SOCIAL SECURITY ADMINISTRATION
TITLE II DISABILITY
INSURANCE BENEFITS WITH A
WORKERS’ COMPENSATION OFFSET
November 2006 A-04-05-15133
AUDIT REPORT
Mission
We improve SSA programs and operations and protect them against fraud, waste, and abuse by conducting independent and objective audits, evaluations, and investigations. We provide timely, useful, and reliable information and advice to Administration officials, the 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
By conducting independent and objective audits, investigations, and evaluations,
we are agents of positive change striving for continuous improvement in the
Social Security Administration's programs, operations, and management and in
our own office.
Date: November 22, 2006
Refer To:
To: The Commissioner
From: Inspector General
Subject: Title II Disability Insurance Benefits with a Workers’ Compensation Offset (A‑04‑05‑15133)
OBJECTIVE
Our objective was to determine the accuracy of payments of Title II Disability Insurance (DI) claims with workers’ compensation (WC) offsets.
BACKGROUND
The Social Security Administration (SSA) administers the Old-Age, Survivors and Disability Insurance (OASDI) program under Title II of the Social Security Act, as amended (Act). Section 223 of the Act requires that SSA provide monthly DI benefits to individuals who meet specific disability requirements.
Workers injured on the job may qualify for DI benefits in addition to benefits under Federal and State WC programs. In general, injured workers receive compensation for lost wages through State WC programs. Each State administers its own WC program. State WC agencies generally adjudicate claims and act as the depository for WC disability claim records. However, employers may purchase WC insurance from private insurance companies, receive it through a State insurance fund, or elect self-insurance.
When an injured worker qualifies for both State WC and Federal DI benefits, the combined benefits could result in workers receiving more in disability payments than they earned before they became disabled. To prevent this, Congress enacted the WC offset provision under section 224 of the Act, which requires that SSA reduce DI benefits by the amount of any other disability benefit paid under any law or plan of the United States, a State, or a political subdivision. In this instance, SSA reduces the DI benefit based on an offset calculation set forth in its policy and procedures.
Not all State WC benefits result in a reduction of DI benefits. Fourteen States have reverse offset laws recognized by SSA. Those 14 States reduce WC benefits, and the injured worker receives the full DI benefit from SSA.
Our previous audits revealed weaknesses in the payment calculations of Title II DI claims involving WC benefits. The payment errors generally occurred because of human error in processing the claims. That is, SSA staff
In previous reports, which are detailed in Appendix B, we made recommendations to improve the payment calculation process by increasing front-end reviews, reducing the backlog of WC claims with pending WC decisions, automating manual processes, and ensuring WC benefit data are verified.
In June 2004, SSA implemented the Title II Redesign Release 3 (Redesign) to improve the automated processing of Title II initial claims applications and post‑entitlement actions, both of which involve WC offset claims. The Redesign’s goal was to expand business automation, reduce manual tasks, improve the quality of the data stored on the master records, and reduce the number of exceptions to be worked by program service center (PSC) technicians. The Redesign streamlined the WC process to reduce manual actions and expanded the Master Beneficiary Record (MBR) to include more WC information. Although the Redesign automates the WC offset calculation, the calculation still depends on SSA’s interpretation and input of the State WC benefit data. Because each State administers its own WC program, the WC benefits data available to SSA often vary in format and content. The variability in the State WC data can contribute to SSA’s misinterpretation of the data.
SCOPE AND METHODOLOGY
We reviewed a random sample of 250 DI claims from a population of 234,968 DI claims in which SSA’s records indicated a WC offset began between January 1, 1998 and December 31, 2004. Because the offset start date is effective when a change in WC benefits is recorded, our population includes some DI claims with offset beginning before 1998. From our sample, we determined that 93 percent of the DI claims had a WC offset that began between January 1, 1998 and December 31, 2004; 7 percent of the claims had WC offsets that began before the January 1, 1998. To determine the accuracy of the WC offsets for these 250 cases, we
For 18 claims, we determined the payment errors continued after December 31, 2004. During our audit, we informed SSA of the errors. SSA agreed to correct the offset calculation and adjust the DI benefits as needed. These errors would likely have continued had we not identified them or a significant event occurred that would have caused SSA to review the claims. Therefore, we estimated the number of claims and the total amount of the payment error that may have continued for 12 months after our audit period. Further information regarding our scope and methodology as well as our sampling methodology is in Appendices C and D.
RESULTS OF REVIEW
We commend SSA’s efforts to improve the payment accuracy of DI claims with a WC offset. We acknowledge the complexity of these claims and believe the recent Redesign contributed to improvements in the accuracy of WC claims. The percentage of payments in error identified in this report has declined significantly when compared to the percentage we reported in our prior WC offset audits. For example, in our October 2004 report, The Social Security Administration’s Clean-up of Title II Disability Insurance Cases with a Workers’ Compensation Offset, we identified a 31-percent payment error rate.
Although we acknowledge an improvement in the payment accuracy of WC offset claims, some payment errors continue to exist in this workload. Of the 250 randomly sampled DI claims, 43 (17 percent) had payment errors. Of the 43 claims, 27 had payment errors directly related to the WC offset calculation, totaling $158,590 (Appendix E). The remaining 16 had DI processing errors that were not related to WC offset calculation; these claims totaled $71,524 (Appendix F). From our population of DI claims in which SSA records indicated a WC offset started between January 1, 1998 and December 31, 2004, we estimate that:
Table 1 details the sampling and estimation results for the 27 payment errors related to the WC offset.
Table 1: Summary of Sampling and Estimation Results for WC Related Errors
Error Category |
Sample – Error Claims |
Estimate to Population |
||
Claims |
Dollars |
Claims |
Dollars |
|
19 |
$118,386 |
17,858 |
$111,268,016 |
|
Overpayments |
8 |
$40,204 |
7,519 |
$37,786,614 |
Totals |
27 |
$158,590 |
25,377 |
$149,054,630 |
Also, 18 of the 43 claims had payment errors that continued after December 2004. Based on this error rate, we estimate that approximately 16,918 claims had payment errors totaling about $83.1 million that may have continued through the 12-month period ended December 2005. The continuing payment errors for the 18 claims are summarized in Appendix G.
As in past audits, we determined that most of the payment errors resulted from human error. For example, we noted that SSA personnel did not always verify the amount of WC payments made to the DI beneficiary by the State or insurance carrier. This information is essential in calculating the amount to be offset. Additionally, we continued to note that SSA personnel misinterpreted or incorrectly applied the amount of WC payments to the offset calculation. Finally, we identified instances in which SSA personnel calculated the offset amount correctly but made other errors when processing the claims. Based on the continuing payment error rate and complexity of these claims, we believe SSA should explore all possible avenues, including additional legislation, to simplify and automate this process.
DISABILITY INSURANCE CASE PAYMENT ERRORS
Of the 250 randomly selected DI claims with a WC offset, 43 (17 percent) had
payment errors totaling $230,114. Of these 43 claims, 27 had payment
errors totaling
$158,590 that were related to the WC offset calculation. The remaining
16 payment error claims had DI processing errors unrelated to the WC offset
calculation. The total payment error for these 16 claims was $71,524.
PAYMENT ERRORS RELATED TO THE WC OFFSET
Of the 27 claims with payment errors related to the WC offset, 23 errors resulted from mistakes in processing the WC offset calculation. The remaining four errors occurred because SSA staff did not verify WC benefits paid to the SSA DI beneficiary.
Processing Mistakes Related to the WC Offset Calculation
In 23 claims, SSA personnel made mistakes in processing the WC offset calculations that resulted in payment errors. The payment errors for the 23 claims totaled $140,225: 15 claims resulting in $100,021 in underpayments and 8 claims resulting in $40,204 in overpayments. Of the 23 payment error claims, 11 had payment errors that continued past our audit period. For these 11 claims, the monthly payment errors that continued into January 2005 totaled $4,448 or about $404 per case.
In general, we determined the payment errors occurred because SSA personnel
Table 2 identifies the payment errors directly related to mistakes in processing
the WC offset.
Table 2: Processing Error Related to the WC Offset Calculation
|
Error Description |
Payment Errors |
Payment Error Dollars |
||
|
Over-Payments |
Under-Payments |
Total Errors |
||
Incorrect WC Data (amount and frequency) Applied |
13 |
$35,040(6) |
$56,012(7) |
$91,052 |
|
2 |
Lump Sum Settlement Prorated Incorrectly |
2 |
-- |
$8,261(2) |
$8,261 |
3 |
2 |
-- |
$925(2) |
$925 |
|
4 |
Beneficiary Not Switched to Retirement Benefits |
2 |
$3,475 |
$3,546 |
$7,021 |
5 |
Reverse Offset not Recognized |
1 |
-- |
$12,838 |
$12,838 |
6 |
WC Offset Incorrectly Applied to Auxiliary Beneficiaries |
1 |
$12,360 |
$12,360 |
|
7 |
WC Attorney Fee Applied Incorrectly |
1 |
-- |
$6,079 |
$6,079 |
8 |
WC Offset Stopped Early |
1 |
$1,689 |
-- |
$1,689 |
|
TOTALS |
23 |
$40,204 |
$100,021 |
$140,225 |
Note: The numbers shown in ( ) indicate the number of payment error claims comprising the total dollar payment error amount. |
SSA overpaid one beneficiary $8,527 because personnel incorrectly applied WC data received from the insurance carrier. In this case, the DI beneficiary was paid on two WC claims—one claim through a lump sum payment and the other through weekly payments. SSA correctly applied the lump sum benefits but did not include the $244 weekly WC benefits in the offset calculation.
In another example, we identified an underpayment of more than $3,500. The
underpayment occurred because SSA applied a WC offset to the DI benefit when
the beneficiary should have been receiving reduced Retirement Insurance Benefits
(RIB). According to the
MBR, the beneficiary elected early reduced RIB in April 1996 in place of DI
benefits (subject to a WC offset). However, SSA continued to pay offset
DI benefits, resulting in a large underpayment.
We understand that interpreting the myriad of State WC benefits data may be
difficult for SSA personnel processing a WC claim. Although most States
maintain information regarding the status of WC claims, detailed settlement
and benefit payment information is usually maintained by the employer’s
insurance carrier. The insurance carrier’s WC information is often
only available to SSA in paper record, and the format varies by insurance carrier. Further,
obtaining hard copy WC data from a multitude of insurance carriers can be tedious,
and the timely receipt of information depends on the responsiveness of the
insurance carriers.
As stated earlier, the proper interpretation and application of this information are essential in calculating a correct WC offset. Given the complexity of this process and the continuing error rate in WC claims, we encourage SSA to explore alternate methods for obtaining, standardizing and applying State WC information.
Payment Errors Occurred Because SSA Personnel Did Not Always Verify
WC Benefits
In 4 of the 27 payment error claims, the errors occurred because SSA did not verify WC benefits paid by the State or insurance carrier. The payment errors for these four claims resulted in $18,365 in underpayments.
Critical components of the WC offset calculation are the amount of WC benefits paid by the State or insurance carrier and whether they are paid weekly, bi‑weekly, or monthly. If SSA personnel apply incorrect WC data in the offset calculation, a payment error is likely to occur. The most reliable way of ensuring the accuracy of WC data is to obtain independent proof of the WC data from the insurance carrier administering the claim.
In March 2006, SSA issued a policy requiring that personnel permanently retain all proof of State WC benefits or public disability benefits (PDB) in the official claims folder. Prior SSA policy required that SSA staff verify WC benefits but did not specify where the proof should be maintained. This policy also required that staff processing claims enter relevant WC information in SSA systems. Although the prior policy did not require that staff maintain proof of WC benefits, in practice, WC proofs were often maintained in either the beneficiary’s case folder or the paperless system.
For 109 (43 percent) of the 250 claims reviewed, we did not locate independent proof of the WC benefits in SSA’s case folder or on the paperless system. For many of these claims, WC data were recorded on the MBR. Presumably, these data (WC payment amount and frequency) were obtained from documentation provided by the DI beneficiary, State or insurance carrier when SSA staff calculated the WC offset. For 19 (17 percent) of the 109 claims, SSA staff annotated on the MBR that the WC data used to calculate the offset were not proven. We obtained proof of the WC benefit data for all but 2 of the 19 claims and determined that 4 had reportable underpayment errors. SSA representatives reviewed the four claims and agreed that these errors existed. Table 3 details the four underpayment claims caused by SSA personnel’s use of unverified WC data.
Table 3: Incorrect WC Benefit Data Resulted in Under-Payment Errors
|
Payment Error |
SSA’s WC Data |
OIG’s Verified WC Data |
||
WC Amount |
WC Frequency |
WC Amount |
WC Frequency |
||
1 |
$10,601 |
$550 |
Weekly-Ongoing |
$187 |
Weekly-Ending 6/13/2003 |
2 |
4,407 |
$536 |
Weekly |
$424 |
Weekly |
3 |
1,728 |
$932 |
Monthly |
$606 |
Monthly |
4 |
1,629 |
$193 |
Weekly |
$129 |
Weekly |
|
$18,365 |
Total Under-Payment Errors |
In the first case, we identified a $10,601 underpayment that occurred because
SSA used a $550 weekly WC benefit amount to calculate the beneficiary’s
offset. The
$550 weekly amount was the State of Kentucky’s maximum WC benefit. SSA
used this rate because it did not verify the WC benefits. We obtained
the WC verification for this case and determined the weekly WC benefit was
$187, and the benefits terminated on June 13, 2003. As a result of these
differences, the claimant was underpaid $10,601 from February 2003 through
December 2004 (during our audit period). SSA agreed the beneficiary had
been underpaid and will release the total benefits due the beneficiary through
the time the adjustment was made in April 2006.
At the time of our review, SSA was still paying all four of the claims in
error. The
four claims had continuing underpayment errors that ranged from $74 to $513
per month. Had we not identified the payment errors, the beneficiaries
would likely continue to be underpaid until a significant life event occurred
that would have caused SSA to reevaluate the claims.
PROCESSING MISTAKES NOT RELATED TO THE WC OFFSET
CALCULATION RESULTED
IN PAYMENT ERRORS
Sixteen of the 43 payment errors resulted from processing mistakes unrelated to the WC offset calculation. The payment errors for the 16 claims totaled $71,524. Of the 16 payment error claims, 3 continued beyond our audit period. For the three claims, the total monthly payment error that continued into January 2005 was $1,691, or on average about $563 per case.
SSA’s automated systems typically process monthly DI payments. However, when SSA’s automated or direct input systems cannot completely process an action, authorized technicians at SSA’s PSCs mustmanually process the action. For example, authorized PSC employees may process actions that include initiating payment of DI benefits, disbursing attorney fees from benefit payments, recording overpayments, terminating benefits, and updating or correcting information on the MBR (which may alter the monthly benefit amount).
Examples of the processing mistakes we identified follow.
Table 4 details the payment errors caused by processing mistakes that were
not related to the WC offset calculation
Table 4: Processing Errors NOT Related to the WC Offset Calculation
We determined SSA underpaid one beneficiary $2,722. We agreed with SSA’s WC offset calculation. However, when we compared the total benefits paid to the total benefits owed on the claim, we identified an underpayment error. After reviewing the case, SSA agreed with our analysis and explained the payment error resulted from a benefit authorizer’s mistake that was unrelated to the WC offset calculation.
Also, SSA overpaid a beneficiary $8,656 because the individual’s benefits
were not terminated when he died in February 2004. SSA continued to pay
the beneficiary until December 2004—when it determined the individual
had died. However, SSA personnel did not record an overpayment on the
beneficiary’s MBR. Until we notified the Agency, it did not attempt
to recover any of the overpayment.
CONCLUSION AND RECOMMENDATIONS
We acknowledge the improvements SSA has made in the WC offset process. Most notably, we are encouraged by the Title II Redesign implementation, which automated and simplified some aspects of this process. However, the payment accuracy of DI benefits with a WC offset still depends on decisions and data SSA staff records when processing claims. Paying correct benefit amounts to injured workers is important and is a part of SSA’s goal of providing world-class service and ensuring stewardship of trust fund resources. Accordingly, we remain concerned that the payment error rate is higher than should be acceptable to the Agency. Therefore, we recommend that SSA:
AGENCY COMMENTS AND OIG RESPONSE
The Agency agreed with our recommendations. The full text of the Agency’s comments is included in Appendix H.
Patrick P. O’Carroll, Jr.
Appendices
APPENDIX A – Acronyms
APPENDIX B – Prior Audit Reports
APPENDIX C – Scope and Methodology
APPENDIX D – Sampling Methodology and Results
APPENDIX E – Payment Errors Caused by Workers’ Compensation Offset Processing Mistakes
APPENDIX F – Payment Errors Unrelated to the Workers’ Compensation Offset Calculation
APPENDIX G – Continuing Payment Errors
APPENDIX H – Agency Comments
APPENDIX I – OIG Contacts and Staff Acknowledgments
Appendix A -- Acronyms
DI |
Disability Insurance |
MBR |
Master Beneficiary Record |
OASDI |
Old-Age, Survivors and Disability Insurance |
OIG |
Office of the Inspector General |
POMS |
Program Operations Manual System |
PSC |
Program Service Center |
RIB |
Retirement Insurance Benefits |
SSA |
Social Security Administration |
SSI |
Supplemental Security Income |
U.S.C. |
United States Code |
WC |
Workers’ Compensation |
Appendix B -- Prior Audit Reports
Social Security Administration, Office of the Inspector General Reports Related to Payment Accuracy in Disability Insurance Claims Involving Workers’ Compensation Offsets |
||
Common Identification Number |
Report Title |
Date |
A-04-96-61013 |
Effects of State Awarded Workers’ Compensation Payments on Social Security Benefits |
September 1998 |
A-04-98-62001 |
The Social Security Administration Incorrectly Paid Attorney Fees on Disability Income Cases When Workers’ Compensation Payments Were Involved |
March 2000 |
A-06-03-13022 |
The Social Security Administration’s Workers’ Compensation Data Match with the State of Texas |
April 2003 |
A-08-02-12064 |
Pending Workers’ Compensation: The Social Security Administration Can Prevent Millions in Title II Disability Overpayments |
June 2003 |
A-04-02-21054 |
Title II Disability Insurance Benefits with Workers’ Compensation Underpayment Errors Exceeding $70,000 |
July 2003 |
A-04-03-13042 |
The Social Security Administration’s Clean-up of Title II Disability Insurance Cases with a Workers’ Compensation Offset |
October 2004 |
A-06-05-15024 |
The Social Security Administration’s Match of Disability Insurance Records with Texas Workers’ Compensation Payment Data |
August 2005 |
A-08-05-25132 |
Follow-up of Pending Workers’ Compensation: The Social Security Administration Can Prevent Millions in Title II Disability Overpayments |
September 2005 |
A-04-05-15042 |
Payments Resulting from Disability Insurance Actions Processed via the Social Security Administration’s Manual Adjustment, Credit, and Award Processes |
April 2006 |
A-14-06-16049 |
Implementation of Workers’ Compensation in Title II Redesign Release 3 |
June 2006 |
Appendix C -- Scope and Methodology
We reviewed a random sample of 250 Disability Insurance (DI) claims from a population of 234,968 DI claims in which the Social Security Administration (SSA) indicated a workers’ compensation (WC) offset began between January 1, 1998 and December 31, 2004. Because the offset start date is updated when a change in WC benefits is recorded, our population includes some DI claims with offset beginning before 1998. From our sample, we determined that 93 percent of the DI claims had a WC offset that began between January 1, 1998 and December 31, 2004, and 7 percent of the claims had WC offsets that began before January 1, 1998.
To accomplish our audit objective, we:
For each of the 250 sampled claims, we:
We deemed a WC case to have a reportable error when our review determined that:
All material error claims were forwarded to SSA for review and comment.
The SSA entities reviewed were the Offices of Income Security Programs and Disability Programs under the Deputy Commissioner for Disability and Income Security Programs. The electronic data used for this audit were sufficiently reliable to meet our audit objective. Our tests of internal controls were limited to gaining an understanding of the laws, regulations and polices that govern the processing of DI claims with a WC offset and performing the audit steps identified above. We performed the review in Atlanta, Georgia, and Baltimore, Maryland. We conducted our audit from May 2005 to April 2006 in accordance with generally accepted government auditing standards.
Appendix D -- Sampling Methodology and Results
Sampling Methodology
We reviewed a random sample of 250 Disability Insurance (DI) claims from a
population of 234,968 DI claims in which the Social Security Administration’s
(SSA) records indicated a workers’ compensation (WC) offset began between
January 1, 1998 and December 31, 2004. Because the offset start
date is effected when a change in WC benefits is recorded, some of our population
includes DI claims with offset beginning before 1998. From our sample,
we determined that 93 percent of the DI claims had a WC offset that began between
January 1, 1998 and December 31, 2004, and 7 percent of the claims had
WC offsets that began before January 1,1998. Our dollar payment error
projection was based on the total benefits paid on the 250 sampled items
during the 6-year period January 1, 1998 through December 31, 2004. We
made all projections at the 90-percent confidence level.
Sampling Results
Estimation of Payment Errors—DI Claims With a WC Offset Calculation
Error (January 1, 1998 through December 31, 2004)
Projections of Attribute Appraisals: DI Claims With a WC Offset Calculation Error |
|
Attribute Appraisal Projections |
|
Population and Sample Data |
Number of Claims |
Total Population |
|
Sample Size |
250 |
Payment Errors Resulting in an Underpayment |
19 |
Payment Errors Resulting in an Overpayment |
8 |
Projection to Population – Underpayments |
Number of Claims |
Lower Limit |
11,830 |
Point Estimate |
17,858 |
Upper Limit |
|
Projection to Population – Overpayments |
Number of Claims |
Lower Limit |
3,765 |
Point Estimate |
7,519 |
Upper Limit |
13,390 |
Projections of
Variable Appraisals: |
|
Variable Appraisal Projections |
|
Population and Sample Data |
Dollar Value of Claims |
Sample |
$9,351,517 |
Total DI claims Involving a WC offset with a Payment Error |
$158,590 |
Payment Errors Resulting in an Underpayment |
$118,386 |
Payment Errors Resulting in an Overpayment |
$40,204 |
Projection to Population – Underpayments |
Dollar Value of Claims |
Lower Limit |
$49,644,626 |
Point Estimate |
$111,268,016 |
Upper Limit |
$172,891,405 |
Projection to Population – Overpayments |
Dollar Value of Claims |
Lower Limit |
$12,397,025 |
Point Estimate |
$37,786,614 |
Upper Limit |
$63,176,203 |
DI Claims With Payment Errors Unrelated to the WC Offset Calculation
(January 1, 1998 through December 31, 2004)
DI Claims With Payment Errors Unrelated to the WC Offset Calculation |
|
Attribute Appraisal Projections |
|
Population and Sample Data |
Number of Claims |
Total Population |
234,968 |
Sample Size |
250 |
Payment Errors |
16 |
Projection to Population |
Number of Claims |
Lower Limit |
9,530 |
Point Estimate |
15,038 |
Upper Limit |
22,456 |
Variable Appraisal Projections |
|
Population and Sample Data |
Dollar Value of Claims |
Sample |
$9,351,517 |
Total DI Claims With Payment Errors Unrelated to the WC Offset |
$71,524 |
Projection to Population |
Dollar Value of Claims |
Lower Limit |
$26,295,266 |
Point Estimate |
$67,223,696 |
Upper Limit |
$108,152,127 |
Estimation of DI Claims Involving a WC Offset that Had Continuing Payment Errors during the Period January through December 2005
We determined that 18 claims had payment errors that continued after
December 31, 2004. We believe the payment errors would have likely continued
had we not identified them, or a significant event occurred that would have
caused SSA to review the claims. Therefore, we conservatively estimated
that the payment errors would have continued, on average, for at least 12 months
after our audit period. Our estimate was based on two factors:
Projections of
Attribute Appraisals: |
|
Attribute Appraisal Projections |
|
Population and Sample Data |
Number of Claims |
Total Population |
234,968 |
Sample Size |
250 |
Claims With a Continuing Payment Error |
18 |
Projection to Population |
Number of Claims |
Lower Limit |
11,057 |
Point Estimate |
16,918 |
Upper Limit |
24,645 |
1-Year Estimate — DI
Claims Involving a WC Offset With Continuing |
|
Sample Results |
|
Total Continuing Payment Errors for January 2005 |
$7,372 |
Projection to Population |
Dollar Value of Claims |
Lower Limit |
$3,408,914 |
Point Estimate |
$6,928,736 |
Upper Limit |
$10,448,559 |
Estimated Payment Error for the 12-Month Period January through December 2005 (Based on Point Estimate) |
$83,144,832 |
Appendix E -- Payment Errors Caused by Workers’ Compensation Offset Processing
Mistakes
|
Error Description |
Under- Payment |
Over- |
1. |
Applied Incorrect Workers Compensation (WC) Data |
$28,971 |
-- |
2. |
Reverse Offset Error |
$12,838 |
-- |
3. |
Applied Incorrect WC Data |
$12,377 |
-- |
4. |
Inappropriately Offset Auxiliaries |
$12,360 |
-- |
5. |
WC Offset Based on Unverified WC Benefits |
$10,601 |
-- |
6. |
Applied Incorrect WC Data |
-- |
$8,527 |
7. |
Applied Incorrect WC Data |
$8,402 |
-- |
8. |
Applied Incorrect WC Data |
-- |
$8,257 |
9. |
Applied Incorrect WC Data |
-- |
$7,937 |
10. |
Applied Incorrect WC Data |
-- |
$6,890 |
11. |
Lump Sum Proration Error |
$6,595 |
-- |
12. |
WC Attorney Fees were Incorrectly Applied |
$6,079 |
-- |
13. |
WC Offset Based on Unverified WC Benefits |
$4,407 |
-- |
14. |
Beneficiary Elected Early Retirement Insurance Benefits |
$3,546 |
-- |
15. |
Beneficiary Elected Early Retirement Insurance Benefits |
-- |
$3,475 |
16. |
Applied Incorrect WC Data |
$3,343 |
-- |
17. |
Applied Incorrect WC Data |
-- |
$2,501 |
18. |
WC Offset Based on Unverified WC Benefits |
$1,728 |
-- |
19. |
WC Offset Stopped too Early |
-- |
$1,689 |
20. |
Lump Sum Proration Error |
$1,666 |
-- |
21 |
WC Offset Based on Unverified WC Benefits |
$1,629 |
-- |
22. |
Applied Incorrect WC Data |
$1,283 |
-- |
23. |
Applied Incorrect WC Data |
-- |
$928 |
24. |
Applied Incorrect WC Data |
$907 |
-- |
25. |
Applied Incorrect WC Data |
$729 |
-- |
26. |
Triennial Not Performed |
$517 |
-- |
27. |
Triennial Not Performed |
$408 |
-- |
|
TOTALS |
$118,386 |
$40,204 |
|
TOTAL UNDER & OVERPAYMENTS |
$158,590 |
Appendix F -- Payment Errors Unrelated to the Workers’ Compensation Offset
Calculation
|
Error Description |
Under-Payment |
Over-Payment |
1. |
Supplemental Security Income Windfall Offset Processed Incorrectly |
$20,810 |
-- |
2. |
Supplemental Security Income Windfall Offset Processed Incorrectly |
$9,183 |
-- |
3. |
Failure to Post Overpayment |
-- |
$8,656 |
4. |
Attorney Fee Error |
-- |
$5,839 |
5. |
Attorney Fee Error |
-- |
$5,300 |
6. |
Total Benefits Paid were More than Total Benefits Due |
-- |
$4,686 |
7. |
Total Benefits Paid were Less than Total Benefits Due |
$2,790 |
-- |
8. |
Incorrect Initial Award |
$2,765 |
-- |
9. |
Total Benefits Paid were Less than Total Benefits Due |
$2,722 |
-- |
10. |
Total Benefits Paid were Less than Total Benefits Due |
$2,497 |
-- |
11. |
Total Benefits Paid were Less than Total Benefits Due |
$1,941 |
-- |
12. |
Total Benefits Paid were Less than Total Benefits Due |
$1,686 |
-- |
13. |
Total Benefits Paid were Less than Total Benefits Due |
$1,039 |
-- |
14. |
Benefits Not Adjusted for Non-Routine Payments |
-- |
$644 |
15. |
Total Benefits Paid were Less than Total Benefits Due |
$584 |
-- |
16. |
Total Benefits Paid were Less than Total Benefits Due |
$382 |
-- |
|
Total |
$46,399 |
$25,125 |
|
TOTAL UNDER & OVERPAYMENTS |
$71,524 |
Appendix G -- Continuing Payment Errors
Eighteen of our 43 (41 percent) payment error claims had a payment error that occurred during our audit period and continued after December 2004. We believe the payment errors would have likely continued had we not identified them, or a significant event occurred that would have caused SSA to review the claims. The claims with continuing payment errors are summarized below.
Payment Errors Continuing After December 2004
|
Error Description |
Number of Continuing Payment Errors |
Total Dollar Payment
Error |
|
1 |
Incorrect Workers’ Compensation (WC) Data (amount and frequency) Applied |
6 |
$1,728 |
|
2 |
No Verification |
4 |
$1,233 |
|
3 |
Total Benefits Paid Did Not Agree to Total Benefits Paid |
3 |
$1,691 |
|
4 |
Triennial Redetermination Not Performed |
2 |
$660 |
|
5 |
Beneficiary Not Switched to Retirement Benefits |
1 |
$1,447 |
|
6 |
WC Offset Incorrectly Applied to Auxiliary Beneficiaries |
1 |
$330 |
|
7 |
WC Offset Stopped Early |
1 |
$283 |
|
|
TOTALS |
18 |
$7,372 |
Appendix H --
Agency Comments
MEMORANDUM |
Date: |
November 6, 2006 Refer |
Refer To: S1J-3 |
To: |
Patrick P. O'Carroll, Jr. |
From: |
Larry W. Dye /s/ |
Subject: |
Office of the Inspector General (OIG) Draft Report, "Title II Disability Insurance Benefits with a Workers' Compensation Offset" (A-04-05-15133) – INFORMATION |
We appreciate OIG’s efforts in conducting this review. Our comments on the draft report content and recommendations are attached.
Let me know if we can be of further assistance. Staff inquiries may
be directed to
Ms. Candace Skurnik, Director, Audit Management and Liaison Staff on extension
54636.
Attachment:
SSA Response
COMMENTS ON THE OFFICE OF THE INSPECTOR GENERAL (OIG) DRAFT REPORT, "TITLE II DISABILITY INSURANCE BENEFITS WITH A WORKERS' COMPENSATION OFFSET" (A-04-05-15133) -- INFORMATION
Thank you for the opportunity to review and comment on the draft report.
The workers’ compensation (WC) workload, although a very small workload compared to other SSA workloads, has always been complex and challenging. Over the past several years, SSA has made great strides in improving the accuracy of the computations. Much of the improvement is a result of Title 2 redesign enhancements that automated and simplified some aspects of this process. The payment accuracy of DI benefits with a WC offset is impacted greatly by the quality and timeliness of the data supplied by the States. Although we presume this data to be accurate, we frequently find ourselves re-verifying cases and getting different information that results in underpayments and/or overpayments. This, in conjunction with human error, when transmitting information into the system, contributes to a number of errors related to this workload. We continue to remind employees on the WC processes and have recently started gathering data that will be used to provide refresher training to the technicians.
Our specific responses to the report's recommendations are provided below.
Recommendation 1
Support legislation that would simplify and standardize the WC offset calculation.
Response:
We agree. A standardized calculation would make it easier for the Agency to train technicians to do this work accurately, without having to teach different calculations to selected groups. Further, management's ability to reassign work/resources as needed would be greatly enhanced due to the decreased need for the specialized abilities of the technicians. Accordingly, we strongly support legislation that would simplify and standardize WC offset calculations. There is currently a proposal in the President’s Fiscal Year 2007 Budget that would simplify WC offset for all new beneficiaries by imposing offset at a flat percentage of benefits for a limited 5-year period.
Recommendation 2
Work with States to standardize the format used to report WC benefits to SSA.
Response:
We agree. Standardizing the reporting of WC benefits information would simplify processing. However, it would be difficult to facilitate a national format that all States would follow for obvious reasons, not the least of which would be the financial investment required from the States to update and maintain the information.
Recommendation 3
Continue to explore electronic data exchanges with the States that maintain automated WC databases.
Response:
We agree. Such exchanges would allow for an expeditious transfer of data to the Agency. Time spent by technicians trying to obtain accurate WC information would be reduced along with the processing time of these cases. In addition, the level of accuracy in processing these cases would improve due to the availability of the most recent WC data.
Recommendation 4
Determine whether assigning WC offset claims only to technicians specialized in this workload would be cost-effective and improve payment accuracy.
Response:
We agree in part. The Agency has already looked at the ramifications of specialization of the WC offset workloads. At the current staffing levels and given the amount of other priority workloads and service levels to maintain, it would be difficult to dedicate a specialized group of technicians for this workload. However, we would be willing to reevaluate the issue in the future as part of our ongoing efforts to improve our stewardship of the program.
Many WC offset actions, both for initial disability claims and in post-entitlement situations, are processed in our field offices and, with current resource constraints, specialization would not be cost-effective. Assigning all WC offset actions to a specific claims representative or technical expert would be difficult in field offices due to staffing and other workload concerns. However, we will continue to monitor field office inputs to determine specific training needs.
On the other hand, in our processing centers, specialization has already occurred in targeted reviews of WC offset cases. Along with that specialization, technicians are provided continuous refresher training and feedback to ensure a continued improvement in payment accuracy.
Recommendation 5
Increase management oversight of the WC offset calculation, including the verification of WC benefits.
Response:
We agree. In addition to the increase of technical reviews of WC offset cases, as noted in our comments to recommendation 4, we have established a website that allows for continual monitoring by management the ongoing payment accuracy of these cases.
In addition, several of our processing centers worked together to create a national project to conduct weekly random quality reviews of current cases involving WC/Public Disability Benefit offset. These processing centers have developed an application that will standardize the way they evaluate the quality of this workload and identify error-prone case characteristics. We will use this information to determine training needs for technical staff and reduce the number of deficiencies in this critical workload.
Appendix I -- OIG Contacts and Staff Acknowledgments
Kimberly A. Byrd, Director (205) 801-1605
Frank Nagy, Audit Manager (404) 562-5552
Acknowledgments
In addition to those named above:
Valerie Ledbetter, Auditor
Shane Henley, Auditor
Brennan Kraje, Statistician
Kimberly Beauchamp, Writer-Editor
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 Specialist
at (410) 965-3218. Refer to Common Identification Number
A-04-05-15133.
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-- FOOTNOTES FOLLOW --
See SSA Program Operations Manual System (POMS), DI 520: Workers’ Compensation/Public Disability Benefit (WC/PDB) Offset.
These “reverse offset” States are California, Colorado, Florida, Louisiana, Minnesota, Montana, Nevada, New Jersey, New York, North Dakota, Ohio, Oregon, Washington and Wisconsin. SSA, POMS DI 52001.080(3)(a).
SSA establishes an MBR for each DI claimant. The MBR maintains pertinent information needed to accurately pay benefits to the claimant and all entitled dependents. The information maintained includes identification data (name, Social Security number, date of birth, address), earnings history, type and date of disability, monthly DI benefit amounts, and the reason for terminating or suspending benefit payments. Thus, any change in a claimant’s or dependent’s situation must be reflected on the MBR to ensure its integrity and the accuracy of benefit payments.
A lump sum settlement represents all the remaining WC payments due the disabled worker. The lump sum award must be prorated to determine the amount and length of time to offset the beneficiary’s Title II DI benefits.
To protect against inflation, SSA is required to redetermine the beneficiary’s average current earnings for those workers who had a WC/PDB offset. The triennial redetermination should be made when Title II DI benefits have been offset for 3 consecutive years because of WC payments. A triennial redetermination can result in increased benefits since the average current earnings—a component of the offset calculation—are recalculated using a ratio adjusted for inflation.
When a DI beneficiary is age 62 to 64 and their WC offset is ongoing, the beneficiary may elect to receive RIB. The election may occur when the reduced monthly RIB exceeds the monthly DI benefits (after WC offset). Once the early RIB is elected, the reduced RIB continues after full retirement age.
POMS, DI 52001.150.
Overview of the Office of the Inspector General
The Office of the Inspector General (OIG) is comprised of our Office of Investigations
(OI), Office of Audit (OA), Office of the Chief Counsel to the Inspector General
(OCCIG), and Office of Executive Operations (OEO). To ensure compliance with
policies and procedures, internal controls, and professional standards, we also
have a comprehensive Professional Responsibility and Quality Assurance program.
Office of Audit
OA conducts and/or supervises 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 and program evaluations and projects on
issues of concern to SSA, Congress, and the general public.
Office of Investigations
OI conducts and coordinates investigative activity 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 OIG liaison to the Department of
Justice on all matters relating to the investigations of SSA programs and personnel.
OI also conducts joint investigations with other Federal, State, and local law
enforcement agencies.
Office of the Chief Counsel to the Inspector General
OCCIG provides independent legal advice and counsel to the IG on various matters,
including statutes, regulations, legislation, and policy directives. OCCIG 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.
Finally, OCCIG administers the Civil Monetary Penalty program.
Office of Executive Operations
OEO supports OIG by providing information resource management and systems security.
OEO also coordinates OIG's budget, procurement, telecommunications, facilities,
and human resources. In addition, OEO is the focal point for OIG's strategic
planning function and the development and implementation of performance measures
required by the Government Performance and Results Act of 1993.