Social Security Overpaid Nearly Half on Disability

Social Security overpaid nearly half the people receiving disability benefits over the past decade, according to a government watchdog, raising questions about the management of the cash-strapped program.

In all, Social Security overpaid beneficiaries by nearly $17 billion, according to a 10-year study by the agency's inspector general.

Many payments went to people who earned too much money to qualify for benefits, or to those no longer disabled. Payments also went to people who had died or were in prison.

Social Security was able to recoup about $8.1 billion, but it often took years to get the money back, the study said.

"Every dollar that goes to overpayments doesn't help someone in need," said Sen. Chuck Grassley, R-Iowa. "Given the present financial situation of the Social Security Disability Insurance trust fund, the program cannot sustain billions of dollars lost to waste."

The trust fund that supports Social Security's disability program is projected to run out of money late next year, triggering automatic benefit cuts, unless Congress acts. The looming deadline has lawmakers feuding over a solution that may have to come in the heat of a presidential election.

The program's financial problems go beyond the issue of overpayments — Social Security disability has paid out more in benefits than it has collected in payroll taxes every year for the past decade. But concerns about waste, fraud and abuse are complicating the debate in Congress over how to address the program's larger financial problems.

"Overpayments are bad for everyone — they are bad for the beneficiary and they are bad for the taxpayer," said Rep. Sam Johnson, R-Texas, chairman of the House Ways and Means subcommittee on Social Security. "With the disability program going broke next year, it is especially troubling that Social Security is failing to protect precious taxpayer dollars."

A spokesman for the Social Security Administration said the agency has a high accuracy rate for its payments and a comprehensive debt collection program for overpayments.

"Social Security provides services to over 48 million retirement and survivors beneficiaries and about 15 million disability beneficiaries," Social Security spokesman Mark Hinkle said in an email. "The agency will issue nearly $1 trillion in payments this year. For fiscal year 2013 — the last year for which we have complete data — approximately 99.8 percent of all Social Security payments were free of overpayment, and nearly 99.9 percent were free of underpayment."

"That same year, we also achieved high levels of payment accuracy in the (Supplemental Security Income) program despite the inherent complexities in calculating monthly payments due to beneficiaries' income and resource fluctuations and changes in living arrangements," he said.

The inspector general's office examined a randomly selected sample of 1,532 people who were receiving either Social Security disability or Supplemental Security Income in October 2003. SSI is a separately funded disability program for the poor.

Auditors followed the group for 10 years, until February 2014. They determined that 45 percent of the beneficiaries were overpaid at some point during that period. The overpayments totaled $2.9 million, the study said.

They used the results to estimate that Social Security made a total of $16.8 billion in overpayments during the 10-year period.

The study concluded that "the agency could do more to prevent the most common overpayments."

Social Security paid out $142 billion in disability benefits last year. Unless Congress acts, the trust fund that supports the disability program will run dry sometime during the final three months of 2016, according to projections by the trustees who oversee Social Security. At that point, the program will collect only enough payroll taxes to pay 81 percent of benefits.

That would trigger an automatic 19 percent cut in benefit payments. The average monthly payment for a disabled worker is $1,165, or about $14,000 a year.

An easy fix is available. Congress could redirect payroll tax revenue from Social Security's much larger retirement program, as lawmakers have done before. But Republicans in Congress are balking, saying they want to address the program's long-term finances.

About 11 million disabled workers, children and spouses currently receive Social Security disability benefits. About 8.3 million people receive Supplemental Security Income, which is funded separately, through the government's general revenues.

SSI paid out about $54 billion in benefits last year.