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 firstname.lastname@example.org. 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 This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. 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 email@example.com. 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 GAO’s Mission The Government Accountability Office, the audit, evaluation, and investigative arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. 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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)