Procedures for Collecting Social Security
Administration/Railroad Retirement Board Combined Benefit Payments
Issued After Death - A-05-95-00017 - 3/13/97
The purpose of our audit was to determine if the Social Security
Administration`s (SSA) share of payments issued after death by
the Railroad Retirement Board (RRB) to combined Retirement, Survivors,
and Disability Insurance (RSDI) and Railroad Retirement (RR) beneficiaries,
were returned to SSA. The death of a combined RSDI and RR beneficiary
often results in the issuance of one or more incorrect payments by
the RRB because the notification of death is not received and posted
until after the cutoff date for submission of the payment tape to
the U.S. Department of the Treasury (Treasury Dept.).
RRB is responsible for identifying and collecting incorrect payments
from the combined beneficiary`s account. RRB is also responsible
for returning RSDI’s share of the combined payments to the Treasury
Dept. for credit to RSDI trust funds. However, SSA and RRB do not
share payment and receivable information on an individual beneficiary
basis. Also, SSA systems account for expected rather than actual
payments made to RSDI/RR combined beneficiaries. As a result, SSA
is unable to determine if combined payments were issued after death,
and what related amounts may be due from the RRB.
We reviewed case records for a random sample of 200 beneficiaries
who were receiving RSDI/RR combined benefit payments which were terminated
due to death during Fiscal Year (FY) 1994. Documentation
at SSA and RRB shows that incorrect payments issued after death were
not always identified and recovered by RRB. As a result, RSDI’s
share of these payments was not returned to RSDI trust funds. Our
projections show that, during FY 1994, RRB issued an estimated
$3.5 million in RSDI benefit payments after death. We estimated
that $391,716 of the $3.5 million was not returned to the RSDI trust
funds. For details of our sample results refer to Appendix A.
We are recommending that SSA:
(1) request RRB calculate and
return to SSA its share of incorrect payments issued during FYs 1994
through 1996 which were not returned to RSDI trust funds, we
estimate the amount of these incorrect payments to be $391,716 for
FY 1994; (2) develop a method of accounting for RSDI payments
issued to SSA/RRB combined beneficiaries; (3) establish an accounts
receivable for RSDI payments due from RRB for incorrect payments
issued after death; and (4) ensure that RSDI beneficiary records
accurately reflect combined benefit payment and collection information.
SSA agreed with our recommendations and stated that the Railroad
Certification (RRCERT) monitoring system, which is part of title
II redesign and scheduled to be implemented by July 1999, would monitor
trust fund transfers between SSA and RRB. In our opinion, the RRCERT
monitoring system may be a long term solution, however, we believe
that SSA should institute an immediate control over transfers of
trust fund monies until such time as the controls envisioned by title
II redesign are operational.
BACKGROUND
The Railroad Retirement Act of 1974 provides that persons eligible
for retirement, survivors, and disability benefits under both the
Railroad Retirement Act and the Social Security Act have their benefits
combined and paid with one check. SSA certifies the amount of SSA
benefits to RRB via a magnetic tape and, as a result, authorizes
RRB to issue the combined check to the beneficiary. The certification
tape only contains payment data for new beneficiaries and those beneficiaries
whose monthly benefit payable amount has changed since the prior
month. The RRB runs this tape to update their beneficiary information
systems.
When a beneficiary receiving a combined benefit check dies,
the RRB requests the Treasury Dept. begin reclamation proceedings
for any incorrect payments that have been identified. When payments
are recovered, RRB initiates the transfer of SSA`s share of
the collected payments to RSDI trust funds. The transfer to SSA
is an aggregate amount. The RRB provides a paper canceled check
listing with the detailed beneficiary information.
In March 1986, a Department of Health and Human Services, Office
of Inspector General report was issued regarding SSA/RRB data transfers.
The report recommended that SSA: (i) establish accounts receivable
controls and reporting requirements to manage the transfer of funds
due SSA from RRB, and (ii) revise policies and procedures
to ensure that transfer of funds data received from RRB are recorded
on beneficiary records. In response, SSA designed the RRCERT system
to address these recommendations. However, neither the system nor
the procedures have been fully implemented.
The audit was conducted in accordance with generally accepted
government auditing standards. The objectives were to determine:
(i) if adequate methods exist to ensure that SSA`s share
of combined benefit payments incorrectly issued after death are
returned to RSDI trust funds, and (ii) whether SSA beneficiary
records accurately reflect combined RSDI/RR payment and collection
transactions.
To achieve our objectives we:
selected a random sample of 200 beneficiaries, who were
receiving combined benefit payments that were terminated due
to death during FY 1994;
Ø reviewed SSA policies and procedures relating to RSDI/RR
combined benefits;
Ø interviewed SSA and RRB personnel responsible for processing
and accounting for combined benefit payments; and
Ø reviewed RSDI and RR beneficiary system records, case folders,
and accounting records.
We conducted our audit at RRB headquarters and the Harold Washington
Social Security Center in Chicago, Illinois, and SSA headquarters
in Baltimore, Maryland. The field work was done from April to December
1995.
RESULTS OF AUDIT
SSA does not have a system to account for payments made to
RSDI/RR combined beneficiaries. Thus, SSA is unable to determine
if RRB accurately identifies, recovers, and returns incorrect payments
issued after death to the trust funds. SSA relies on RRB to: (i) identify
all incorrect payments issued after death, (ii) recover the
incorrect payments issued, and (iii) return SSA`s share
of the payments to the trust funds. Based on our sample results,
RRB has not consistently identified and recovered incorrect payments.
We found that 153 of 200 sampled beneficiaries were incorrectly
issued combined benefit payments after death. These 153 beneficiaries
received 171 incorrect payments totaling $91,125. RRB did
not return SSA`s share of 19 payments to the trust funds.
RRB did not identify and collect 18 of these payments, and 1 payment
was identified but never returned to the SSA trust funds due to
a human error. SSA’s share of the 19 payments not returned
to the trust funds by RRB totaled $10,253. During FY 1994,
we estimate that RRB issued about $3.5 million in RSDI benefits
incorrectly after death, of which $391,716 was not returned to
the trust funds. The remaining 152 (171 less 19) incorrect
payments were identified and collected, and SSA`s share was
returned to the trust funds. As a result of our audit, RRB has
taken action to recover the outstanding payments and return SSA`s
share for the remaining 19 incorrect payments identified in
our sample.
The unidentified and uncollected payments from our sample were
referred to a RRB task force. The task force reviewed the cases
to determine the causes and found that two types of system output
forms used to record death terminations were not properly processed.
RRB responded that it designed an automated system to identify
incorrect payments and overpayments caused by termination of benefits.
RRB implemented the Automated Receivables, Reclamations, and Credits
(ARRC) System in July 1995. This system automatically reviews
all terminations to determine if payments occurred after death.
When payments are identified, the system is designed to: (i) calculate
the overpayment amount, (ii) establish a receivable, (iii) initiate
reclamation, and (iv) record payments or returned checks.
The RRB`s Bureau of Quality Assurance is reviewing the ARRC
System.
The SSA designed a system (RRCERT) to account for all combined
benefit payments issued, including payments issued after death.
The RRCERT system became operational in July 1995, but only
in a modified format. RRCERT was not fully implemented due to other
priority workloads and will not be expanded due to the Title II
Redesign Project. As designed, RRCERT was intended to monitor RRB
disbursements and ensure that SSA`s share was issued correctly.
If a discrepancy existed between SSA and RRB payment data for a
beneficiary, an alert would be produced by the system. The alert
would then be processed to resolve the discrepancy and to update
beneficiary records. However, the modified version of RRCERT is
unable to generate these alerts or monitor the accuracy of payment
information contained on the records for SSA/RRB combined beneficiaries.
1. Request RRB calculate and return to SSA its share of incorrect
payments issued during FYs 1994 through 1996 which
were not returned to the trust funds. For FY 1994, we estimate
this amount to be $391,716.
SSA Comments: We agree and will immediately proceed
to implement necessary billing to RRB for the estimated $391,716
identified in the report as not returned to the SSA trust funds.
2. Develop a monitoring system to account for the transfer
of trust fund monies to and from RRB. The system should identify
beneficiaries who were issued incorrect payments after death.
The system should also identify amounts due from RRB for the
purpose of monitoring credits to the trust funds.
SSA Comments: We agree and are developing the RRCERT
monitoring system, which will be fully implemented as part of the
title II redesign effort scheduled for July 1999. Without the full-scale
RRCERT monitoring system, SSA has no cost-effective means to monitor
trust fund transfers between SSA and RRB. Consistent with an earlier
memorandum to the Chairman of the RRB, dated June 12, 1995, we
believe the more prudent approach is to postpone interim enhancements
to the RRCERT system pending full implementation in the title II
redesign system
OIG Response: The RRCERT monitoring system, which is
part of title II redesign and scheduled to be implemented by July
1999, is a good long-term solution, however, we believe that SSA
should institute an immediate control over transfers of trust fund
monies until such time as the controls envisioned under title II
redesign are operational.
3. Establish an accounts receivable amount due from RRB for
incorrect payments issued after death.
SSA Comments: We agree and will take the necessary steps
to ensure that the monies are returned to the trust fund once RRB
begins to provide information on incorrect payments.
OIG Response: We do not believe that establishing an
accounts receivable based on information provided by RRB will provide
SSA the capability of insuring that the information provided is
complete and accurate.
4. Ensure that SSA beneficiary records accurately reflect
SSA/RRB combined benefit payment and collection information.
SSA Comments: We agree. The issues identified in our
previous comments concerning the title II redesign system also
apply to this recommendation.
OIG Response: As stated above, we believe that SSA should
institute immediate controls to ensure the accuracy of beneficiary
records until such time as the controls envisioned under title
II redesign are operational.
Population: 7,641 beneficiaries receiving SSA/RRB combined
benefit payments terminated due to death during Fiscal Year 1994
Sample Size: 200 beneficiaries
Sample Selection: Random
Characteristics: 1) number and amount of payments issued
after death 2) number and amount of payments not returned to the
SSA trust funds
Number Identifiedin Sample: 1)
171 payments totaling $91,125 were issued after death 2) 19 payments
totaling $10,253 were not returned to the SSA trust funds
Projected Amounts: 1) payments totaling $3,481,431 issued
after death 2) payments totaling $391,716 not returned to the SSA
trust funds
90 Percent Confident Population Meanis Between: 1)
$3,087,404 and $3,875,458 2) $171,704 and $611,728
Appendix C
MAJOR CONTRIBUTORS TO THIS REPORT
Office of the Inspector General
Roger Normand, Acting Director, Program Audits
Ross Anderson, Team Leader
Sheri Fulcher, Senior Auditor
David Markulin, Auditor
Robert Lenz, Auditor
Lisa McAllister, Auditor
www.socialsecurity.gov
