This report identifies how many representative
payees did not respond to requests for an annual accounting
of benefits for the report period October 1993 through September 1994.
BACKGROUND
The Social Security Administration (SSA) administers
two programs under The Social Security Act--title II (Retirement,
Survivors, and Disability Insurance (RSDI)) and title XVI
(Supplemental Security Income (SSI)). These programs provide monthly
benefits to approximately 49.2 million beneficiaries. For the 6.6
million beneficiaries who cannot manage their own finances, Congress
has authorized SSA to pay the benefits to other individuals or
organizations. The SSA calls them representative payees or payees.
A major payee responsibility is to submit an
annual report to SSA accounting for benefits received, used, and
conserved. If payees have not returned forms within 6 months of
mailing, SSA generates a list of nonresponding payees for further
contact by staff. Staff attempt to contact payees until an accounting
is completed.
The SSA has undertaken initiatives to strengthen
the entire annual accounting process. To assist in this effort,
SSA requested that the Office of the Inspector General conduct
a series of inspections to review and recommend improvements to
the annual accounting process. This report is one in the series
of reports that assess the risk of misuse of benefits associated
with various categories of payees. Other reports will present data
concerning demographics of payees, misuse or questionable use of
benefits by payees, poor performance by payees, effectiveness and
efficiency of the payee accounting review process, and problems
with completion of the accounting forms. A roll-up report will
provide overall recommendations for improving the accounting process.
In September 1994, SSA prepared a computerized
file of titles II and XVI beneficiaries with payees who received
benefits for the report period October 1993 through September 1994.
In October 1995, we obtained a copy of the file to determine how
many nonresponding payees (payees who did not respond to SSA's
attempts at contact) remained after 1 year. We analyzed this information
to identify the amount of benefits controlled by and any possible
trends among these nonresponding payees.
FINDINGS
SSA Does Not Receive an Accounting for
Approximately $1.2 Billion in Annual Benefits
We found that SSA had not received approximately
316,000 accounting forms from 248,000 payees between October
1994 and October 1995. These payees receive approximately $1.2
billion in benefits on behalf of beneficiaries. Annual benefits
for nonresponding payees averaged $3,934, with almost 74 percent
managing between $1,200 and $7,200 during the report period. Although
SSA policy is to continue efforts to obtain an accounting until
it is secured, the low priority typically assigned to this workload
makes it unlikely that these cases are aggressively pursued.
SSA Does Not Maintain Systematic Information
About Nonresponding Payees
The SSA's present computerized file does not
retain any history of payees' return of accounting forms. Payees
who fail to respond to the accounting process are not systematically
tracked after 1 year has elapsed. The SSA overwrites the computerized
file of nonresponding payees when it mails accounting forms for
the following year.
Nonresponding Payees are Usually Relatives
With Custody
Approximately 76 percent of nonresponding payees
are parents and other relatives with custody of the beneficiaries.
We found that the greatest number of nonresponding payees live
in States with large general populations (California, New York,
Texas, and Florida), while Puerto Rico, with a relatively small
general population, also has a large number of unreturned accounting
forms.
Agencies and Institutions are the Most
Common High-Volume Nonresponding Payees
We found 12 instances in which agency or institutional
payees did not return 10 or more accounting forms. The number of
unreturned forms for each payee ranged from 10 to 56, with an average
of 18.2 forms. Approximately 74 percent of all nonresponding agency
or institutional payees have custody of beneficiaries.
RECOMMENDATIONS
The SSA should:
1. Determine why selected payees (e.g., high-volume
agency or institutional payees and payees in Puerto Rico) fail
to complete accountings.
2. Determine whether field office or processing
center staff are properly processing the nonresponder alerts.
3. Develop a more immediate and appropriate
method (e.g., suspension of benefits, immediate change of payee
with final accounting by former payee) to be used in conjunction
with the tracking system to obtain accountings. Additionally,
SSA should annotate the Master Representative Payee File to indicate
that the payee failed to respond to a request for accounting
and should not be considered as a representative payee for other
beneficiaries.
This report identifies how many representative
payees did not respond to requests for an annual accounting of
benefits for the report period October 1993 through September 1994.
BACKGROUND
Overview of the Representative Payee Program
and the Jordan Court
The SSA administers two programs under The
Social Security Act--title II (RSDI) and title XVI (SSI).
These two programs provide monthly benefit payments of about
$25 billion to approximately 49.2 million beneficiaries
and recipients who are aged, disabled, or survivors.[Workpapers
4S-33]
The SSA collects and maintains data on all beneficiaries
in two computerized data bases--title II data are maintained
in the Master Beneficiary Record (MBR), and title XVI data are
maintained in the Supplemental Security Record (SSR). The data
bases contain descriptive information about the beneficiary, such
as date of birth and amount of benefits.
Approximately 6.6 million beneficiaries, or
slightly more than 13 percent, cannot manage their own finances.[Workpapers
4S-33] If beneficiaries cannot manage their own finances, Congress
has authorized SSA to pay the benefits to other individuals or
organizations on their behalf. The SSA calls these individuals
and organizations representative payees (hereinafter called payees).
Using medical and Agency guidelines, SSA determines
if beneficiaries need payees. Such beneficiaries may include the
mentally or physically impaired, disabled adult children, and persons
incapable of exercising good financial judgment. In addition, SSA
requires a payee for some individuals, including:
1. minor children
under age 18, (2) 2. legally incompetent adults, and (3)
3. persons who receive benefits because they are disabled due to
alcohol
and/or drugs.
Public Law 104-121 passed on March 28, 1996
prohibits eligibility
to individuals whose drug addiction and/or alcoholism is a
contributing factor material to the finding of disability. This
legislation
affects the status of current drug addicts and/or alcoholics
who must request new medical determinations by July 28, 1996.
These
individuals may be found disabled due to other conditions and
may continue to receive benefits. The new law requires payees
for current
and future beneficiaries who have a drug addiction and/or alcoholism
condition and who are also determined to be incapable of managing
their benefits.
The Social Security Act authorizes the
Commissioner of SSA to appoint payees. Payees may include, but
are not limited to, parents with or without custody of children,
spouses, other relatives, legal guardians, friends who show strong
concern for the beneficiary's welfare, and institutions with or
without custody of the beneficiary.
When SSA appoints payees, it updates beneficiaries'
MBR and/or SSR files with information about the payees. This information
includes, but is not limited to, the payee's name and address,
the type of payee code, and the custody arrangement.
Prior to 1983, SSA did not have a mandate to
conduct accountings of funds that payees received on behalf of
beneficiaries. The Agency relied on its own initiative to create
an accounting system. In 1979, Ms. Jeanne Jordan brought a certified
class action suit against SSA challenging how it monitored payees.
(Ms. Jordan alleged that her payee was not using her SSA benefits
properly to meet her needs.) In its 1983 decision, the Jordan Court
decided that payees should be required to give a full accounting
of how they spend and save title II and title XVI benefits on behalf
of beneficiaries. Subsequently, Congress amended The Social
Security Act to require annual accounting of all payees except
State mental institutions participating in the onsite review program.
The SSA designed an annual accounting process
to gather data from the payee about various situations involving
the beneficiary. The data helps SSA determine:
1. the continuing suitability of the payee;
2. the continuing need for representative
payment; and
3. whether the payee used benefits properly
during the 12-month report period.
Payee Responsibilities
Responsibilities include (1) frequently monitoring
the beneficiary's well-being, (2) notifying SSA of situations
that affect the beneficiary's entitlement to or amount of benefits
(e.g., work), and (3) informing SSA of changes in the payee's own
circumstances that would affect the payee's performance. A major
payee responsibility is to submit an annual report to SSA accounting
for benefits received, used, and conserved. Payees receive the
booklet, A Guide For Representative Payees, during the SSA
interview which describes a payee's responsibilities and the appropriate
use of benefits. The booklet includes a worksheet to record the
use of benefits and a sample accounting form.
Each month, SSA uses its computerized data bases
(the MBR and the SSR) to identify payees who are to receive annual
accounting forms. The SSA usually schedules payees to receive forms
on the anniversary of the month they were selected to be the payee,
although SSA and/or payees may designate an alternate report period.
As a result of this selection process, SSA sends initial accounting
forms to approximately one-twelfth of all payees each month. The
SSA uses a contractor to mail accounting forms to payees.
The SSA does not select payees to receive accounting
forms if payments have been received for less than 1 year, if on-site
reviews apply, if payments are made to an address in a foreign
country, and if payments were suspended for the entire accounting
period. The SSA also does not select all payees to receive accounting
forms if the beneficiary is concurrently entitled to receive title
II and title XVI benefits. In such cases, only the payee for title
XVI benefits is selected.
To handle a high volume of annual accounting,
SSA developed standardized accounting forms--the SSA-623 and the
SSA-6230. The SSA-623 asks how payees used the funds for: (1) food
and shelter; (2) other items such as clothing, education, personal
items, and medical and dental expenses; and (3) savings. The form
also asks payees about: (1) changes in the beneficiary's custody;
(2) whether the payee or another person controlled the SSA benefits;
and (3) their own felony convictions during the previous 12 months.
In July 1990, SSA introduced the SSA-6230 accounting form for parents
and, later, stepparents and grandparents with custody of minor
children who receive title II benefits.See Workpaper file
for the Process/Work-flow report (OEI-09-92-00858), #2P-11, p.
1. Relatives acting as payees may report their use of benefits
for up to four children on the same form. Since parents, stepparents,
and grandparents represent the largest type of payee category,
most title II payees now receive the SSA-6230.
The SSA-6230 differs from the SSA-623 primarily
in: (1) the payees' ability to account for up to four children
on the same form; and (2) the wording of the questions on custody
and use of benefits. Also, questions about funds on the SSA-6230
are more general. Payees report: (1) the expenses for care and
support of the children and (2) savings.
When the contractor mails accounting forms to
payees, SSA establishes a centralized computer systems diary to
control the forms return. When payees return their form,
SSA clears the systems diary to acknowledge receipt, thereby eliminating
the systematic record of responses from the payees. The SSA's Wilkes-Barre
Data Operations Center in Pennsylvania completes the initial screening,
data verification, and review of all returned forms. The staff
use a computer program to review the accounting forms and decide
whether the responses are acceptable or need further explanation.
If all responses are acceptable, no further action is necessary
and the record is deleted from the data base. If payees do not
return the accounting form to Wilkes-Barre within 3 months, the
contractor mails a second copy of the accounting form. If payees
return the form as a result of the second request, SSA clears the
systems diary.
If payees have not returned either form within
6 months of first mailing, SSA, through the National Computer Center
in Baltimore, produces lists of payees from the systems diary who
have not returned the forms. The lists (called "nonresponder
alerts" or "listings") are sent to SSA field offices
and processing centers for follow-up by telephone or mail. The
field offices contact nonresponding payees for title XVI beneficiaries.
The processing centers attempt to contact nonresponding payees
for title II beneficiaries. If they are unsuccessful, they send
development requests to the appropriate field offices. The processing
centers retain control of development requests for nonresponding
payees and follow up with field offices for status reports.
The Increasing Costs of Annual Accounting
The cost of annual accounting has almost doubled over the
last 5 years as indicated in the graph below. In Fiscal Year (FY)
1991, SSA spent approximately $33.2 million to administer annual
accounting. For FY 1996, SSA estimated that it would spend $66.0 million
for annual accounting.
SSA Initiatives and Changes in Annual
Accounting
To combat rising costs, SSA initiated several activities
to improve the annual accounting process. First, SSA introduced
the SSA-6230 accounting form tailored for parents, stepparents,
and grandparents with custody of minor children who receive title
II benefits. Second, SSA asked the Office of the Inspector General
(OIG) to conduct a series of inspections that would review and
recommend improvements to the annual accounting process. This report
is one in the series of reports that assess the risk of misuse
of benefits associated with various categories of payees. Other
reports will present data concerning demographics of payees, misuse
or questionable use of benefits by payees, poor performance by
payees, effectiveness and efficiency of the payee accounting review
process, and problems with completion of the accounting forms.
A roll-up report will provide overall recommendations for improving
the accounting process. And third, independent of the OIG's work,
SSA appointed an external Representative Payee Advisory Committee
in June 1995 to study all aspects of the accounting process
from payee selection through monitoring payee performance. The
Committee reported its findings and recommendations to the Commissioner
of SSA in November 1996.
METHODOLOGY
In September 1994, SSA prepared a computerized file of titles
II and XVI beneficiaries with payees scheduled to receive initial
accounting forms in October 1994, who received benefits for the
report period October 1993 through September 1994. The SSA
used a contractor to mail accounting forms to these payees in October 1994.
As payees returned their accounting forms, SSA deleted their names
from this file. In October 1995, we obtained a copy of the file
to determine how many nonresponding payees (payees who did not
respond to SSA's attempts at contact) remained after 1 year. We
analyzed these data to identify: (1) how many payees did not respond
to the annual accounting; (2) the amount of benefits for which
SSA did not receive an accounting; and (3) any possible trends
among these nonresponding payees.
This inspection was conducted in accordance with the Quality
Standards for Inspections issued by the President's
Council on Integrity and Efficiency.
In October 1994, SSA mailed 367,636 accounting forms asking
payees to describe how they spent or saved benefits on behalf of
the beneficiaries. One year later, we found that SSA had not received
26,331 accounting forms (from 20,681 payees), representing $104 million
in benefits, from these payees. On an annual basis, this projects
to approximately 316,000 unreturned accounting forms from 248,000
payees and $1.2 billion in benefits for which SSA did not
receive an accounting.
For the report period, annual benefits for nonresponding
payees averaged $3,934. Almost 74 percent of these payees
managed between $1,200 and $7,200 during the report period.
The SSAs present tracking system is not designed to
provide a historical overview of payees return of accounting
forms. It does not even track when payees return forms.
Rather, the system tracks which payees have not returned
accounting forms so that SSA knows which payees require additional
contact.
Under the current process, payees who fail to respond to
the accounting process within 1 year receive no further centralized
systematic scrutiny. After 1 year has elapsed, the nonresponder
file is overwritten when SSA mails another accounting form. Since
no computer data is maintained about the nonresponding payees,
SSA has no way of knowing how often these payees fail to respond
or if they have ever responded to a request for accounting.
Approximately 76 percent of nonresponding payees are relatives
with custody of beneficiaries. At 37.6 percent, mothers with custody
of their children account for the single largest group of unreturned
accounting forms. This is followed by:
payees coded "W" (assumed to be parents with
custody) at 21.8 percent,
other relatives with custody at 8.3 percent, and
fathers with custody at 7.9 percent.
These results are not unexpected, however. Mothers with custody
represent 38.2 percent of the payees who receive accounting forms,
while payees coded "W" represent 19.9 percent, other
relatives with custody represent 6.3 percent, and fathers with
custody represent 7.8 percent.
Nonresponding payees are concentrated in a few States
and Puerto Rico
The highest volume of unreturned accounting forms are concentrated
in the States with the highest general populations. Overall, California
has the greatest number of unreturned forms with 2,043 (7.8 percent
of all unreturned accounting forms), followed by New York with
1,976 (7.5 percent), Texas with 1,870 (7.1 percent),
and Florida with 1,605 (6.1 percent). Table 1 in Appendix
A provides information on unreturned accounting forms for each
State and SSA region.
Not so predictable, however, is the number of unreturned
accounting forms from Puerto Rico. Puerto Rico had a total of 978
unreturned forms for title II beneficiaries. This accounts for
3.7 percent of all unreturned forms and projects to 11,736
for the year. We also found that Puerto Rico accounted for:
Eight of the 24 SSA field offices with 60 or more unreturned
accounting forms from those that SSA originally mailed in October
1994. The number of unreturned forms from these 8 field offices
ranged from 61 to 106, with an average of 76.0 per office.
Table 2 in Appendix A lists all field offices with 60
or more unreturned accounting forms.
Six instances in which groups of individuals (mostly
relatives) had not returned 10 or more accounting forms
from the same small geographic location. In several instances,
a single payee is responsible for more than one unreturned
form. Table 3 in Appendix A provides information about these
concentrations of nonresponding payees.
We found 12 instances in which agency or institutional payees
(e.g., State departments of social services or county public guardian
services) had not returned 10 or more accounting forms (Table 4
in Appendix A). The number of unreturned forms ranged from 10 to
56, with an average of 18.2 for each payee. We found that approximately
73.8 percent of the nonresponding agency or institutional payees
have custody of beneficiaries. This group mirrors the universe
of nonresponding payees--approximately 72.4 percent have custody
of their beneficiaries.
The SSAs payee policies, the Jordan Court, and
Federal law require that SSA obtain accounting forms from payees
annually. Even so, more than 26,000 of the payees that SSA originally
contacted in October 1994 failed to respond to the request for
accounting. These payees failed to respond to two mailed requests,
and, presumably, the field offices or processing centers attempts
at contact.
The SSAs present system does not provide sufficient
information to determine why certain payees do not return accounting
forms and if these payees have ever returned accounting
forms. The SSA has no knowledge of how payees used these funds.
Therefore, we recommend that SSA should:
1. Develop an improved system for tracking non-responding
payees.
We recommend that, as a first step, SSA maintain data on
nonresponding payees that it currently overwrites.
2. Determine why selected payees (e.g., high-volume agency
or institutional payees and payees in Puerto Rico) fail to complete
accountings.
3. Determine whether field office or processing center
staff are properly processing the nonresponder alerts.
4. Develop a more immediate and appropriate method (e.g.,
suspension of benefits, immediate change of payee with final
accounting by former payee) to be used in conjunction with the
tracking system to obtain accountings. Additionally, SSA should
annotate the Master Representative Payee File to indicate that
the payee failed to respond to a request for accounting and should
not be considered as a representative payee for other beneficiaries.
SSA Comments
The SSA agreed that it should maintain data on nonresponding
payees. It also agreed with our recommended actions to determine
why selected payees fail to account and whether field office personnel
are properly processing nonresponder alerts. Additionally, SSA
agrees with the proposal to annotate the Master Representative
Payee File with information on nonresponders. Systems changes and
procedural changes are being planned to implement these recommendations.
The SSA wishes to wait for the results of additional OIG
work now in progress to determine what direction SSA will take
concerning the recommendation to develop a more immediate and appropriate
method to obtain accountings from nonresponding payees.
OIG Response to Agency Comments
We agree with the Agency's response to our recommendations
and the approach it is taking to implement corrective action.
LOCATIONS AND CHARACTERISTICS OF NONRESPONDING PAYEES
The following tables provide breakdowns on the locations
of nonresponding payees, type of payee information for selected
high-volume nonresponding payees, and geographic concentrations
of unreturned accounting forms.
TABLE 1: UNRETURNED ACCOUNTING FORMS BY STATE AND REGION (OCTOBER
1994)
STATE
TOTAL
PERCENTAGE
Connecticut
315
1.20%
Maine
70
0.27%
Massachusetts
706
2.68%
New Hampshire
80
0.30%
Rhode Island
64
0.24%
Vermont
62
0.24%
TOTAL REGION I
1,297
4.93%
New Jersey
892
3.39%
New York
1,976
7.50%
Puerto Rico
978
3.71%
Virgin Islands
23
0.09%
TOTAL REGION II
3,869
14.69%
Delaware
102
0.39%
District of Columbia
100
0.38%
Maryland
503
1.91%
Pennsylvania
1,128
4.28%
Virginia
507
1.93%
West Virginia
234
0.89%
TOTAL REGION III
2,574
9.78%
Alabama
596
2.26%
Florida
1,605
6.10%
Georgia
910
3.46%
Kentucky
436
1.66%
Mississippi
452
1.72%
North Carolina
665
2.53%
South Carolina
436
1.66%
Tennessee
686
2.61%
TOTAL REGION IV
5,786
21.97%
Indiana
492
1.87%
Illinois
1,157
4.39%
Michigan
989
3.76%
Minnesota
210
0.80%
Ohio
1,088
4.13%
Wisconsin
456
1.73%
TOTAL REGION V
4,392
16.68%
Arkansas
342
1.30%
Louisiana
707
2.69%
New Mexico
199
0.76%
Oklahoma
382
1.45%
Texas
1,870
7.10%
TOTAL REGION VI
3,500
13.29%
Iowa
137
0.52%
Kansas
149
0.57%
Missouri
446
1.69%
Nebraska
97
0.37%
TOTAL REGION VII
829
3.15%
Colorado
278
1.06%
Montana
78
0.30%
North Dakota
20
0.08%
South Dakota
42
0.16%
Utah
153
0.58%
Wyoming
30
0.11%
TOTAL REGION VIII
601
2.28%
Arizona
378
1.44%
California
2,043
7.76%
Guam
21
0.08%
Hawaii
104
0.39%
Nevada
99
0.38%
TOTAL REGION IX
2,645
10.05%
Alaska
34
0.13%
Idaho
123
0.47%
Oregon
228
0.87%
Washington
453
1.72%
TOTAL REGION X
838
3.18%
TOTAL
26,331
100.00%
TABLE 2: FIELD OFFICES WITH 60 OR MORE NONRESPONDER CASES (OCTOBER
1994)
DOC
CITY
STATE
TOTAL UNRETURNED ACCOUNTING FORMS*
198
Bayamon
PR
106
622
Birmingham
AL
90
281
Caguas
PR
90
363
Detroit
MI
87
657
Orlando
FL
83
280
Arecibo
PR
82
500
Evergreen Park
IL
79
279
Mayaguez
PR
78
172
Camden
NJ
73
783
Oklahoma City
OK
71
858
Albuquerque
NM
69
455
Indianapolis
IN
67
136
Patchogue
NY
66
655
Jacksonville
FL
65
272
Ponce
PR
65
816
Houston
TX
64
271
Rio Piedras
PR
64
617
East Point
GA
62
641
Jackson
MS
62
379
Hato Rey
PR
62
656
Tampa
FL
61
B00
Bayamon
PR
61
566
Memphis
TN
60
855
Houston
TX
60
*This information is intended to show geographic concentrations
of unreturned forms and is not intended to demonstrate a failure
by field offices or processing centers to obtain completed forms.
TABLE 3: CONCENTRATIONS OF NONRESPONDING PAYEES:
10 OR MORE FORMS FROM THE SAME SMALL GEOGRAPHIC LOCATION (OCTOBER
1994)
TYPE OF
PAYEE CODE(S)*
CITY
STATE
DOC
NUM
Grandparent, Mother, Other Relative,
Spouse, "W"
Ponce
PR
272
28
Child, Father, Mother, Other
Relative, "W"
Mayaguez
PR
279
18
Child, Mother, Other Relative,
Spouse, "W"
Caguas
PR
281
17
Child, Father, Mother, Other
Relative, Spouse, "W"
Toa Baja
PR
B00
13
Father, Mother, Nonrelative
Individual, Other Relative, Spouse, "W," Missing
Villas de Buena
PR
198
11
Grandparent, Mother, Other Relative,
Stepfather, "W"
Vega Baja
PR
B89
10
*In each instance, at least one payee is responsible for more than
one unreturned accounting form.
TABLE 4: HIGH-VOLUME NONRESPONDING PAYEES:
10 OR MORE FORMS FROM THE SAME AGENCY OR INSTITUTION(OCTOBER
1994)
TYPE OF
PAYEE CODE(S)*
CITY
STATE
DOC
NUM
Agency or State Nonmental Institution
Olympia
WA
918
56
Public Official
Los Angeles
CA
951
21
Agency or State Mental or Nonmental Institution
Utica
NY
164
20
Nonprofit Mental or Private Nonmental Institution
Akron
OH
A66
20
Agency or State Nonmental Institution
Boston
MA
030
18
Agency
Phoenix
AZ
913
15
Agency or Nonprofit Nonmental or
State Nonmental Institution
Los Angeles
CA
D44
15
Agency or State Mental or Nonmental Institution
Jefferson City
MO
740
12
Agency
Trenton
NJ
171
11
Agency
New York
NY
159
11
Nonprofit Mental or Nonprofit Nonmental or
Private Nonmental Institution
Mid-Island
NY
144
10
State Nonmental Institution
Memphis
TN
C90
10
*Each row represents accounting forms mailed to a single nine-digit
zip code. Although the Social Security Administrations data
bases frequently listed more than one type of payee code, each row
represents a single agency or institution.
Scott Patterson, Director, Evaluations and Technical Services
Deborah Harvey, Senior Evaluator
Brian Pattison, Senior Evaluator
Alan Stubbs, Senior Evaluator
Robert Gibbons, Senior Evaluator (Department of Health and Human Services)
Pat Kennedy, Senior Auditor