The Social Security Administration spent more to recover certain low-dollar Old-Age, Survivors, and Disability Insurance overpayments than the amounts it ultimately recovered, according to a recent audit performed by SSA's internal Office of the Inspector General.
The audit, Follow-up on Cost-benefit Analysis of Processing Low-dollar Overpayments, reviewed SSA's efforts to implement prior recommendations related to capturing the average cost of collecting overpayments and determining whether additional actions could improve the processing of low-dollar overpayments.
For the current audit, OIG states that it reviewed a sample of 250 low-dollar OASDI overpayments and found SSA took collection actions on 50 cases that auditors determined were not cost-beneficial because collection efforts likely exceeded the overpayment amounts.
Auditors estimated SSA spent approximately $14,492 attempting to recover these 50 overpayments, which totaled $8,129, according to the audit report.
"Projected across the broader population, OIG estimated SSA spent approximately $4.6 million to recover nearly 16,000 low-dollar OASDI overpayments totaling about $2.6 million — roughly $2 million more than the Agency could recover," the report states.
"The OIG report's recommendations, that SSA should stop trying to collect SSI (and OASDI) overpayments when they are so small that it costs more for the agency to collect them than they would recover, are the least that should be done," Nancy Altman, president of Social Security Works, told ThinkAdvisor Thursday in an email.
"The reform that really needs to happen is much larger: Congress should pass the SSI Restoration Act, which would update and simplify SSI," Altman said. "Among the many benefits of this bill is that it would make overpayments even less frequent than they already are."
Martha Shedden, president and co-founder at the National Association of Registered Social Security Analysts, said in another email Thursday that she agrees I with OIG's conclusion that "SSA should not pursue recovery of overpayments when it is not cost beneficial to do so."
In the case of OASDI, "the SSA has relevant data on the cost/benefit to processing these low-dollar overpayments, but this is not available for similar SSI overpayments and SSA should determine this relevant cost information," Shedden said.
"The SSA did not act on the OIG recommendations from their July 2015 audit and should be held accountable to now taking the necessary steps to create the system for analyzing the SSI cost/benefit data," Shedden continued. "Hopefully SSA will be able to see a better use of resources and potential cost savings by following the audit's recommendations."
The OIG told SSA to take the following steps:
— Ensure consistency in methodologies used to calculate the average cost of processing overpayments;
— Take appropriate actions on identified low-dollar overpayments that are not cost-beneficial to pursue; and
— Update agency policy to establish criteria employees should use to determine when collection actions are not cost-beneficial.
SSA agreed to implement the recommendations, OIG said.
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