oversight

The Social Security Administration's Administrative Finality Policy

Published by the Social Security Administration, Office of Inspector General on 2021-05-28.

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

             Audit Report




The Social Security Administration’s
   Administrative Finality Policy




        A-01-19-50859 | May 2021
MEMORANDUM


Date:      May 28, 2021                                                       Refer To:

To:        The Commissioner
From:      Inspector General
Subject:   The Social Security Administration’s Administrative Finality Policy (A-01-19-50859)

           The attached final report presents the results of the Office of Audit’s review. The objective was
           to summarize prior work on the Social Security Administration’s administrative finality policy
           and evaluate the Agency’s actions to update it.

           If you wish to discuss the final report, please call me or have your staff contact
           Michelle L. Anderson, Assistant Inspector General for Audit, at 410-965-9700.



                                                           Gail S. Ennis

           Attachment
The Social Security Administration’s Administrative Finality
Policy
A-01-19-50859
May 2021                                                                  Office of Audit Report Summary

Objective                                 Findings

To summarize prior work on the Social     Our prior work showed SSA had not corrected millions of ongoing
Security Administration’s (SSA)           OASDI payments because of its administrative finality policy.
administrative finality policy and        Although SSA agreed with our recommendation to evaluate its
evaluate the Agency’s actions to          administrative finality policies since 2012, as of April 2021, SSA
update it.                                had not finalized its decision on policy changes. SSA has taken the
                                          following actions.
Background
                                             SSA solicited public comment on proposed policy revisions in
Administrative finality is the concept        2013.
that, when a determination or decision       SSA requested and reviewed a 2016 Law Library of Congress’
is rendered, it becomes final and             report, which stated, “A government agency may correct a
binding, unless it is appealed or             mistake, and no principle of administrative law consigns an
reopened Once a determination or              agency to repeating a mistake into perpetuity. Administrative
decision becomes final, it can only be        agencies have the inherent authority to correct adjudications
reopened and revised for certain              which appear to be erroneous.” This comports with our prior
reasons and within certain time periods       recommendations, which SSA has not implemented, to correct
pursuant to SSA’s administrative              ongoing payments.
finality policy.
                                             In 2017, SSA established a workgroup to develop
Under the Old-Age, Survivors and              recommendations to revise its administrative finality policy. In
Disability Insurance (OASDI)                  2020, SSA informed us the workgroup planned to present
program, SSA does not consider each           options for policy updates to the Commissioner in Fiscal
month’s payment to be a new                   Year 2021 and implement changes by December 2022.
determination. This prevents SSA          We also compared SSA’s administrative finality policy to that of
from revising future benefits if the      other agencies and found he Railroad Retirement Board and
Agency discovers an error under its       Department of Veterans Affairs’ administrative finality policies
current administrative finality policy.   permit revisions to ongoing and future payments in certain
However, SSA can correct future           circumstances beyond those allowed by SSA policy.
Supplemental Security Income (SSI)
payments when it finds an error           Recommendation
because SSA considers each month’s
payment to be an initial determination.   We recommended SSA finalize its decision on updating its
                                          administrative finality policy and execute an action plan with
                                          specific milestones to ensure any updates are implemented timely.
                                          SSA agreed with the recommendation.
TABLE OF CONTENTS
Objective ..........................................................................................................................................1
Background ......................................................................................................................................1
     Administrative Finality Limits Revisions to Payments .............................................................1
     Methodology ..............................................................................................................................3
Results of Review ............................................................................................................................4
     Ongoing Improper Payments Not Corrected Because of Administrative Finality ....................5
     The Social Security Administration Agreed to Reconsider its Administrative Finality Policy
     but Had Made No Changes as of April 2021 .............................................................................6
Conclusion .....................................................................................................................................11
Recommendation ...........................................................................................................................11
Agency Comments .........................................................................................................................11
                    – Scope and Methodology ..................................................................................... A-1
                    – Reports Related to Administrative Finality ........................................................ B-1
                    – Audit Recommendations Related to Administrative Finality ............................. C-1
                    – Agency Comments .............................................................................................. D-1




SSA’s Administrative Finality Policy (A-01-19-50859)
ABBREVIATIONS
C.F.R.               Code of Federal Regulations

GAO                  Government Accountability Office

OASDI                Old-Age, Survivors and Disability Insurance

OIG                  Office of the Inspector General

POMS                 Program Operations Manual System

Pub. L. No.          Public Law Number

SSA                  Social Security Administration

SSI                  Supplemental Security Income

U.S.C.               United States Code




SSA’s Administrative Finality Policy (A-01-19-50859)
OBJECTIVE
To summarize prior work on the Social Security Administration’s (SSA) administrative finality
policy and evaluate the Agency’s actions to update it.

BACKGROUND
SSA administers the Old-Age, Survivors and Disability Insurance (OASDI) program to provide
benefits to replace some of the earnings lost because a worker retires, becomes disabled, or dies. 1
SSA also administers the Supplemental Security Income (SSI) program to provide income for
aged, blind, or disabled individuals with limited income and resources. 2

In Fiscal Year 2020, SSA paid over $1 trillion in OASDI and $55 billion in SSI to over
70 million beneficiaries and recipients. 3 SSA determines eligibility and payment amounts due an
OASDI beneficiary or SSI recipient based on such factors, as income, resources, living
arrangements, pension entitlement, and medical conditions. 4 Once SSA makes an OASDI or SSI
determination, the Agency may later reopen and revise the determination only under certain
conditions. If those conditions are not met, SSA will not correct the determination or change
payments associated with a determination.

Administrative Finality Limits Revisions to Payments
Administrative finality is the concept that, when a determination or decision is rendered, it
becomes final and binding unless it is appealed or reopened. Once a determination or decision
becomes final, it can only be reopened and revised for certain reasons and within certain time
periods pursuant to SSA’s administrative finality policy 5 See Table 1 for a summary of the
administrative finality policy for OASDI and SSI.




1
    Social Security Act, 42 U.S.C. §§ 401-402 (govinfo.gov 2018).
2
    Social Security Act, 42 U.S.C. § 1381 (govinfo.gov 2018); 20 C.F.R. § 416.110 (govinfo.gov 2020).
3
    SSA, Fiscal Year 2020 Agency Financial Report, pp. 7 and 55 (November 2020).
4
 SSA, What You Need to Know When You Get Retirement or Survivors Benefits, pp. 5 through 18 (January 2021);
What You Need to Know When You Get Social Security Disability Benefits, p. 2 (January 2021); What You Need To
Know When You Get Supplemental Security Income, pp. 7 through18 (August 2019).
5
 20 C.F.R. § 404.988 (govinfo.gov 2020); SSA, POMS, GN 04001.010 (December 22, 1989); GN 04001.001
(September 9, 2011); SI 04070.010 (March 24, 2017); and GN 04020.001 - 04020.110 (November 1, 1988 –
May 22, 2012).



SSA’s Administrative Finality Policy (A-01-19-50859)                                                            1
                        Table 1: Administrative Finality Policy in SSA Programs
                            OASDI 6                                                SSI 7
                                      SSA may revise a determination . . .
                                        . . . within 1 year for any reason.
    . . . within 4 years if                               . . . within 2 years if
    • new and material evidence is furnished;             • new and material evidence is furnished;
    • a clerical error was made; or                       • a clerical error was made; or
    • the evidence that was considered in making          • the evidence that was considered in making
          the determination clearly shows on its face           the determination clearly shows on its face
          that an error was made.                               that an error was made.
    . . . at any time, if                                 . . . at any time, if
    •   fraud or similar fault is found, or               •    fraud or similar fault is found.
    •   the evidence clearly shows on its face that an
        error was made and if the change would be
        favorable to the beneficiary. 8

Because SSA does not correct prior OASDI or SSI payments when it applies administrative
finality, beneficiaries may receive funds to which they are not entitled. However, SSA does not
consider these prior uncorrected payments to be improper because administrative finality was
correctly applied

SSA developed different administrative finality policies for OASDI and SSI because of the
differences in program eligibility requirements. SSA explained its reopening rules allow them to

           . . . reevaluate SSI eligibility monthly, offering more opportunities to correct records
           without applying administrative finality. Since the need to reopen [OASDI]
           determinations is more common than in [SSI] determinations and decisions, our
           [OASDI] rules allow a longer timeframe for reopening under good cause (four years)
           and more reasons for unlimited reopening. [SSI] administrative finality rules have a
           two-year timeframe for reopening for good cause and unlimited reopening applies only
           for fraud and similar fault.




6
    20 C.F.R. §§ 404.987-989 (govinfo.gov 2020). SSA, POMS, GN 04001.010 (December 22, 1989).
7
    20 C.F.R. §§ 416.1487-1489 (govinfo.gov 2019). SSA, POMS, SI 04070.010 (March 24, 2017).
8
  SSA’s regulations provide several other situations that permit revisions at any time under the OASDI program. A
final determination or decision may be reopened at any time under any of the conditions in 20 C.F.R. § 404.988(c)
(govinfo.gov 2019). SSA, POMS, GN 04020.001 - 04020.110 (November 1, 1988 – May 22, 2012)
9
 Because SSA does not consider these payments to be improper, it does not include them in its improper payment
estimates under the Payment Integrity Information Act of 2019, Pub. L. No. 116-117, 134 Stat. 113 (2020).
Improper payment estimates were previously required under the Improper Payments Elimination and Recovery Act
of 2010, Pub. L. No. 111-204, 124 Stat. 2224 (2010).



SSA’s Administrative Finality Policy (A-01-19-50859)                                                                2
Administrative finality applies to initial determinations of benefits or eligibility, which SSA
defines differently in the OASDI and SSI programs

       Under the OASDI program, SSA does not consider each month’s payment to be a new
       determination. 10 This prevents SSA from revising benefits if it finds an error longer than 4
       years after the initial determination in most cases. Generally, when SSA finds an error after
       the period benefit allowed by administrative finality has ended, it will continue paying the
       incorrect OASDI benefit amount until the beneficiary dies or SSA makes a new payment
       determination, such as when benefits convert from disability to retirement when a beneficiary
       attains full retirement age. “For example, if we erroneously entitled you to a larger payment
       amount than was due, we will continue to pay you the larger benefit amount even though we
       know it is wrong.” 11

       SSA policy allows it to correct past SSI payments within 2 years. Unlike the OASDI
       program, the Agency can correct future SSI payments when it finds an error because SSA
       considers each month’s payment to be an initial determination in which there is “deemed” no
       changes in the factors of eligibility or payment amount. 12

According to SSA, it created this policy to (1) protect beneficiaries from the inconvenience or
hardship that could result from the correction of an Agency error and (2) ease administration of
the program. SSA limits the circumstances under which it may change its decisions to ensure
individuals can rely on the determinations and decisions made in its claims. SSA policy states,
“When a determination or decision is made with respect to entitlement, amount, or the actual
payment of benefits . . . the individual to whom that determination or decision applies should be
able to rely on it correctness.” 13

Although SSA must follow its administrative finality policy while that policy is in place, the
Social Security Act grants the Commissioner the authority to set this policy by regulations. 14
SSA can change its administrative finality policy as it deems appropriate.

Methodology
We reviewed SSA Office of the Inspector General (OIG) reports, The Law Library of Congress’
studies, and the administrative finality policies of other Federal agencies. We also reviewed the
notes from SSA’s administrative finality workgroup meetings and answers from SSA to our
questions. See Appendix A for our scope and methodology.




10
     SSA, POMS, GN 03101.070 (June 17, 2011).
11
     Rules of Administrative Finality, 78 Fed. Reg. 46,309, p. 46,310 (July 31, 2013).
12
     SSA, POMS, SI 04070.010, A.3 (March 24, 2017).
13
     SSA, POMS, GN 04001.001, C (September 9, 2011).
14
     Social Security Act, 42 U.S.C. §§ 902(a)(5), 405(a) (govinfo.gov 2018).



SSA’s Administrative Finality Policy (A-01-19-50859)                                                3
RESULTS OF REVIEW
Our prior work has shown that SSA cannot correct millions of ongoing OASDI payments
because of its administrative finality policy. Although SSA agreed with our recommendations to
evaluate its administrative finality policies since 2012, as of April 2021, SSA had not finalized
its decision on policy changes. 15 See Figure 1.

               Figure 1: Summary of Actions Related to Administrative Finality




15
   According to the Standards of Internal Control in the Federal Government, “[m]anagement completes and
documents corrective actions . . . on a timely basis. These corrective actions include resolution of audit
findings . . .” GAO, Standards for Internal Control in the Federal Government, GAO-14-704G, pp. 68 and 69
(2014).


SSA’s Administrative Finality Policy (A-01-19-50859)                                                         4
Ongoing Improper Payments Not Corrected Because of
Administrative Finality
During the last 15 years, we have issued five reports that quantified ongoing OASDI payments
that SSA could not correct because of administrative finality. Examples follow.

    A 2007 report found SSA could not assess overpayments to 44,000 OASDI beneficiaries or
     correct future payments to 26,000 beneficiaries because of administrative finality. 16 This
     report recommended, “SSA should consider revisions to its rules and regulations that will
     permit changes to the ongoing OASDI benefit payments whenever errors are discovered.” 17
    A 2018 report estimated SSA would continue paying approximately 21,000 OASDI
     beneficiaries more than they were entitled to, 18 because it applied administrative finality and
     could not correct payment errors related to government pension offset 19 and the windfall
     elimination provision. 20 This report recommended SSA, “Make a decision on whether it
     should revise its rules on administrative finality to allow for the correction of the Windfall
     Elimination Provision and Government Pension Offset overpayments for the population of
     the dually entitled beneficiaries identified by our audits.” 21

See additional information in Appendix B, Table B–1.




16
   SSA, OIG, Administrative Finality in the Old-Age, Survivors and Disability Insurance Program, A-01-07-27029,
p. 3 (September 2007).
17
   SSA, OIG, Administrative Finality in the Old-Age, Survivors and Disability Insurance Program, A-01-07-27029,
p. D-2 (September 2007).
18
  SSA, OIG, Follow-up: Dually Entitled Beneficiaries Who Are Subject to the Windfall Elimination Provision and
Government Pension Offset, A-09-17-50252, pp. 3, 7, and 8 (August 2018). Other reports on this topic include
Windfall Elimination Provision Exemptions, A-13-17-34132 (August 2019); Dually Entitled Beneficiaries Who Are
Subject to the Windfall Elimination Provision and Government Pension Offset, A-09-12-11210 (January 2013); and
Dually Entitled Beneficiaries who are Subject to Government Pension Offset and the Windfall Elimination
Provision, A-09-07-27010 (September 2008).
19
  Government pension offset reduces monthly Social Security benefits for spouses, divorced spouses, and widows
who also receive a pension based on their own employment for a Federal, State, or local government not covered by
Social Security. The government pension offset reduction is generally equal to two-thirds of the government
pension. Social Security Act, 42 U.S.C. § 402(k)(5) (govinfo.gov 2018); 20 C.F.R. §404.408a(d) (govinfo.gov
2020); and SSA, POMS, GN 02608.100 (December 2, 2020).
20
  The windfall elimination provision can reduce OASDI benefits for beneficiaries who worked for an employer that
did not withhold Social Security taxes from their salaries, such as a government agency or an employer in another
country. Social Security Act, 42 U.S.C. § 415(a)(7)(A)-(B) (govinfo.gov 2018); and 20 C.F.R. § 404.213
(govinfo.gov 2020), and SSA, POMS, RS 00605.360 (June 24, 2013).
 SSA, OIG, Follow-up: Dually Entitled Beneficiaries Who Are Subject to the Windfall Elimination Provision and
21

Government Pension Offset, A-09-17-50252, p. C-2 (August 2018).



SSA’s Administrative Finality Policy (A-01-19-50859)                                                              5
The Social Security Administration Agreed to Reconsider its
Administrative Finality Policy but Had Made No Changes as of
April 2021
In a September 2007 report, we first recommended SSA revise its administrative finality policy. 22
SSA disagreed with that recommendation. However, SSA agreed with a recommendation in our
July 2012 report to re-evaluate its administrative finality policies. 23 From 2016 through 2019, we
issued three additional reports with recommendations that SSA finalize changes to its
administrative finality policy regarding whether the Agency should continue paying incorrect
future benefits. 24 SSA agreed with the recommendations.

For example, in a 2016 report, we recommended that SSA “Finalize changes to its administrative
finality policy regarding whether the agency should continue to pay prospective benefits even
where administrative finality currently prohibits reopening the determination.” SSA responded,
“We agree. We will continue to work on finalizing our policy changes.” 25 As of April 2021—
over 8 years after SSA agreed with the recommendation in our 2012 report—SSA had not
implemented it. See Appendix C for more details on our prior recommendations.

SSA provided us with additional detail on the time involved in its response to our
recommendations to update its policy.

        The administrative finality rules are complex, long standing, and span across almost all
        areas of our programs. With this in mind, we have taken a deliberative approach to
        revising the rules, while also juggling competing agency priorities, which has resulted
        in the rules revision effort taking an extended amount of time. We convened a cross-
        component workgroup (whose efforts extended over multiple years) to review the
        current administrative finality rules and propose revisions. This group of well-rounded
        agency experts provides insight into the different facets of the administrative finality
        policy and ways to improve its application.

        The main hurdle to completing this effort has been finding data to support the rules
        revision. There is no specific collection source to provide administrative finality
        information. For that reason, we have taken a multi-faceted approach, including a
        request that the [Law] Library of Congress review administrative finality rules from
        other government agencies. Finally, we are working to obtain data to inform decision


22
   SSA, OIG, Administrative Finality in the Old-Age, Survivors and Disability Insurance Program, A-01-07-27029,
p. 6 (September 2007).
23
  SSA, OIG, Significance of Administrative Finality in the Social Security Administration’s Programs,
A-08-11-21107, p. 6 (July 2012).
24
  SSA, OIG, Old-Age, Survivors and Disability Insurance Benefits Affected by Federal Pensions, A-13-16-23006
(September 2016); Follow-up: Dually Entitled Beneficiaries Who Are Subject to the Windfall Elimination Provision
and Government Pension Offset, A-09-17-50252 (August 2018); and Windfall Elimination Provision Exemptions,
A-13-17-34132 (August 2019).
25
   SSA, OIG, Old-Age, Survivors and Disability Insurance Benefits Affected by Federal Pensions, A-13-16-23006,
p. C-2 (September 2016).


SSA’s Administrative Finality Policy (A-01-19-50859)                                                              6
           making and ensure that any administrative finality rules revisions are evidence-based.
           We expect to receive this data in [Fiscal Year] 2021.

Federal Register Notice and Request for Public Comment
In July 2013, SSA published proposed changes to its administrative finality policy in the Federal
Register for public comment. SSA laid out the following reasons for the proposed rule changes.

           1. We take our responsibility as effective stewards of the trust funds very seriously.
           Modifying our rules would enable us to take corrective action on more cases, and could
           decrease the amount of improper payments that we make.

           2. Our current rules are complex to administer. The fact that our rules under [OASDI]
           and [SSI] contain different timeframes for reopening for good cause can result in
           confusion for our adjudicators and the public, particularly in situations where an
           individual is concurrently receiving benefits under title II and title XVI of the [Social
           Security] Act.

           3. The current rules may prevent us from making changes regardless of the possible
           outcome for the individual. For example, if an individual presents or we discover new
           and material evidence after the time period that would allow us to reopen, we cannot
           take corrective action and revise the determination or decision. Modifying our rules to
           change certain timeframes for reopening may enable us to take corrective actions on
           more cases.

           4. The [OIG] has recommended that we review our rules on administrative finality to
           find ways that will allow us to correct more erroneous payments.

           5. Some of our administrative finality rules have not been revised in sixty years. Over
           the years, there has been an increase in our workloads and the complexity of our
           programs. Updating the rules would allow us to reflect these changes.

           6. Finally, modifying our current rules would enable us to streamline and simplify our
           rules on administrative finality. We believe this would allow us to operate more
           efficiently in a challenging, limited-resource environment. 26

SSA asked for comments concerning whether and how it should change its administrative
finality policy in the Federal Register posting. SSA received seven responses to the request for
public comment. While four respondents did not address the proposed changes to correct
ongoing benefits, three disagreed with them, asserting that the focus should be on ensuring




26
     Rules of Administrative Finality, 78 Fed. Reg. 46,309, p. 46,310 (July 31, 2013).



SSA’s Administrative Finality Policy (A-01-19-50859)                                                   7
correct initial determinations. 27 SSA told us, “We evaluated and discussed the comments
received. We used the comments as the starting point for our rules revision effort.” See SSA
Administrative Finality Workgroup below for additional information on SSA’s rules revision
efforts.

Other Programs Allow Revisions to Ongoing Payments
In response to a request from SSA, the Law Library of Congress studied the application of
administrative finality in benefit determinations in seven other Federal agencies 28 as well as
government benefit programs in seven other countries (see Table 2). 29 Many of the other
agencies and countries limit the time considered when assessing past overpayments—similar to
SSA. The Law Library of Congress Reviews did not discuss whether other U.S. agencies or
countries apply administrative finality in the case of underpayments or whether they bar the
correction of ongoing payments. However, the Law Library of Congress report states, “A
government agency may correct a mistake, and no principle of administrative law consigns an
agency to repeating a mistake into perpetuity. Administrative agencies have the inherent
authority to correct adjudications which appear to be erroneous.” 30 This supports our
recommendations that SSA change its policy to allow for the correction of future payments.




27
   The Director of Government Affairs of the National Organization of Social Security Claimants’ Representatives,
stated, “We believe that Congress’s failure to adequately fund the agency’s administrative budget over the past few
years has had a greater effect on SSA’s ability to make the correct decision at the right time, rather than the
perceived limitations of reopening regulations.” Ethel Zelenske, Re: Request for comments on SSA’s rules of
administrative finality, Docket No. SSA-2013-0011, Regulations.gov, p. 4 (September 26, 2013).
28
  The Law Library of Congress, Global Legal Research Center, Administrative Finality in Benefits Determinations:
A Review of US Legal, Regulatory, and Social Science Materials, Report for the Social Security Administration,
LL File No. 2016-012840 (2016).
29
  The Law Library of Congress, Global Legal Research Center, Administrative Finality in Benefits Determinations -
Australia • Canada • England and Wales • France • Germany • Israel • Japan, Report for the Social Security
Administration, LL File No. 2016-012832 (2016).
30
   CORPUS JURIS SECUNDUM (C.J.S.) Public Administrative Law and Procedure, vol. 73A § 361 (2015); quoted
in The Law Library of Congress, Global Legal Research Center, Administrative Finality in Benefits Determinations:
A Review of US Legal, Regulatory, and Social Science Materials, Report for the Social Security Administration,
LL File No. 2016-012840, pp. 19 and 20 (2016).



SSA’s Administrative Finality Policy (A-01-19-50859)                                                                  8
       Table 2: Agencies and Countries Included in the Law Library of Congress’ Studies
                                         Agencies                                             Countries
       Center for Medicare & Medicaid Services                                          Australia
       Department of Agriculture’s Supplemental Nutrition Assistance Program            Canada
       Department of Defense                                                            England and Wales
       Department of Labor’s Office of Workers’ Compensation Programs                   France
       Department of Veterans Affairs                                                   Germany
       Office of Personnel Management                                                   Israel
       Railroad Retirement Board                                                        Japan
       Social Security Administration

We also compared SSA’s administrative finality policy to those of other agencies and found the
Railroad Retirement Board and Department of Veterans Affairs’ administrative finality policies
permit revisions to ongoing and future payments in more circumstances than SSA’s
administrative finality policy.

The Railroad Retirement Board allows for final decisions to be reopened at any time to correct
specific errors beyond what SSA policy allows. For example, a decision may be reopened at any
time when it is incorrect because of a failure to apply either a reduction or the correct reduction
amount to a specific component of an annuity. Reductions resulting from these corrections apply
to the months following the month of corrective action. 31 The Railroad Retirement Board also
allows for a final decision to be reopened at any time if “The claimant shows that it is to his or
her advantage to select a later annuity beginning date. . . .” 32 This policy would allow for the
correction of future underpayments to the beneficiary.

The Department of Veterans Affairs allows final and binding decisions to be revised based on
both “clear and unmistakable error” and “difference of opinion.” In the case of clear and
mistakable error, “For the purpose of authorizing benefits . . . a reversal or revision of a prior
decision on the grounds of clear and unmistakable error has the same effect as if the corrected
decision had been made on the date of the reversed decision.” 33 In the case of other reductions,
including those caused by difference of opinion, “Where an award is reduced, the reduced rate
will be effective the day following the date of discontinuance of the greater benefit.” 34 This
policy allows the correction of past and future over- and underpayments.



31
     20 C.F.R. § 261.2(c)(10) (govinfo.gov 2020).
32
     20 C.F.R. § 261.2(c)(9) (govinfo.gov 2020).
33
  38 C.F.R. §§ 3.105(a) and 3.105(b) (govinfo.gov 2020). In some cases of reduction or discontinuance of
compensation or pension payments, the award will be reduced or discontinued effective following a 60-day period
for the presentation of evidence to show that compensation or pension benefits should be continued at their present
level. 38 C.F.R. §§ 3.105(e) and 3.105(f) (govinfo.gov 2020).
34
     38 C.F.R. § 3.500 (govinfo.gov 2020).



SSA’s Administrative Finality Policy (A-01-19-50859)                                                                  9
SSA Administrative Finality Workgroup
In March 2017, SSA established a workgroup to develop recommendations for revising its
administrative finality policy. 35 In 2017, the workgroup regularly met to discuss streamlining
and updating the administrative finality policy.

Although the workgroup considered the potential benefits of OIG’s recommendations, the group
initially rejected changing administrative finality policy to allow the correction of ongoing
improper payments because of the disadvantages listed below.

    Changes could be harsh on individuals relying on a certain monthly payment amount.
    There would be an additional large workload to reopen and issue revised determinations for
     every incorrect determination with due process.
    Appeals to revised determinations would potentially add to the hearings backlog. 36

The workgroup met once in March 2019 to introduce a new workgroup lead and discuss one item
related to the recommendations. See Table 3.

                                  Table 3: Workgroup Meeting Dates
          Year                                  Day of Meeting
          2017       March 20, April 24, May 8, May 22, July 31, October 23, December 4
          2018       April 23, September 10, September 24
          2019       March 14

Following the last workgroup meeting in March 2019, the workgroup turned its efforts to
obtaining data to support its recommendations. According to SSA, although regular meetings of
the full workgroup were no longer needed, members of the workgroup worked with various
agency components to obtain data to support its recommendations. SSA informed us “The
workgroup expects to present options to the [SSA] Commissioner in Fiscal Year 2021,” with an
estimated implementation date of December 31, 2022.




35
  The workgroup included employees from SSA’s Offices of Quality Review, Disability Policy, General Counsel,
Disability Determinations, Electronic Services and Technology, Public Services and Operations Support, Income
Security Programs, Appellate Operations, and Hearings Operations.
36
  If a claimant is dissatisfied with an SSA decision, he/she can appeal it. SSA, POMS, GN 04001.090, A
(September 9, 2011). SSA’s hearings and appeal process has experienced timeliness issues and growing backlogs
with average processing times reaching as high as 595 days in Fiscal Year 2018. SSA, OIG, Fiscal Year 2018
Inspector General’s Statement on the Social Security Administration’s Major Management and Performance
Challenges, A-02-18-50307, p. 1 (November 2018). While SSA continues to reduce hearing pending levels, it still
has a backlog of pending cases. SSA considers any pending level that keeps the average processing time for
hearings above 270 days as a “backlog.” As of the end of September 2020, the average processing time for hearings
was 355 days. SSA, OIG, Fiscal Year 2020 Inspector General’s Statement on the Social Security Administration’s
Major Management and Performance Challenges, A-02-19-50825, p. 4 (November 2020).


SSA’s Administrative Finality Policy (A-01-19-50859)                                                           10
CONCLUSION
SSA has not timely addressed our prior recommendations to update its administrative finality
policy. In the 8 years since SSA first agreed with our recommendation to update its policy, the
Agency has taken some steps, but, as of April 2021, it had not finalized its decision.

RECOMMENDATION
We recommended SSA finalize its decision on updating its administrative finality policy and
execute an action plan with specific milestones to ensure any updates are implemented timely.

AGENCY COMMENTS
SSA agreed with the recommendation, see Appendix D.



                                                       Michelle L. Anderson
                                                       Assistant Inspector General for Audit




SSA’s Administrative Finality Policy (A-01-19-50859)                                              11
                                        APPENDICES




SSA’s Administrative Finality Policy (A-01-19-50859)
                      – SCOPE AND METHODOLOGY
To accomplish our objective, we:

   Reviewed applicable sections of the Social Security Act.

   Reviewed the Social Security Administration’s (SSA) regulations, rules, policies, and
    procedures on administrative finality.

   Reviewed proposed changes to administrative finality policy and public comment received
    on these proposals.

   Reviewed the Law Library of Congress’ review of U.S. legal, regulatory, and social science
    materials regarding administrative finality in benefits determinations. 1

   Reviewed the Law Library of Congress’ review of administrative finality policies from other
    international benefits paying agencies. 2

   Reviewed the Department of Veterans Affairs’ and Railroad Retirement Board’s regulations,
    rules, and policies on administrative finality.

   Reviewed Office of the Inspector General reports from 2005 to 2019 related to administrative
    finality.

       Analyzed these reports’ scope, methodology, and findings with respect to administrative
        finality.

       Identified reports that found SSA did not assess improper payments because of
        administrative finality but did not quantify the amounts.

       Quantified report estimates of past and ongoing improper payments not corrected because
        of administrative finality.

   Reviewed SSA Office of Quality Review reports from 2012 to 2019 related to administrative
    finality.

   Obtained and reviewed information from SSA regarding the rationale behind current
    administrative finality policy, SSA response to the Office of Quality Review’s




1
 The Law Library of Congress, Global Legal Research Center, Administrative Finality in Benefits Determinations:
A Review of US Legal, Regulatory, and Social Science Materials, Report for the Social Security Administration,
LL File No. 2016-012840 (2016).
2
 The Law Library of Congress, Global Legal Research Center, Administrative Finality in Benefits Determinations -
Australia • Canada • England and Wales • France • Germany • Israel • Japan, Report for the Social Security
Administration, LL File No. 2016-012832 (2016).


SSA’s Administrative Finality Policy (A-01-19-50859)                                                         A-1
    recommendations regarding administrative finality, and information related to SSA’s
    administrative finality workgroup.

We assessed the significance of internal controls necessary to satisfy our objective. This
included an assessment of the five internal control components, control environment, risk
assessment, control activities, information and communication, and monitoring. In addition, we
reviewed the principles of internal controls associated with our objective. We identified the
following component and principles as significant to the objective.

   Component 5: Monitoring

       Principle 16: Perform Monitoring Activities.

       Principle 17: Evaluate Issues and Remediate Deficiencies.

The principal entity audited was the Office of Income Security Programs under the Office of the
Deputy Commissioner for Retirement and Disability Policy. We conducted our review between
June 2020 and April 2021 in Boston, Massachusetts. We conducted this performance audit in
accordance with 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 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 audit
objectives.




SSA’s Administrative Finality Policy (A-01-19-50859)                                         A-2
                          – REPORTS RELATED TO ADMINISTRATIVE
                            FINALITY
The Office of the Inspector General (OIG) has issued several reports that discuss the Social
Security Administration’s (SSA) application of its administrative finality policy in its Old-Age,
Survivors and Disability Insurance (OASDI) and Supplemental Security Income (SSI) programs.
In these reports, we identified both over- and underpayments for beneficiaries and recipients that
SSA did not resolve because administrative finality prevented it from correcting the payments.

Table B–1 shows reports related to ongoing/future payments SSA will not correct because of
administrative finality.

                     Table B–1: Audit Projections of Ongoing Improper Payments
                       SSA Will Not Correct Because of Administrative Finality
                                                              Estimate of Lifetime         Estimate of Annual
                                              Number of       Improper Payments          Improper Payments SSA
       Title, Common Identification
                                               Affected      SSA Will Not Correct           Will Not Correct
         Number, and Issue Date
                                             Beneficiaries         Because of                  Because of
                                                             Administrative Finality      Administrative Finality
    Benefits Paid to Dually Entitled Title            281                $10,312,215
    II Beneficiaries, A-01-06-26004
    (August 2006)
    Administrative Finality in the Old-            25,801                $49,767,698
    Age, Survivors and Disability
    Insurance Program, A-01-07-27029
    (September 2007)
    Payment Accuracy of Dually Entitled               664                $10,279,135
    Title II Beneficiaries, A-04-13-13014
    (August 2014)
    Higher Benefits for Dually Entitled             1,899                                               $9,847,464
    Widow(er)s Had They Delayed
    Applying for Retirement Benefits,
    A-09-18-50559 (February 2018)
    Follow-up: Dually Entitled                     20,668                                              $46,380,172
    Beneficiaries Who Are Subject to the
    Windfall Elimination Provision and
    Government Pension Offset,
    A-09-17-50252 (August 2018) 1
                                  TOTAL            49,313                $70,359,048                   $56,227,636




1
  The projections in this report are for ongoing improper payments identified in two prior audits conducted on this
topic. SSA, OIG Dually Entitled Beneficiaries Who are Subject to Government Pension Offset and the Windfall
Elimination Provision, A-09-07-27010 (September 2008) and Dually Entitled Beneficiaries Who are Subject to the
Windfall Elimination Provision and Government Pension Offset, A-09-12-11210 (January 2013).


SSA’s Administrative Finality Policy (A-01-19-50859)                                                             B-1
Table B–2 shows reports related to past OASDI and/or SSI payments SSA did not correct
because it applied administrative finality.

            Table B–2: OIG Report Projections of Past Payments SSA did not Correct
                             Because of Administrative Finality
                                                    Number of         OASDI             SSI              Total
                                                     Affected        Payments        Payments          Payments
      Title, Common Identification Number,         Beneficiaries   Issued in the   Issued in the    SSA issued in
                 and Issue Date                                      Past that       Past that      the Past That
                                                                   SSA Will Not    SSA Will Not       it Will Not
                                                                      Correct         Correct           Correct
    Disabled Supplemental Security Income                73,260                     $82,850,020       $82,850,020
    Recipients with Earnings, A-01-04-14085
    (April 2005)
    Benefits Paid to Dually Entitled Title II               281      $7,655,238                        $7,655,238
    Beneficiaries, A-01-06-26004 (August 2006)
    Direct Deposit for Multiple Title XVI                   148                        $819,812          $819,812
    Recipients Into the Same Bank Account,
    A-02-06-25141 (March 2007)
    Administrative Finality in the Old-Age,              44,230    $140,533,069                     $140,533,069
    Survivors and Disability Insurance Program,
    A-01-07-27029 (September 2007)
    Manual Computations of Supplemental                  30,262                     $14,455,606       $14,455,606
    Security Income Payments, A-07-09-19060
    (June 2010)
    Payment Accuracy of Dually Entitled Title II            664      $7,644,626                        $7,644,626
    Beneficiaries, A-04-13-13014 (August 2014)
    Widow(er)s Eligible for an Earlier Initial          110,116    $285,453,378                     $285,453,378
    Month of Entitlement, A-09-17-50187
    (August 2017)
    Higher Benefits for Dually Entitled                   9,224    $131,817,936                     $131,817,936
    Widow(er)s Had They Delayed Applying for
    Retirement Benefits, A-09-18-50559
    (February 2018)
                                                        268,185    $573,104,247    $98,125,438 3    $671,229,685
                                       TOTAL                                   2                                 4




2
 Of the total OASDI improper payments, $156 million is projected dollars not assessed as overpayments and
$417 million is projected dollars not assessed as underpayments.
3
  Of the total SSI improper payments, $83 million is projected dollars not assessed as overpayments and $15 million
is projected dollars not assessed as underpayments.
4
 Of the total improper payments, $239 million is projected dollars not assessed as overpayments and $432 million is
projected dollars not assessed as underpayments.


SSA’s Administrative Finality Policy (A-01-19-50859)                                                            B-2
   Table B–3 shows reports that noted SSA would not correct some (a) past OASDI or SSI
   payments and/or (b) future OASDI payments because of administrative finality, but the reports
   did not quantify dollars.

                   Table B–3: OIG Reports that Did Not Quantify the Amount of
                 Improper Payments Not Assessed Because of Administrative Finality
                               Title, Common Identification Number, and Issue Date
Disabled Title II Beneficiaries With Earnings Reported on the Master Earnings File, A-01-03-13019 (July 2004)
Underpayments on Prior Supplemental Security Income Records, A-07-07-17034 (August 2007)
Supplemental Security Income Recipient Marriages Not Reported to the Social Security Administration, A-01-07-27109
(May 2008)
Unprocessed Manual Recalculations for Title II Payments, A-03-07-17090 (August 2008)
Dually Entitled Beneficiaries who are Subject to Government Pension Offset and the Windfall Elimination Provision,
A-09-07-27010 (September 2008)
Supplemental Security Income Recipients with Unreported Vehicles, A-02-08-28038 (July 2009)
Manual Computations of Supplemental Security Income Payments, A-07-09-19060 (June 2010)
Emerge, Incorporated, an Organizational Representative Payee for the Social Security Administration, A-13-10-21087
(March 2011)
Supplemental Security Income Recipients with Unreported Real Property, A-02-09-29025 (June 2011)
Old-Age, Survivors and Disability Insurance Benefits Affected by State or Local Government Pensions, A-13-10-10143
(November 2011)
Supplemental Security Income Recipients Eligible For, or Receiving, Russian Pensions, A-01-12-21238 (December 2012)
The Social Security Administration’s Development of Earnings Alerts for Supplemental Security Income Recipients,
A-02-11-11185 (December 2012)
Dually Entitled Beneficiaries Who Are Subject to the Windfall Elimination Provision and Government Pension Offset, A-
09-12-11210 (January 2013)
Using Bank Data to Identify Supplemental Security Income Recipients with Potential Overpayments, A-01-12-11223
(September 2013)
Processing Internal Revenue Service Alerts for Supplemental Security Income Recipients, A-03-13-13106 (December 2013)
Supplemental Security Income Recipients Who Have Earnings, A-01-16-50003 (December 2015)
Old-Age, Survivors and Disability Insurance Benefits Affected by Federal Pensions, A-13-16-23006 (September 2016)
Manually Reduced Cross-program Recovery Overpayments, A-06-17-50225 (July 2017)
Removal of Self-employment Income and the Impact on Social Security Benefits, A-03-16-50102 (February 2018)
Controls over Supplemental Security Income Applicants/Recipients’ Transferring Ownership of Resources, A-02-16-50066
(May 2018)
Follow-up: Dually Entitled Beneficiaries Who Are Subject to the Windfall Elimination Provision and Government Pension
Offset, A-09-17-50252 (August 2018)
Supplemental Security Income Recipients Who Have Not Had a Redetermination in Longer than 10 Years, A-01-17-50219
(August 2018)
Accuracy of Supplemental Security Income Payments to Recipients with Manually Deemed Income, A-07-18-50295
(August 2018)
Windfall Elimination Provision Exemptions, A-13-17-34132 (August 2019)
Beneficiaries with Representative Payees and Earnings, A-02-17-50143 (March 2020)




   SSA’s Administrative Finality Policy (A-01-19-50859)                                                       B-3
Over- and Underpayments Because the Social Security
Administration Misapplied Administrative Finality
Our 2005 audit on administrative finality in the SSI program found the rules of administrative
finality were not consistently applied, resulting in overpayments assessed outside of the 24-
month limit when no fraud or similar fault was found. SSA’s Office of Quality Review also
issued a number of reports with similar findings. The Office tracked over- and underpayments
caused by the misapplication of administrative finality. If SSA changed the period
administrative finality bars from correction that resulted in an incorrect overpayment, the error
tracked is an underpayment in the same amount. If SSA made a change that resulted in an
incorrect underpayment, the error tracked is an overpayment in the same amount. See Table B–4
for over- and underpayments because of the misapplication of administrative finality.

                          Table B–4: Over- and Underpayments in Millions
                        Because of the Misapplication of Administrative Finality
                                                                            Under-        Over-       Total
                          Title, Common Identification Number, and
         Source                                                            payments     payments    Deficiency
                                         Issue Date
                                                                                                     Dollars
    Office of the        Social Security Administration’s Administrative      $74.7 5                    $74.7
    Inspector General    Finality Rules, A-01-04-24024 (July 2005)
    SSA’s Office of      Title XVI Transaction Accuracy Review Report          $27.3        $10.4        $37.7
    Quality Review       Findings Fiscal Year 2011 (June 2012)
    SSA’s Office of      Title XVI Transaction Accuracy Review Report          $25.1        $20.2        $45.3
    Quality Review       Fiscal Year 2012 (September 2013)
                         Fiscal Year 2012 Title II Work Continuing             $18.4         $6.6        $25.0
    SSA’s Office of
                         Disability Review Quality Review Findings
    Quality Review
                         (February 2014)
                         Fiscal Year 2013 Title II Work Continuing                         $420.7      $420.7
    SSA’s Office of
                         Disability Review Quality Review Findings
    Quality Review
                         (August 2014)
    SSA’s Office of      Title XVI Transaction Accuracy Review Report          $39.9         $6.3        $46.2
    Quality Review       Fiscal Year 2013 (August 2014)
    SSA’s Office of      Title XVI Transaction Accuracy Review Report          $31.0        $27.6        $58.6
    Quality Review       Fiscal Year 2014 (September 2015)
                         Fiscal Year 2015 Title II Work Continuing                          $13.5        $13.5
    SSA’s Office of
                         Disability Review Quality Review Findings
    Quality Review
                         (October 2016)
                                                                TOTAL         $216.4       $505.3      $721.7




5
  We estimated SSA assessed approximately $74.7 million in SSI overpayments beyond the 24-month limit when
SSA found no fraud or similar fault. Consistent with the Office of Quality Review report findings, these are
included in the underpayment column.


SSA’s Administrative Finality Policy (A-01-19-50859)                                                        B-4
                          – AUDIT RECOMMENDATIONS RELATED TO
                            ADMINISTRATIVE FINALITY
The reports listed below included recommendations related to the Social Security
Administration’s (SSA) administrative finality policy in its Old-Age, Survivors and Disability
Insurance (OASDI) and Supplemental Security Income (SSI) programs.

Administrative Finality in the Old-Age, Survivors and Disability
Insurance Program, A-01-07-27029 (September 2007)
           Recommendation: SSA should consider revisions to its rules and regulations that will
           permit changes to the ongoing OASDI benefit payments whenever errors are
           discovered.

           Agency Response: We disagree. . . .ongoing readjudication of claims would place an
           administrative burden on the Agency’s resources, as well as impact the public's reliance
           on the government's decision. Our regulations state that four years is a reasonable time
           limit for us to identify and correct any error on our records. Correcting a record more
           than four years in the past could cause undue hardship for our beneficiaries, as well as
           create extensive public relations issues for the Agency. We are concerned that making
           decisions to correct and reduce beneficiary payments beyond the four year time span
           may erode public trust for our Social Security programs. Any changes in the existing
           rules would need to be carefully weighed to determine the potential impact of any
           changes on both the beneficiaries and the Agency. At this time we do not agree that it
           would be in the Social Security program’s best interest to perform ongoing OASDI
           benefit recalculations, as to do so would require additional administrative resources
           and/or the deferral of other Agency work.

           Finally, Section 205(c) of the Social Security Act (and implementing regulations at 20
           CFR 404.820ff) limits the circumstances in which earnings records from past years may
           be revised downward. This, in turn, may limit the ability of SSA in many cases to make
           the sorts of downward adjustments in benefit amounts that are intended in the
           recommendation. It may be that, in the absence of a statutory change to section 205(c),
           the impact of the recommendation with respect to SSA’s regulatory administrative
           finality policy may be limited.

           Status of Recommended Changes: SSA has considered revisions to its rules and
           regulations that will permit changes to the ongoing OASDI benefit payments whenever
           errors are discovered. On July 31, 2013 SSA published a Federal Register Notice 1
           requesting suggestions and comments from the public on simplifying its administrative
           finality policy. However, as of April 2021, SSA has not implemented revisions to its
           policy.




1
    Rules of Administrative Finality, 78 Fed Reg. 46,309, p. 46,310 (July 31, 2013)


SSA’s Administrative Finality Policy (A-01-19-50859)                                                  C-1
Significance of Administrative Finality in the Social Security
Administration’s Programs, A-08-11-21107 (July 2012)
        Recommendation: Evaluate its administrative finality policies and regulations and
        consider revising the rules to allow for the collection of more debt.

        Agency Response: We agree. We evaluated our administrative finality policies and
        regulations and are considering four proposals for changing the rules of administrative
        finality. On July 31, 2013, we published a Federal Register Notice to request comments
        and suggestions from the public on a few possible changes to our rules.

        Status of Recommended Changes: As of April 2021, SSA has not implemented
        revisions to its policy.

Old-Age, Survivors and Disability Insurance Benefits Affected by
Federal Pensions, A-13-16-23006 (September 2016)
        Recommendation: Finalize changes to its administrative finality policy regarding
        whether the agency should continue to pay prospective benefits even where
        administrative finality currently prohibits reopening the determination.

        Agency Response: We agree. We will continue to work on finalizing our policy
        changes.

        Status of Recommended Changes: As of April 2021, SSA has not implemented
        revisions to its policy.

Follow-up: Dually Entitled Beneficiaries Who Are Subject to the
Windfall Elimination Provision and Government Pension Offset,
A-09-17-50252 (August 2018)
        Recommendation: Make a decision on whether it should revise its rules on
        administrative finality to allow for the correction of the Windfall Elimination Provision
        and Government Pension Offset overpayments for the population of the dually entitled
        beneficiaries identified by our audits.

        Agency Response: We agree.

        Status of Recommended Changes: As of April 2021, SSA has not implemented
        revisions to its policy.




SSA’s Administrative Finality Policy (A-01-19-50859)                                                C-2
Windfall Elimination Provision Exemptions, A-13-17-34132
(August 2019)
        Recommendation: We recommend SSA finalize changes to its administrative finality
        policy regarding whether the Agency should continue to pay prospective benefits even
        where administrative finality currently prohibits reopening the determination.

        Agency Response: We agree.

        Status of Recommended Changes: As of April 2021, SSA has not implemented
        revisions to its policy.




SSA’s Administrative Finality Policy (A-01-19-50859)                                           C-3
                                – AGENCY COMMENTS




                                             SOCIAL SECURITY

MEMORANDUM


Date:      May 25, 2021                                                             Refer To:   TQA-1

To:        Gail S. Ennis
           Inspector General




From:      Scott Frey
           Chief of Staff

Subject:   Office of the Inspector General Draft Report “The Social Security Administration's
           Administrative Finality Policy” (A-01-19-50859) -- INFORMATION

           Thank you for the opportunity to review the draft report. Administrative finality is a complex
           subject that touches every aspect of the benefit programs we administer. We are carefully
           considering changes to our longstanding regulations and policies to ensure that we protect the
           beneficiaries and recipients we serve. In addition, any changes must make the policies easier to
           administer, which will help reduce improper payments.

           We agree with the recommendation to finalize our decision about updating our administrative
           finality policy, and make any resulting changes timely.

           Please let me know if I can be of further assistance. You may direct staff inquiries to
           Trae Sommer at (410) 965-9102.




           SSA’s Administrative Finality Policy (A-01-19-50859)                                          D-1
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