OFFICE OF
THE INSPECTOR GENERAL

SOCIAL SECURITY ADMINISTRATION

SUPPLEMENTAL SECURITY INCOME
RECIPIENTS WITH EXCESS INCOME AND/OR
RESOURCES

July 2008

A-01-08-18022

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: July 23, 2008

To: The Commissioner

From: Inspector General

Subject: Supplemental Security Income Recipients with Excess Income and/or Resources (A-01-08-18022)

OBJECTIVE

Our objective was to determine whether bank data can be used to identify Supplemental Security Income (SSI) recipients who may not be eligible for payments because they have income and/or resources that exceed the allowable limitations set by the Agency.

BACKGROUND

SSI is a nation-wide, Federal cash assistance program administered by the Social Security Administration (SSA) that provides a minimum level of income to financially needy individuals who are aged, blind or disabled. No individual shall be considered eligible for SSI payments for any period during which such individual has income or resources that exceed the allowable limit amounts established under The Social Security Act. For example, an unmarried SSI recipient cannot have countable resources exceeding $2,000 in any given month. In addition, relevant information will be verified from independent or collateral sources to ensure such benefits are only provided to eligible individuals and the amounts of such benefits are correct.

SSI recipients are required to report events and changes of circumstances that may affect their eligibility and payment amounts-including changes in income and resources. SSA has implemented several proactive measures to help identify SSI recipients with excess income and/or resources, such as

processing redeterminations periodically-generally every 1 to 6 years-to determine whether recipients are still eligible to receive SSI payments;
conducting a data match with the Internal Revenue Service three times a year to identify non-wage income that was not previously reported to SSA;
contracting with a third-party vendor to assist in retrieving electronic bank data to detect unreported bank accounts; and
testing an automated monthly telephone wage reporting system to reduce unreported changes in wages.

While conducting our audit of Supplemental Security Income Recipients with Automated Teller Machine Withdrawals Indicating They Are Outside the United States (A-01-07-17036), we identified bank statements containing large account balances and/or deposit amounts that appeared to exceed the allowable income/resource limits established by SSA. Consequently, the individuals appeared to be most likely ineligible for and/or overpaid SSI payments. To accomplish our objective, we conducted additional analysis of the bank statements from the same random sample of 250 foreign-born recipients selected for our Foreign ATM audit. For those individuals with large deposit amounts or bank balances, we requested that SSA's Office of Operations contact the recipients to determine whether they were ineligible for, and/or overpaid, SSI. (For additional scope and methodology information, see Appendix B of this report.)

RESULTS OF REVIEW

Based on our sample results, we estimate that overpayments totaling approximately $408.9 million went undetected because about 68,966 recipients did not inform SSA of their changes in income and/or resources. Additionally, we estimate SSA will not detect approximately $169.2 million each year to recipients who have income and/or resources above the maximum allowable amounts, if the Agency does not take action.

From our sample of 250 cases,
17 were verified by SSA to have $100,796 in overpayments due to excess income/resources;
232 were not overpaid due to excess income/resources; and
1 was pending case development with SSA staff as of May 2008.

RECIPIENTS WITH EXCESS INCOME AND/OR RESOURCES

Within our sample, our analysis of 24 months of bank statement data showed that 7 percent of the cases had excess income and/or resources the recipients did not report to SSA. Furthermore, the Agency was able to identify additional months of income and/or resource violations for some of these cases beyond our period of review. These additional overpayments were identified based on personal declarations and additional supporting documentation the Agency received directly from the SSI recipients when reviewing these cases.

For example, SSA had processed a redetermination for an individual in June 2007. During this redetermination, the recipient stated the average balance in her bank account was $3 for the period March 2005 through April 2007, which SSA did not verify. We analyzed the individual's bank statements for the 24-month period of March 2005 through February 2007, which overlapped the similar period the previous redetermination covered. During our review, we found the SSI recipient's bank account had a balance over $2,000 during October 2005 and February 2006, which appeared to violate the maximum allowable resource amount. At our request, SSA attempted to contact the individual again in January 2008 and deemed the person had excess resources during the two periods we identified and was therefore overpaid $1,624. Subsequently, SSA assessed an additional overpayment of $8,588 because of resource violations for the period May 2007 through February 2008, resulting in a total overpayment of $10,212.

Redeterminations

One of SSA's critical tools to detect and prevent SSI overpayments (such as those from excess income and/or resources) is the redetermination. Redeterminations, required by law, are periodic reviews of non-medical factors of SSI eligibility. However, SSA indicated it has had to scale back its redetermination workloads because of budget constraints. As a point of comparison, in Fiscal Year 1997, SSA processed 1.8 million redeterminations, but 10 years later-in Fiscal Year 2007-SSA only processed 1 million redeterminations. SSA plans to process 1.2 million redeterminations in Fiscal Year 2008, a significant increase over Fiscal Year 2007. We believe bank statement data can be a useful tool in identifying those cases in need of a redetermination.

CONCLUSION AND RECOMMENDATION

Despite SSA's efforts to identify income and resource violations, we estimate a substantial number of violations have not been detected, resulting in millions of dollars in overpayments.

SSA relies considerably on individuals self-reporting changes in their financial situations. However, because reporting such events may result in ineligibility for SSI payments, there is little incentive for recipients to report them to SSA. Therefore, we believe SSA should explore alternatives that might help detect unreported income and resources.

Consistent with our analysis and recommendation from the Foreign ATM audit, we recommend that SSA

1. Obtain electronic bank statement information, in the most cost-effective manner, to include bank account summary and transaction-level data so that additional income and resources may be identified and investigated for possible violations.

AGENCY COMMENTS

SSA partially agreed with the recommendation. The Agency is in the planning and analysis phase of a project called Access to Financial Institutions which could potentially enable SSA to obtain and analyze electronic bank data and use it to identify possible income/resource violations. (See Appendix C.)

OIG RESPONSE

Although SSA stated that it "partially agreed" with our recommendation, we believe the Agency's Access to Financial Institutions project is responsive to the intent of our recommendation.

Patrick P. O'Carroll, Jr.

Appendices
APPENDIX A - Acronyms
APPENDIX B - Scope and Methodology
APPENDIX C - Agency Comments
APPENDIX D - OIG Contacts and Staff Acknowledgments

Appendix A
Acronyms

ATM Automated Teller Machine
C.F.R. Code of Federal Regulations
SSA Social Security Administration
SSI Supplemental Security Income
U.S.C. United States Code

Appendix B
Scope and Methodology

To accomplish our objective, we:

Reviewed applicable sections of the Social Security Act and other relevant legislation, as well as the Social Security Administration's (SSA) regulations, rules, policies and procedures.

Used the same population data from the previous audit of Supplemental Security Income Recipients with Automated Teller Machine Withdrawals Indicating They Are Outside the United States (A-01-07-17036). The original population consisted of all 1,014,185 foreign-born, U.S. citizens receiving Supplemental Security Income (SSI) payments via direct deposit as of May 2006. We then sorted the population by count of SSI recipients under each bank institution. See Table 1.

Table 1: Total Population by Bank
Bank Number of Recipients Percent of All Recipients
Bank A 253,696 25
Bank B 118,021 12
Bank C 82,618 8
Bank D 48,734 5
Bank E 45,542 4
Subtotal (Top 5 Banks) 548,611 54
All Other Banks 465,574 46
Total (All Banks) 1,014,185 100

Selected one of the top five banks from our population, Bank D, for further review. For audit purposes, we considered the characteristics and findings observed for Bank D to be representative of any bank providing services to the population of approximately 1 million recipients. Of the 48,734 SSI recipients with direct deposit at Bank D, we selected a random sample of 250 for detailed analysis.

Subpoenaed bank statements on behalf of the 250 cases from Bank D for the period March 2005 through February 2007, pursuant to the Right to Financial Privacy Act. We examined the account balance and transaction history sections of the bank statements and identified any amount(s) that appeared to represent excessive income and/or resources.

Requested that SSA's Office of Operations contact those recipients, who had excess income and/or resources noted on the bank statements, to determine whether they were improperly paid.

We conducted our audit in Boston, Massachusetts, between March and December 2007. We tested the data obtained in our audit and determined them to be sufficiently reliable to meet our objective. The entities audited were SSA's field offices under the Deputy Commissioner for Operations. 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 AND ESTIMATES/PROJECTIONS

Table 2: Population and sample size
All foreign-born, United States citizens receiving SSI payments via direct deposit as of May 2006 1,014,185
Population Size (recipients above with direct deposit at Bank D) 48,734
Percent of recipients with bank accounts at Bank D 5%
Sample Size (recipients sampled from the population of Bank D customers) 250

Table 3: Number of SSI Recipients with Undetected Income and/or Resource Violations Results and Projections to Bank D Estimate in All Banks
Identified in Sample 17
Point Estimate 3,314 68,966
Projection Lower Limit 2,137
Projection Upper Limit 4,881
Note: All projections are at the 90-percent confidence level.

Table 4: Amount of Undetected SSI Overpayments Resulting from Income and/or Resource Violations Results and Projections to Bank D Estimate in All Banks
Identified in Sample $100,796
Point Estimate $19,648,857 $408,904,995
Projection Lower Limit $10,344,610
Projection Upper Limit $28,953,104
Note: All projections are at the 90-percent confidence level.

Table 5: Amount of SSI Overpayments SSA Could Fail to Detect Due to Income and/or Resource Violations Each Year Results and Projections to Bank D Estimate in All Banks
Identified in Sample $41,699
Point Estimate $8,128,675 $169,162,807
Projection Lower Limit $4,211,316
Projection Upper Limit $12,046,035
Note: All projections are at the 90-percent confidence level.

Appendix C
Agency Comments

MEMORANDUM

Date: June 27, 2008

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

From: David V. Foster
Acting Chief of Staff

Subject: Office of the Inspector General (OIG) Draft Report, "Supplemental Security Income Recipients with Excess Income and/or Resources" (A-01-08-18022)-INFORMATION

We appreciate OIG's efforts in conducting this review. Attached is our response to the recommendations.

Please 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, at (410) 965-4636.

COMMENTS ON THE OFFICE OF THE INSPECTOR GENERAL'S DRAFT REPORT, "SUPPLEMENTAL SECURITY INCOME RECIPIENTS WITH EXCESS INCOME AND/OR RESOURCES" (A-01-08-18022)

Thank you for the opportunity to review and provide comments on this draft report. We believe it is important to note that this review was based on the examination of a limited sample of a targeted portion of the Supplemental Security Income (SSI) population (foreign-born, U.S. citizens receiving SSI payments via direct deposit). In our opinion, the results cannot be generalized to the population of SSI recipients overall.

We take the stewardship of the SSI program very seriously. We explore all options for ensuring the integrity of the program, including electronic verification of bank account information when appropriate and cost effective. We have taken proactive steps to detect when SSI recipients have excess income or resources, including implementing data exchanges with the Internal Revenue Service and other government agencies. In addition, as mentioned in the report, we have increased the number of redeterminations we plan to process in fiscal year 2008.

Recommendation 1

Obtain electronic bank statement information, in the most cost-effective manner, to include bank account summary and transaction-level data, so that additional income and resources may be identified and investigated for possible violations.

Comment

We partially agree. We are in the planning and analysis phase of the Access to Financial Institutions (AFI) project. AFI could potentially automate our financial institution verification process. The goal of this project is to have banks provide SSA with "first of the month" account balances on selected individuals so that we can determine if they remain within the resource limits necessary to continue receiving SSI benefits. When fully implemented, we plan to expand the use of the system to field offices nationwide. However, AFI and current business policy do not support transaction-level requests. Including transaction-level detail of bank information would require significant systems changes and additional funding. In addition, we do not believe the transaction-level data is a reliable indicator of excess resources. Relying on this information could result in unproductive leads that would divert field office resources that are already strained. For example, in a joint-account situation, an SSI recipient could have income deposited by a co-owner mistakenly counted as their income. The process of rebutting ownership of these funds is very labor intensive for field office personnel.

Appendix D
OIG Contacts and Staff Acknowledgments
OIG Contacts
Judith Oliveira, Director, Boston Audit Division (617) 565-1765
Jeffrey Brown, Audit Manager (617) 565-1814
David Mazzola, Audit Manager (617) 565-1807
Acknowledgments
In addition to those named above:
Chad Burns, Auditor
Kevin Joyce, IT Specialist

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-01-08-18022.

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.