OFFICE OF
THE INSPECTOR GENERAL

SOCIAL SECURITY ADMINISTRATION

Effectiveness of Title XVI
Installment Agreements

February 2009

A-02-09-29007

QUICK RESPONSE
EVALUATION

MEMORANDUM

Date: February 10, 2009 Refer To:

To: The Commissioner

From: Inspector General

Subject: Effectiveness of Title XVI Installment Agreements (A-02-09-29007)

The attached final Quick Response Evaluation presents the results of our review. Our objective was to determine the effectiveness of the Social Security Administration’s efforts to collect Title XVI overpayments from individuals who agreed, but failed, to honor an installment agreement.

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

/s/
Patrick P. O’Carroll, Jr.

Attachment

February 2009

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.

Background
OBJECTIVE

Our objective was to determine the effectiveness of the Social Security Administration’s (SSA) efforts to collect Title XVI overpayments from individuals who agreed, but failed, to honor an installment agreement.

BACKGROUND

Individuals are considered overpaid when they receive funds in excess of the correct amount. With few exceptions, overpaid individuals are responsible for repaying the overpayments. SSA prefers a full refund of an overpayment. If a full refund is not possible, SSA has several methods of collecting a Title XVI overpayment. If the overpaid individual is receiving Title XVI payments, SSA’s systems automatically withhold 10 percent of the individual’s benefit payment 60 days after an overpayment notice is sent if the individual does not respond to the overpayment notice within 30 days. The Agency will delay withholding from the individual’s benefit payment if reconsideration or waiver of the overpayment is requested. If the individual is not currently receiving Title XVI payments, SSA can collect the Title XVI overpayment from any Title II benefits due, which is referred to as Cross Program Recovery.

Some beneficiaries cannot manage or direct the management of their finances because of their youth or mental or physical impairment. For such beneficiaries, Congress provided for payment to be made through a representative payee who receives and manages the beneficiary’s funds. If SSA is unable to collect an overpayment from a beneficiary, and the overpaid funds were paid to a liable representative payee, the overpayment can be recovered from the representative payee’s Title XVI payments or Title II benefits.

When SSA is unable to recover the overpayment through adjustment to monthly payments and an overpaid person does not make a full refund in a single payment, an individual can enter into an agreement with SSA and refund the overpayment through monthly installment payments. When a debtor makes, but later fails to honor, an installment agreement, SSA’s procedures prescribe that the following outreach efforts should occur.

• The Recovery and Collection of Overpayment Process (RECOOP) sends
two reminder bills, 1 month apart.

• If the beneficiary has not made a payment 30 days after the second reminder bill is sent, RECOOP sends a call-in notice, advising the debtor to call the Debt Management Section in the program service center of jurisdiction.

• If there is still no response from the beneficiary 15 days later, an alert is generated for the Debt Management Section to contact the debtor by telephone.

• The Debt Management Section controls the case until the debt is resolved.

If certain criteria are met, SSA can also recover delinquent overpayments through such options as the Treasury Offset Program (TOP), which offsets any Federal payment (for example, a tax refund) and/or Administrative Wage Garnishment (AWG), a vehicle by which a delinquent SSA debtor’s wages may be garnished. Debtors who have been sent a second reminder bill by RECOOP and meet the applicable criteria for TOP and/or AWG are selected by SSA’s automated External Collection Operation (ECO) system.

To meet our objective, we obtained a data extract from one segment of the Supplemental Security Record (SSR) for individuals with an open installment agreement as of October 1, 2007. From this data set, we isolated individuals with an overpayment balance of $15,000 or more who had not made any of the agreed-upon installment payments from October 1 through December 31, 2007. For this review, we considered these installment agreements to be delinquent. There were 102 individuals in the SSR segment with combined overpayments totaling approximately $2.2 million who met the selection criteria. Since there are 20 segments of the SSR, we estimate about $44 million in overpayments met our criteria. We reviewed SSA’s records for the 102 individuals to determine whether SSA took the appropriate steps to collect the delinquent amounts. We conducted a similar review of Title II Installment Agreements for our September 2008 report, Status of Title II Installment Agreements (A 02 08 18074). Additional details of our Scope and Methodology are in Appendix B.

Results of Review
The effectiveness of SSA’s efforts to collect overpayments related to delinquent Title XVI installment agreements could be improved. While SSA generally followed its procedures for billing and contacting delinquent debtors, it did not pursue other recovery methods available for all eligible cases.

We found that 5 of the 102 cases we reviewed were eligible for TOP, but they were not referred. In four other cases, benefit withholding from a representative payee could have been pursued, but was not. In two additional cases, both TOP and benefit withholding from a representative payee could have been pursued, but were not. Also, we identified one debtor who was receiving Title XVI payments, but funds were not being withheld from her monthly payments to recover a prior overpayment.

By not pursuing available collection methods in these 12 cases, SSA lost the opportunity to collect $252,685. Estimating these results to the entire SSR, we estimate SSA failed to pursue available collection methods for 240 individuals (with overpayment balances of $15,000 or more) or their representative payees with combined overpayments of $5.1 million.

USE OF TREASURY OFFSET PROGRAM

Our audit of Title II installment agreements found that TOP and AWG were the most effective methods of collection; however, they were not always pursued when applicable. Similarly, we identified seven Title XVI debtors who met the TOP eligibility criteria as of August 2008, but were not referred. As with our review of Title II installment agreements, this was due in part to the ECO system selection of debts as described in the following paragraphs.

SSA used TOP effectively with some of the debtors we reviewed. As of August 2008, SSA was pursuing offset against 21 eligible debtors and had recovered $13,565 from 7. Additionally, SSA recovered $15,939 from five individuals who previously met the criteria for TOP, but did not meet the eligibility criteria as of August 2008. While SSA used TOP effectively with some cases, it did not pursue it for seven additional debtors who met TOP eligibility criteria.
All seven debtors who were eligible and not referred for TOP had multiple overpayments recorded on their SSRs. Some of the debtors’ previous overpayments did not meet the criteria for TOP. For example, the debtor was under age 18 when the debt was established or the debt was over 10 years old. Although the current debts we reviewed met the criteria for TOP, the existence of the old debts on the individuals’ records prevented the eligible debts from being selected by ECO. By not pursuing TOP against these seven debtors, SSA lost the opportunity to collect $151,791.

RECOVERY FROM REPRESENTATIVE PAYEE BENEFITS

If SSA is unable to collect an overpayment from a recipient, and the overpaid funds were paid to a liable representative payee, the overpayment can be recovered from the representative payee’s own Title XVI payments or Title II benefits. We identified six representative payees who were receiving their own Title II benefits and/or Title XVI payments that could have been used to recover their recipients’ overpayments. However, SSA did not propose benefit adjustment against the representative payees’ own benefits despite their joint liability for the overpayments with a combined balance of $116,252.

One-half (51 of 102) of the debtors we reviewed had representative payees. Ten of those representative payees were receiving their own Title XVI payments and/or Title II benefits. Of these 10, SSA could have pursued recovery from the representative payee’s benefits in 7 cases, but only did so in 1 case. SSA did not pursue benefit withholding in the other six eligible cases.

RECOVERY FROM BENEFITS DUE THE DEBTOR

We identified one debtor who had previously received Title XVI payments and was overpaid $16,285. After not receiving Title XVI for 7 years, she began receiving monthly payments again. However, the overpayment was not transferred to her new record, and no action was taken to recover the overpayment.

The field office is responsible for recognizing the need to transfer an overpayment from a terminated record to the new SSR. This process is performed automatically in most cases through the automated reconciliation process. However, the field office must identify those situations that can use the automated reconciliation process, as well as those that require manual processing. In this case, the field office employee who established the new Title XVI record failed to transfer the overpayment to the current record.

Matters for Consideration
Based on the results of our review, SSA is not fully using all recovery methods available to recover delinquent Title XVI overpayments. SSA can pursue benefit withholding from representative payees when it is available if attempts to recover the overpayment from the recipient have failed. We recommended in our prior report, Status of Title II Installment Agreements (A-02-08-18074), that SSA maximize recovery via TOP in both Title II and Title XVI cases. Additionally, SSA should transfer overpayments from terminated SSRs to new SSRs when a new record is put into payment status.

SSA is already pursuing corrective actions in response to our September 2008 audit that should also address the issues identified in this review. We provided SSA a list of the 12 cases identified during our review so the Agency can take appropriate action.

Appendices
APPENDIX A – Acronyms
APPENDIX B – Scope and Methodology
APPENDIX C – OIG Contacts and Staff Acknowledgments

Appendix A
Acronyms
AWG Administrative Wage Garnishment
C.F.R. Code of Federal Regulations
ECO External Collection Operation
OIG Office of the Inspector General
POMS Program Operations Manual System
RECOOP Recovery and Collection of Overpayment Process
SSA Social Security Administration
SSI Supplemental Security Income
SSR Supplemental Security Record
TOP Treasury Offset Program

Appendix B
Scope and Methodology

Our objective was to determine the effectiveness of the Social Security Administration’s (SSA) efforts to collect Title XVI overpayments from individuals who agreed to, but failed to honor, an installment agreement. To meet our objective, we:

• Reviewed applicable Federal laws, regulations and SSA’s policies and procedures regarding the collection of Title XVI overpayments.

• Contacted staff within SSA’s Office of Public Service and Operations Support for information about the input of Title XVI Installment Agreements into SSA’s systems.

• Obtained a data extract from one segment of the Supplemental Security Record (SSR) of individuals with an open installment agreement as of December 31, 2007. We determined which individuals were in default of the agreement by selecting only those individuals who made an agreement October 1, 2007 or earlier, but had not made a remittance from October through December 2007.

We focused our review on individuals with overpayment balances of $15,000 or more. To limit our review to only those individuals who agreed to make regular monthly installment payments, we excluded individuals whose monthly installment amount was coded as the full overpayment amount. We determined that 102 individuals in the segment met our selection criteria. The combined overpayment balance for these individuals was about $2.2 million.

We reviewed SSRs, Debt Management System queries, and notices obtained via the Online Retrieval System to determine whether the procedures described in SSA’s Program Operations Manual System, Systems and Methods 00610.735, Installment Agreements, were followed. We also determined whether other recovery methods, such as the Treasury Offset Program, Administrative Wage Garnishment, and reporting to credit bureaus, were applicable and used. Lastly, we reviewed the SSRs, Master Beneficiary Records, and earnings records of payees representing the recipients we reviewed to determine whether recovery from the representative payee was applicable and, if so, pursued.

We determined the data used for our review were sufficiently reliable given our objective and their intended use and should not lead to incorrect or unintended conclusions. We performed our review in the New York Audit Division in November and December 2008. The entity reviewed was the Office of Public Service and Operations Support under the Deputy Commissioner for Operations. We conducted our review in accordance with the President’s Council on Integrity and Efficiency’s Quality Standards for Inspections.

Appendix C
OIG Contacts and Staff Acknowledgments
OIG Contacts

Tim Nee, Director, New York Audit Division, (212) 264-5295

Victoria Abril, Audit Manager, (212) 264-0504

Acknowledgments

In addition to those named above:

Christine Hauss, Senior Program Analyst

James Kim, Program Analyst

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-02-09-29007.

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
Chairman and Ranking Minority Member, Committee on Appropriations, House of Representatives
Chairman and Ranking Minority, Subcommittee on Labor, Health and Human Services, Education and Related Agencies, Committee on Appropriations,
House of Representatives
Chairman and Ranking Minority Member, Committee on Appropriations, U.S. Senate
Chairman and Ranking Minority Member, Subcommittee on Labor, Health and Human Services, Education and Related Agencies, Committee on Appropriations, U.S. Senate
Chairman and Ranking Minority Member, Committee on Finance
Chairman and Ranking Minority Member, Subcommittee on Social Security Pensions and Family Policy
Chairman and Ranking Minority Member, Senate Special Committee on Aging
Social Security Advisory Board

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.