 2012. See Pub. L. No. 112-96, §§ 2122 - 2123, 126 Stat.
156, 163 - 167.
19
     GAO-10-440.
20
  During fiscal year 2011, state agencies paid 9.9 million beneficiaries $113.3 billion in
federal and state unemployment benefits.




Page 7                                                          GAO-12-764 Income Security
Figure 1: DI and UI Benefit Payments for Fiscal Years 2005 through 2011




                                         Note: Dollar amounts in figure 1 are presented in actual dollars rather than real (inflation adjusted)
                                         dollars.


                                         In fiscal year 2010, 117,000 individuals received concurrent cash benefit
Concurrent DI and UI                     payments of more than $850 million. 21 As shown in figure 2, these
Payments Resulted in                     individuals represented less than 1 percent of the total beneficiaries of
Hundreds of Millions                     both programs. However, estimated overlapping cash benefits paid to
                                         these individuals totaled over $281 million from the DI program and more
of Dollars in                            than $575 million from the UI program. 22 For individuals receiving
Overlapping Benefit
Payments                                 21
                                            As previously mentioned, our analysis understates the population of individuals who
                                         received concurrent DI and UI benefits in fiscal year 2010 because it includes only those
                                         individuals who received DI in all 3 months of a quarter.
                                         22
                                            UI benefits increased dramatically in 2009 through 2011 from prior levels. According to
                                         a 2010 announcement by the National Bureau of Economic Research (NBER), a trough in
                                         business activity occurred in the U.S. economy in June 2009. According to NBER, the
                                         trough marks the end of the declining phase and the start of the rising phase of the
                                         business cycle. Economic activity is typically below normal in the early stages of an
                                         expansion, and it sometimes remains so well into the expansion.




                                         Page 8                                                                   GAO-12-764 Income Security
overlapping benefits in fiscal year 2010, we estimate the average
quarterly amount of overlapping cash benefit payments to be $1,093 in DI
and $2,231 in UI, for a quarterly average of $3,324 in overlapping
benefits.

Figure 2: Beneficiaries Receiving Overlapping DI and UI Benefits in Fiscal Year 2010




Note: Our estimate of overlapping DI benefits is understated because it includes DI benefits payable
for only 1 of the 3 months in a quarter for which an individual also received UI benefits. Thus,
overlapping DI benefits that were payable in more than 1 month of a quarter are not included in our
estimate.


Differences in program rules and definitions allow individuals in certain
circumstances to receive overlapping DI and UI benefits without violating
eligibility requirements. As mentioned, SSA’s definition of a disability
involves work that does not rise to the level of SGA. For 2010, a non-blind
person who is earning more than a $1,000 a month is ordinarily
considered to be engaging in SGA. In contrast, states’ determination of
“able and available for work” criteria for UI benefits may include
performing work that does not rise to the level of SGA. As a result, some
individuals may have a disability under federal law but still be able and
available for work under state law, thus eligible to receive DI and UI




Page 9                                                                GAO-12-764 Income Security
concurrently. 23 SSA officials stated that UI is considered unearned
income and therefore does not affect DI benefits. 24 DOL officials
acknowledged that certain individuals may be eligible for both DI and UI,
depending on the applicable state laws regarding UI eligibility. Because
these overlapping payments may be allowed under both programs’
eligibility requirements, and no federal law authorizes an automatic
reduction or elimination of benefits if a recipient receives both payments,
neither SSA nor DOL have any processes to identify these overlapping
payments. As such, the costs associated with establishing mechanisms to
reduce or eliminate these overlapping payments are not readily available.

While the DI and UI programs generally serve separate populations and
provide separate services—thus not meeting our definition for overlapping
programs—the concurrent cash benefit payments made to individuals
eligible for both programs are an overlapping service for the replacement
of their lost earnings. We define overlaps as programs that have similar
goals, devise similar strategies and activities to achieve those goals, or
target similar users. 25 Our prior work on overlapping government
programs has found that, in some instances, overlapping programs or
activities have led to inefficiencies, and we have determined that greater
efficiencies or effectiveness might be achievable. However, in other
instances, it may be appropriate for multiple agencies or entities to be
involved in the same programmatic or policy area due to the nature or
magnitude of the federal effort.




23
   For example, in an unpublished decision from the United States Court of Appeals for
the Ninth Circuit, the court said: “[W]e note that [the plaintiff’s] receipt of unemployment
benefits does not by itself support a conclusion that she is not credible. Generally, in order
to be eligible for disability benefits under the Social Security Act, the person must be
unable to sustain full-time work – eight hours per day, five days per week. However, under
Oregon law, a person is eligible for unemployment benefits if she is available for some
work, including temporary or part time opportunities. Therefore, [the plaintiff’s] claim of
unemployment in Oregon is not necessarily inconsistent with her claim of disability
benefits under the Social Security Act.” Mulanax v. Comm’r of Soc. Sec., 293 Fed. Appx.
522 (9th Cir. 2008) (citations omitted).
24
  DI benefits are only reduced in specified situations, such as receipt of worker’s
compensation or certain other public disability benefits.
25
  GAO, 2012 Annual Report: Opportunities to Reduce Duplication, Overlap and
Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP (Washington,
D.C.: Feb. 28, 2012).




Page 10                                                         GAO-12-764 Income Security
Although current program rules allow overlapping benefits under certain
circumstances, concurrent receipt of DI and UI benefits can also be an
indicator of improper payments. For example, some individuals who have
a disability as determined by SSA may be receiving improper UI
payments because they are not “able and available” for work. Similarly,
some individuals receiving UI benefits may be receiving improper DI
payments because they no longer have a disability as defined by SSA. 26
Specifically, being “able and available” for work may indicate that an
individual’s medical condition no longer prevents him or her from
performing work that rises to the level of SGA. As mentioned, neither SSA
nor DOL have any processes to identify overlapping DI and UI payments.
As a result, neither SSA nor DOL currently evaluates whether overlapping
payments made to these individuals may be proper or improper.

The eight individuals we selected for further review received overlapping
benefits in fiscal year 2010. 27 For example, one individual we selected
from the top 50 recipients of concurrent benefits in our population
received over $62,000 in overlapping DI and UI benefits in a single year.
Of the $62,000 in overlapping benefits received by this individual, 28
$27,528 were DI benefits and $34,534 were UI benefits. 29 In addition to
receiving overlapping DI and UI benefits in both 2010 and 2011, SSA
records indicate that the individual also received over $7,000 in earnings
in these years. On the basis of our inquiries, state UI officials are currently
reviewing the adjudication of this individual’s UI claim because these


26
   A person’s DI benefits may be terminated for a variety of reasons, including that the
disabled beneficiary is no longer disabled because of a medical recovery or successful
reentry to the workforce.
27
   For our review, we obtained DI and UI information for these eight individuals beyond
fiscal year 2010. Of the eight individuals we selected for further investigation, SSA
determined that one individual had a DI benefit overpayment. Additionally, three
individuals had UI benefit overpayments, as determined by the appropriate state UI office.
Because we selected a small number of individuals for our review, the results cannot be
projected to the population of individuals receiving overlapping DI and UI benefits.
28
  Both DI and UI benefits are based on prior wages. In 2008, the individual earned over
$100,000 in wages on which these benefits, in part, were based.
29
  Although the individual was eligible for DI benefits in 2009, SSA did not actually pay the
DI benefits for most of 2009. According to an SSA official, the DI benefit payments were
put on hold during a representative payee review. The individual’s SSA case file indicates
that her disability is due to Affective Disorders and Substance Addiction Disorders
(Drugs). If SSA determines a legally competent adult is unable to manage or direct the
management of his or her own benefits, SSA appoints a representative payee.




Page 11                                                        GAO-12-764 Income Security
              earnings may be related to work that makes this individual ineligible for UI
              benefits. The Massachusetts UI benefits were exhausted after 99 weeks
              as of June, 2011. As of April, 2012, the individual remains in current pay
              status in the DI program, with a monthly DI benefit amount of $2,377.

              Six of the individuals we selected for further investigation received
              overlapping DI and UI benefits for 18 months or more. For example, one
              individual began receiving DI benefits in 2004 originally due to disorders
              of the back, and received overlapping DI and UI payments, which totaled
              over $107,000, in 36 different months from 2008 to 2011. During that
              period, this individual worked for construction companies and received UI
              benefit payments from New Mexico in 2008, Wisconsin in 2009, 30 Kansas
              in 2010, and Montana in 2011. Montana officials stated that they also
              received wage data from North Dakota for use in adjudicating the UI claim
              in their state. As of April, 2012, this individual was no longer receiving UI
              benefits from these states, but continued to receive cash benefits from
              the DI program. SSA officials told us that this individual is currently under
              a continuing disability review to determine if the beneficiary is ineligible for
              DI due to work at or above the SGA level. 31


              DI and UI provide important safety nets for American workers who have
Conclusions   lost their income. However, both trust funds face serious fiscal
              sustainability challenges, prompting the need to examine opportunities for
              potential cost savings. While the programs target different populations
              and generally provide separate services, existing rules and definitions
              result in a limited number of individuals being eligible for overlapping DI
              and UI payments. However, the concurrent receipt of these benefits can
              also provide an indicator of improper payments related to DI or UI.
              Because these overlapping payments may be allowed under both
              programs’ eligibility requirements, and no federal law authorizes an
              automatic reduction or elimination of benefits if a recipient receives both
              payments, neither SSA nor Labor has a process to identify these
              overlapping benefit payments. As a result, for individuals receiving both


              30
                This individual admitted to concealing work activity in order to receive UI benefits from
              Wisconsin in 2010. Wisconsin subsequently determined this individual would forfeit more
              than $2,900 in UI benefits as a result of this activity.
              31
                 SSA conducts work-related continuing disability reviews (CDR) to determine if
              beneficiaries are ineligible for DI due to work at or above the SGA level. 20 C.F.R. §§
              404.1589 - 404.1590.




              Page 12                                                         GAO-12-764 Income Security
                      DI and UI benefits, the government is replacing a portion of their lost
                      earnings not once, but twice. Reducing or eliminating this overlap and
                      potential improper payments could offer substantial savings, though
                      actual savings are difficult to estimate because the potential costs of
                      establishing mechanisms to do so are not readily available.


                      We recommend that the Secretary of Labor work with the Commissioner
Recommendations for   of SSA to (1) evaluate the circumstances under which individuals are
Executive Action      receiving overlapping DI and UI payments, taking appropriate action, as
                      necessary, for any payments determined to be improper, and (2) assess
                      whether cost savings or other benefits might be achieved by reducing or
                      eliminating overlapping DI and UI cash benefit payments being made
                      within the existing laws and regulations, seeking congressional authority
                      to do so as appropriate.


                      We provided a draft of this report to SSA and DOL for comment. DOL and
Agency Comments       SSA provided written comments to the draft which can be found in
and Our Evaluation    appendices I and II. DOL and SSA agreed with our recommendation that
                      DOL work with SSA to evaluate overlapping DI and UI benefits, taking
                      appropriate action for any payments determined to be improper, and
                      assessing whether cost savings or other benefits might be achieved by
                      reducing or eliminating overlapping DI and UI cash benefit payments.
                      DOL and SSA also both recognized that the states play an important role
                      in the UI program, and DOL recommended that we encourage states to
                      participate in addressing the report’s recommendations. In this regard, we
                      agree that states’ programmatic knowledge would significantly contribute
                      to the evaluation of overlapping DI and UI benefits and encourage state
                      participation as appropriate. We also believe that it will be important for
                      DOL to reach out to the states in carrying out our recommendations to
                      evaluate these overlapping benefits. DOL and SSA also provided
                      technical comments, which we incorporated as appropriate.


                      As agreed with your offices, unless you publicly announce the contents of
                      this report earlier, we plan no further distribution until 30 days from the
                      report date. At that time, we will send copies to the Commissioner of the
                      Social Security Administration, the Secretary of Labor, and other
                      interested parties. In addition, the report will be available at no charge on
                      the GAO website at http://www.gao.gov.




                      Page 13                                              GAO-12-764 Income Security
If you or your staff have questions about this report, please contact me at
(202) 512-6722 or hillmanr@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report.




Richard J. Hillman
Managing Director, Forensic Audits and Investigative Service




Page 14                                            GAO-12-764 Income Security
Appendix I: Comments from Department of
             Appendix I: Comments from Department of
             Labor



Labor




             Page 15                                   GAO-12-764 Income Security
Appendix I: Comments from Department of
Labor




Page 16                                   GAO-12-764 Income Security
Appendix II: Comments from the Social
              Appendix II: Comments from the Social
              Security Administration



Security Administration




              Page 17                                 GAO-12-764 Income Security
Appendix II: Comments from the Social
Security Administration




Page 18                                 GAO-12-764 Income Security
Appendix II: Comments from the Social
Security Administration




Page 19                                 GAO-12-764 Income Security
Appendix II: Comments from the Social
Security Administration




Page 20                                 GAO-12-764 Income Security
Appendix II: Comments from the Social
Security Administration




Page 21                                 GAO-12-764 Income Security
Appendix II: Comments from the Social
Security Administration




Page 22                                 GAO-12-764 Income Security
           Appendix II: Comments from the Social
           Security Administration




(192394)
           Page 23                                 GAO-12-764 Income Security
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