Social Security makes $8B in improper payments

WASHINGTON (AP) - The Social Security Administration made $6.5 billion in overpayments to people not entitled to receive them in 2009, including $4 billion under a supplemental income program for the very poor, a government investigator said Tuesday.

In all, about 10 percent of the payments made by the agency's Supplemental Security Income program were improper, said Patrick P. O'Carroll Jr., the inspector general for Social Security. The program has strict limits on income and assets, and most of the overpayments went to people who did not report all their resources, O'Carroll said.

Error rates were much smaller for retirement, survivor and disability benefits, which make up the overwhelming majority of Social Security payments, O'Carroll told a congressional panel.

"By any standard, the scope of these problems is considerable," said Rep. Charles Boustany, R-La., chairman of the House Ways and Means Oversight subcommittee. "Regardless of whether a payment occurs because of simple error or outright fraud, improper payments harm Social Security programs in the long term, jeopardizing benefits for those who may need them in the future. They also cost taxpayers billions of dollars each year."

Social Security also made nearly $1.5 billion in underpayments, raising the total amount of improper payments to $8 billion in the 2009 budget year, O'Carroll said.

With lawmakers working to reduce soaring budget deficits, efforts to reduce improper government payments are getting attention in Congress and the White House. In 2009, President Barack Obama directed federal agencies to reduce improper payments, and last year, Congress set a goal of reducing the payments by $50 billion by 2012.

Throughout the federal government, improper payments totaled $125 billion last year, up from $110 billion in 2009, O'Carroll said. In 2009, only two other agencies - the Departments of Health and Human Services, and Labor - had more improper payments than Social Security, he said.

On Tuesday, two Ways and Means subcommittees held a joint hearing on overpayments by Social Security. The agency has improved the accuracy of its payments in each of the past three years and is working on more improvements, Carolyn W. Colvin, the agency's deputy commissioner, said at the hearing.

"We pay nearly 60 million Americans who deserve to receive their benefits timely and accurately, and we deliver on that responsibility in nearly all cases," Colvin said. "We are committed to minimizing improper payments and protecting program dollars from waste, fraud and abuse. In keeping with President Obama's vision, we are also open and transparent about our improper payment situation and our efforts to improve that situation."

Colvin said Social Security has been increasing the number of reviews it completes each year to make sure beneficiaries still meet income and medical requirements. The agency also has stepped up the use of technology to make sure recipients don't exceed income or asset limits.

Social Security's finances face regular scrutiny because the trust funds that support the massive retirement and disability program are projected to run out of money by 2036, unless Congress acts to shore up the program. At that point, Social Security would collect enough in payroll taxes to pay about 75 percent of benefits.

Social Security administers the Supplemental Security Income program, but it is financed separately, by the government's general revenues. Reducing overpayments by SSI could save taxpayers billions, but it would not affect the finances of the larger retirement and disability programs.

About 99.5 percent of all retirement and disability payments were accurate in 2009, O'Carroll said. In all, the agency made $660 billion in retirement, survivor and disability payments in 2009, including an estimated $2.5 billion in overpayments and $600 million in underpayments, O'Carroll said.

"While we are justifiably proud of our consistently high accuracy rate for (retirement, survivors and disability) payments, we recognize our responsibility to maintain and improve our performance," Colvin said.

She said policing the Supplemental Security Income program is more difficult because benefits can change each month based on changes in income and living arrangements. To qualify for the program, beneficiaries must be 65 or older, blind or disabled, and have very limited resources.

Couples can own a maximum of $3,000 in assets, including cash, stock, second vehicles and personal property. Homes and primary vehicles are excluded.

In 2009, the Supplemental Security Income program made payments totaling $48.3 billion, including an estimated $4 billion in overpayments and $800 million in underpayments.

O'Carroll said most of the overpayments went to people who didn't report all the property they owned.

Democrats complained that the agency's efforts to reduce overpayments are not adequately funded.

"My colleagues seem to be ignoring the elephant in the room - you get what you pay for," said Rep. Xavier Becerra of California, the top Democrat on the House Ways and Means subcommittee on Social Security. "Today's hearing should really be about examining the reckless and indiscriminate cuts imposed on Social Security's operations which, the evidence shows, could lead to less precision and efficiency in processing claims and benefits for seniors and the disabled."

The current budget for all federal agencies was negotiated by Obama and leaders from both parties in Congress, though many Democrats have been critical of some cuts.