OFFICE OF
THE INSPECTOR GENERAL

SOCIAL SECURITY ADMINISTRATION

SUPPLEMENTAL SECURITY INCOME
PAYMENTS TO PARENTS OR RELATIVES
NOT SUPPORTING CHILDREN

December 2009

A-01-09-29113

AUDIT REPORT

Mission

By conducting independent and objective audits, evaluations and investigations, we inspire public confidence in the integrity and security of SSA’s programs and operations and protect them against fraud, waste and abuse. We provide timely, useful and reliable information and advice to Administration officials, Congress and the public.

Authority

The Inspector General Act created independent audit and investigative units, called the Office of Inspector General (OIG). The mission of the OIG, as spelled out in the Act, is to:

 Conduct and supervise independent and objective audits and investigations relating to agency programs and operations.
 Promote economy, effectiveness, and efficiency within the agency.
 Prevent and detect fraud, waste, and abuse in agency programs and operations.
 Review and make recommendations regarding existing and proposed legislation and regulations relating to agency programs and operations.
 Keep the agency head and the Congress fully and currently informed of problems in agency programs and operations.

To ensure objectivity, the IG Act empowers the IG with:

 Independence to determine what reviews to perform.
 Access to all information necessary for the reviews.
 Authority to publish findings and recommendations based on the reviews.

Vision

We strive for continual improvement in SSA’s programs, operations and management by proactively seeking new ways to prevent and deter fraud, waste and abuse. We commit to integrity and excellence by supporting an environment that provides a valuable public service while encouraging employee development and retention and fostering diversity and innovation.

MEMORANDUM

Date: December 28, 2009 Refer To:

To: The Commissioner

From: Inspector General

Subject: Supplemental Security Income Payments to Parents or Relatives Not Supporting Children (A-01-09-29113)

OBJECTIVE

The objective of our review was to assess the Social Security Administration’s (SSA) payment of Supplemental Security Income (SSI) to parents or relatives serving as representative payees for children they were not supporting.

BACKGROUND

The SSI program is intended to be a program of last resort. It is a nation-wide, Federal cash assistance program administered by SSA that provides a minimum level of income to financially needy individuals who are aged, blind, or disabled.

Generally, residents of public institutions are not eligible for SSI payments. However, in some cases, SSI recipients under age 18 remain eligible for payments while residing in institutions. For example, children participating in educational or vocational training programs may remain eligible for payments while residing in institutions. In these cases, the children are not considered residents of public institutions for purposes of determining SSI eligibility—and remain eligible for SSI while residing in the institutions. Additionally, children residing in noninstitutional care, such as foster care homes, may remain eligible for SSI payments. Furthermore, while residing in the institutions or foster care homes, the children’s basic needs, such as food and shelter, may be provided by a third party—and not the children’s parents.

Under the Individuals with Disabilities Education Improvement Act of 2004, all children with disabilities are entitled to a free, appropriate public education. “If placement in a public or private residential program is necessary to provide special education and related services to a child with a disability, the program, including non-medical care and room and board, must be at no cost to the parents of the child.” In addition, the agencies placing children in foster care homes may provide food and shelter.

Furthermore, children residing in certain medical facilities receiving substantial Medicaid or private health insurance payments on their behalf, may also remain eligible for SSI payments. However, in these cases, the children are only eligible for a reduced Federal SSI payment of no more than $30.

To perform our review, we identified 1,512 disabled SSI recipients under age 18—as of April 2009—who were not in the custody of the parents/relatives serving as their representative payees. The ZIP Codes of the representative payees did not match the ZIP Codes of the SSI recipients' residential addresses. Therefore, they did not appear to reside at the same address. In addition, according to the coding on SSA’s records, these children were not residing in institutions or facilities that would subject them to the $30 monthly payment.

We randomly selected 100 cases from this population to determine whether the children’s parents/relatives provided support by contributing to the cost of care at the institutions, residential schools, or foster care homes. (For more information on our scope, methodology, and sampling results, see Appendix B.)

RESULTS OF REVIEW

We found that some parents/relatives serving as representative payees received SSI payments for children they were not supporting. Based on our review, we estimate that approximately 320 children resided in institutions and their parents/relatives did not contribute to the cost of care at the institutions. These parents/relatives received approximately $8.3 million in SSI payments for children they were not supporting. In addition, we estimate the Government could realize potential savings of about

$1.9 million per year if SSA limited these children to reduced SSI payments—similar to how children residing in certain medical facilities are limited to a $30 Federal SSI payment.

Furthermore, we were unable to determine whether parents/relatives contributed to the cost of care for about 260 children residing in institutions. The parents/relatives of these children received approximately $3.6 million in SSI payments and possibly did not contribute to the children’s cost of care at the institutions.

Of the 100 children in our sample,

• 59 resided in institutions and did not appear to be supported by their parents/relatives;

• 17 resided in institutions, and we were unable to determine whether the parents/relatives provided support; and

• 24 were supported by their parents/relatives.

Children Residing in Institutions Not Supported by Their Parents/Relatives

In total, 59 children in our sample resided in institutions and did not appear to be supported by their parents/relatives. Of the 59 children,

 21 resided in institutions full-time, and their parents/relatives—who did not contribute to the cost of care—received about $551,000 in SSI payments on their behalf while they resided in the institutions, and

 38 resided in certain medical institutions before our review, and Medicaid or private health insurance contributed substantially to the cost of care. These 38 children were subjected to a reduced Federal SSI monthly payment of $30 while residing in the medical institutions.

The SSI program is intended to be a program of last resort. It is designed to provide a minimum level of income to help individuals meet their basic needs for food, clothing, and shelter. However, in 21 of our sample cases, parents/relatives received SSI on behalf of children they were not supporting. If SSA limited these children to reduced SSI payments—similar to the way children residing in certain medical facilities are reduced to a $30 Federal payment—the SSI program could realize savings. Specifically, if the Agency limited the children to a similar reduced $30 Federal SSI payment, SSA could realize potential savings of about $126,000 over the next 12 months. See Table 1 for potential savings to the SSI program.

Table 1: Potential Savings to the SSI Program SSI Payments
Amount SSA Will Continue to Pay over the Next 12 Months $133,875
Amount SSA Would Pay over the Next 12 Months If Payments Were Reduced $8,054
Potential Savings $125,821

Projecting our sample results to the population, we estimate that the Government could save approximately $1.9 million per year if SSA limited these children to reduced SSI payments. Payments under the SSI program are financed from the general fund of the U.S. Treasury—which is financed through tax payments from the American public. Therefore, SSA should ensure resources entrusted to the Government by the American people are used in the public’s best interest. The parents/relatives in our review continued to receive payments under the SSI program—which is intended to be a program of last resort—even though the children’s basic needs—such as food and shelter—were being provided at the institutions.

Table 2 shows that children in institutions who are eligible for a full SSI payment meet similar criteria to children reduced to the $30 Federal SSI payment limit.

Table 2: Comparison of the $30 Federal Payment Limit with SSI Payments Made in Similar Circumstances
$30 Federal Payment Limit Full SSI Payments
Child resides in a Medical facility—not with parent/relative Child resides in an educational facility or foster care home—not with parent/relative
Cost of care is paid for by Medicaid or private health insurance Cost of care is paid for by the school district, State, or placement agency
SSI payment is limited to $30 Federal payment May be eligible for a full SSI payment

Unable to Determine Whether Parents/Relatives Provided Support

Of the 100 children in our review, an additional 17 resided in institutions full-time, but we were unable to determine whether their parents/relatives provided support. For these 17 cases, we researched information available on SSA’s systems, but were unable to determine whether the parents/relatives contributed to the cost of care. However, if placement in the institutions was necessary to provide special education and related services, the cost of the program—such as non-medical care and room and board—must be provided at no cost to the child’s parents. In addition, agencies placing children in foster care homes may provide food and shelter. Therefore, the parents/relatives of these 17 children received about $237,000 in SSI payments and possibly did not contribute to the children’s cost of care in the institutions.

For example, in one case, an 11-year-old SSI recipient resided in an institution. Based on available information in SSA’s systems, we were unable to determine who contributed to the cost of care at the institution. However, we researched this institution and found that it is publicly funded. Therefore, the relative serving as this child’s representative possibly did not contribute to the child’s cost of care at the institution. This child’s relative received about $17,000 for the period March 2007 through May 2009 while the child resided in the institution.

See Appendix B for a summary by State for children residing in institutions who did not appear to be supported by their parents/relatives.

Consideration of Parents’ Income and Resources

Generally, SSA considers a parent’s income when determining a child’s SSI eligibility and/or payment amount when the parent and child live in the same household. Therefore, for the children in our sample who resided in institutions, the Agency did not consider the parents’ incomes for determining SSI eligibility and/or payment amounts because the children and parents did not live in the same households.

For example, in one case, a 17-year-old SSI recipient resided in an institution for children with autism in which a third party paid for his care. He had not lived with his father since at least July 2000. His father served as his representative payee and received about $36,000 on behalf of his disabled son for the period July 2000 to May 2009. This child’s father earned about $98,000 in 2008—and this income did not have any impact on his son’s SSI payments.

In another example, a 16-year-old SSI recipient had resided in an institution since October 2006, and the school district paid for his care. His mother served as his representative payee and received about $9,000 on behalf of her disabled son from December 2006 to May 2009. This child’s mother earned about $59,000 in 2008—and this income did not impact her son’s SSI payments.

Although SSA does not consider a parent’s income when a child lives in an institution, it must consider the parent’s income if the child returns to the parent’s home. In five of our sample cases, it appeared the children had returned to live with their parents, but SSA’s records were not properly updated. As a result, the Agency was not considering the parents’ income for SSI purposes. We referred these five cases to SSA for possible correction. As of November 2009, the Agency had updated four of the five cases and assessed $20,236 in overpayments because of our audit.

For example, in one case, the child returned to her parents’ home in June 2006, but SSA did not fully update its records. According to the Agency’s records, this 3-year-old child lived alone and therefore SSA was not considering her parents’ income. As a result of our referral, the Agency updated its records and posted an overpayment of $1,283.

CONCLUSION AND RECOMMENDATION

The SSI program—financed by tax payments from the American public—is intended to be a program of last resort to assist individuals with a minimum level of income. However, we found that some parents/relatives serving as representative payees received SSI payments for children they were not supporting. Although these payments were made in accordance with SSA policy, we estimate that about 320 children resided in institutions, and their parents/relatives did not contribute to the cost of care at the institutions. These parents/relatives received approximately $8.3 million in SSI payments on behalf of children they were not supporting. If these children were limited to reduced SSI payments—similar to the way children residing in certain medical facilities are reduced to a $30 Federal payment limit—we estimate that the Government could realize potential savings of approximately $1.9 million per year.

Furthermore, we were unable to determine whether the parents/relatives provided support to about 260 children residing in institutions. The parents/relatives of these children received approximately $3.6 million in SSI payments and possibly did not contribute to the children’s cost of care at the institutions.

We recommend SSA consider whether it is equitable to reduce SSI payments to parents/relatives serving as representative payees for children they are not supporting. If SSA determines it is equitable to do so, the Agency should seek the legislative revisions needed to enact this change in policy.

AGENCY COMMENTS

SSA agreed with the recommendation. The Agency’s comments are included in Appendix C.

/s/
Patrick P. O’Carroll, Jr.

Appendices
APPENDIX A – Acronyms

APPENDIX B – Scope, Methodology, and Sample Results

APPENDIX C – Agency Comments

APPENDIX D – OIG Contacts and Staff Acknowledgments

Appendix A
Acronyms

C.F.R. Code of Federal Regulations
Pub. L. No. Public Law Number
SSA Social Security Administration
SSI Supplemental Security Income
U.S.C. United States Code

Appendix B
Scope, Methodology, and Sample Results

To accomplish our objective, we:

 Reviewed applicable sections of the Social Security Act and the Social Security Administration’s (SSA) regulations, rules, policies, and procedures.

 Obtained a file of disabled Supplemental Security Income (SSI) recipients—under age 18 as of August 2008—who were not in the custody of their parents/relatives. We then identified cases in which the recipients

1. were still in current pay or under age 18 as of April 2009,

2. had parents/relatives serving as their representative payees,

3. were not subjected to a reduced $30 monthly payment, or

4. had ZIP Codes that did not match the ZIP Codes of their representative payees—indicating they may not reside at the same address as their representative payees.

 Identified a population of 1,512 disabled SSI recipients under age 18—as of April 2009—who did not appear to be supported by the parents/relatives serving as their representative payees.

 Selected a random sample of 100 cases from the population and analyzed each case to determine whether the parents/relatives contributed to their children’s cost of care at the institutions, residential schools, or foster care homes. Specifically, we:

 Reviewed available information on SSA’s systems, including the Supplemental Security Record and Modernized SSI Claims System. In addition, we reviewed Representative Payee Reports and SSI Facility Information and Determination Forms (Form SSA-8045).

 Calculated the amount of SSI payments the recipients received for cases in which the parents/relatives did not contribute to the child’s cost of care—or possibly did not contribute to the cost of care. We did not independently verify with the institutions whether the children were, in fact, living in the institutions.
 Determined whether SSA considered parents’ incomes for cases in which recipients returned to their parents’ homes. We referred cases to SSA field offices for possible correction in which it did not appear the Agency was considering the parents’ incomes.

 Calculated potential savings to the SSI program if recipients residing in institutions, residential schools, or foster care homes were limited to reduced SSI payments—similar to recipients residing in certain medical facilities who are reduced to a $30 Federal payment.

We performed our audit between May and September 2009 in Boston, Massachusetts. We tested the data obtained for our audit and determined them to be sufficiently reliable to meet our objective. The principal entity audited was the Office of Income Security Programs under the Deputy Commissioner for Retirement and Disability Policy. 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 our findings and conclusions based on our audit objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

SAMPLE RESULTS

Table B-1: Population and Sample Size
Population 1,512
Sample Size 100

Table B-2: Children Residing in Institutions, Residential Schools, or Foster Care Homes and Their Parents/Relatives did not Contribute to the Cost of Care Number of Recipients Dollars
Sample Results 21 $551,077
Point Estimate 318 $8,332,282
Projection Lower Limit 223 $5,025,472
Projection Upper Limit 431 $11,639,092
Note: All projections are at the 90-percent confidence level.

Table B-3: Potential Annual Savings to the SSI Program if SSA Limited Payments to Children Residing in Institutions, Residential Schools, or Foster Care Homes Reduced $30 Federal SSI Payments Number of Recipients Dollars
Sample Results 16 $125,821
Point Estimate 242 $1,902,407
Projection Lower Limit 159 $1,154,793
Projection Upper Limit 348 $2,650,022
Note: All projections are at the 90-percent confidence level.

Table B-4: Children Residing in Institutions, Residential Schools or Foster Care Homes and We Were Unable to Determine Who Contributed to the Cost of Care Number of Recipients Dollars
Sample Results 17 $236,694
Point Estimate 257 $3,578,813
Projection Lower Limit 171 $1,977,418
Projection Upper Limit 365 $5,180,209
Note: All projections are at the 90-percent confidence level.

Table B-5: Summary by State: Children Residing in Institutions, Residential Schools or Foster Care Homes Not Supported—or Possibly Not Supported—by Their Parents/Relatives
State
Number of Children Not Supported Number of Children Possibly Not Supported Total Percent
California 5 0 5 13.2%
North Carolina 3 2 5 13.2%
Florida 1 3 4 10.5%
Massachusetts 3 1 4 10.5%
New York 1 3 4 10.5%
Georgia 0 2 2 5.3%
Mississippi 0 2 2 5.3%
South Carolina 1 1 2 5.3%
Texas 2 0 2 5.3%
Indiana 1 0 1 2.6%
Louisiana 1 0 1 2.6%
Maryland 0 1 1 2.6%
Oklahoma 0 1 1 2.6%
Pennsylvania 1 0 1 2.6%
Tennessee 0 1 1 2.6%
Wisconsin 1 0 1 2.6%
West Virginia 1 0 1 2.6%
TOTAL 21 17 38 100.0%

Appendix C
Agency Comments

MEMORANDUM

Date: December 16, 2009 Refer
Refer To: S1J-3

To: Patrick P. O'Carroll, Jr.
Inspector General

From: Margaret J. Tittel //s//
Acting Chief of Staff

Subject: Office of the Inspector General (OIG) Draft Report, “Supplemental Security Income Payments to Parents or Relatives Not Supporting Children” (A-01-09-29113)—INFORMATION

Thank you for the opportunity to review and comment on the draft report. We appreciate OIG’s efforts in conducting this review. Attached is our response to the report recommendation.

Please let me know if we can be of further assistance. Please direct staff inquiries to
Candace Skurnik, Director, Audit Management and Liaison Staff, at (410) 965-4636.

Attachment

COMMENTS ON THE OFFICE OF THE INSPECTOR GENERAL’S DRAFT REPORT, “SUPPLEMENTAL SECURITY INCOME PAYMENTS TO PARENTS OR RELATIVES NOT SUPPORTING CHILDREN” (A-01-09-29113)

We have reviewed the draft report and our response to the recommendation is provided below.

Recommendation

Consider whether it is equitable to reduce Supplemental Security Income payments to parents/relatives serving as representative payees for children they are not supporting. If it is determined equitable to do so, the agency should seek the legislative revisions needed to enact this change in policy.

Comment

We agree. By March 31, 2010, we will analyze this issue and determine if we should seek a legislative revision.

Appendix D
OIG Contacts and Staff Acknowledgments
OIG Contacts

Judith Oliveira, Director, Boston Audit Division

Acknowledgments

In addition to those named above:

Katie Greenwood, Auditor

Kevin Joyce, IT Specialist

Melinda Padeiro, Senior Auditor

For additional copies of this report, please visit our web site at www.socialsecurity.gov/oig or contact the Office of the Inspector General’s Public Affairs Staff Assistant at (410) 965-4518. Refer to Common Identification Number A 01 09 29113.

DISTRIBUTION SCHEDULE

Commissioner of Social Security
Office of Management and Budget, Income Maintenance Branch
Chairman and Ranking Member, Committee on Ways and Means
Chief of Staff, Committee on Ways and Means
Chairman and Ranking Minority Member, Subcommittee on Social Security
Majority and Minority Staff Director, Subcommittee on Social Security
Chairman and Ranking Minority Member, Committee on the Budget, House of Representatives
Chairman and Ranking Minority Member, Committee on Oversight and Government Reform
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Chairman and Ranking Minority, Subcommittee on Labor, Health and Human Services, Education and Related Agencies, Committee on Appropriations,
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Overview of the Office of the Inspector General
The Office of the Inspector General (OIG) is comprised of an Office of Audit (OA), Office of Investigations (OI), Office of the Counsel to the Inspector General (OCIG), Office of External Relations (OER), and Office of Technology and Resource Management (OTRM). To ensure compliance with policies and procedures, internal controls, and professional standards, the OIG also has a comprehensive Professional Responsibility and Quality Assurance program.
Office of Audit
OA conducts financial and performance audits of the Social Security Administration’s (SSA) programs and operations and makes recommendations to ensure program objectives are achieved effectively and efficiently. Financial audits assess whether SSA’s financial statements fairly present SSA’s financial position, results of operations, and cash flow. Performance audits review the economy, efficiency, and effectiveness of SSA’s programs and operations. OA also conducts short-term management reviews and program evaluations on issues of concern to SSA, Congress, and the general public.
Office of Investigations
OI conducts investigations related to fraud, waste, abuse, and mismanagement in SSA programs and operations. This includes wrongdoing by applicants, beneficiaries, contractors, third parties, or SSA employees performing their official duties. This office serves as liaison to the Department of Justice on all matters relating to the investigation of SSA programs and personnel. OI also conducts joint investigations with other Federal, State, and local law enforcement agencies.
Office of the Counsel to the Inspector General
OCIG provides independent legal advice and counsel to the IG on various matters, including statutes, regulations, legislation, and policy directives. OCIG also advises the IG on investigative procedures and techniques, as well as on legal implications and conclusions to be drawn from audit and investigative material. Also, OCIG administers the Civil Monetary Penalty program.
Office of External Relations
OER manages OIG’s external and public affairs programs, and serves as the principal advisor on news releases and in providing information to the various news reporting services. OER develops OIG’s media and public information policies, directs OIG’s external and public affairs programs, and serves as the primary contact for those seeking information about OIG. OER prepares OIG publications, speeches, and presentations to internal and external organizations, and responds to Congressional correspondence.
Office of Technology and Resource Management
OTRM supports OIG by providing information management and systems security. OTRM also coordinates OIG’s budget, procurement, telecommunications, facilities, and human resources. In addition, OTRM is the focal point for OIG’s strategic planning function, and the development and monitoring of performance measures. In addition, OTRM receives and assigns for action allegations of criminal and administrative violations of Social Security laws, identifies fugitives receiving benefit payments from SSA, and provides technological assistance to investigations.