More great news: Social Security overpaid nearly half the people on disability

This is probably a good time to recall that Social Security is on the verge of reaching the point where it will continually need to pay out more than it takes in. That’s already happened a few times, but it will soon become a permanent feature under current rules and conditions. Estimates of how long the “trust fund” will last (even with reduced benefits) vary, but there’s an event horizon out there waiting for us. (And yes, the term “trust fund” belongs in scare quotes because even Alan Greenspan recently admitted that there’s never been an actual trust fund. Just a pile of underrated IOUs.) At the same time, the pool of money for disability payments will run dry next year.


With all of that in mind, you’d think the administrators of the system would be watching every penny like a hawk. Unfortunately, it seems you would be mistaken.

Social Security overpaid nearly half the people receiving disability benefits over the past decade, according to a government watchdog, raising questions about the management of the cash-strapped program.

In all, Social Security overpaid beneficiaries by nearly $17 billion, according to a 10-year study by the agency’s inspector general.

Many payments went to people who earned too much money to qualify for benefits, or to those no longer disabled. Payments also went to people who had died or were in prison.

Social Security was able to recoup about $8.1 billion, but it often took years to get the money back, the study said.

“Every dollar that goes to overpayments doesn’t help someone in need,” said Sen. Chuck Grassley, R-Iowa. “Given the present financial situation of the Social Security Disability Insurance trust fund, the program cannot sustain billions of dollars lost to waste.”

For their part, the administration is saying that they get it right most of the time.

“Social Security provides services to over 48 million retirement and survivors beneficiaries and about 15 million disability beneficiaries,” Social Security spokesman Mark Hinkle said in an email. “The agency will issue nearly $1 trillion in payments this year. For fiscal year 2013 — the last year for which we have complete data — approximately 99.8 percent of all Social Security payments were free of overpayment, and nearly 99.9 percent were free of underpayment.”


Actually, if it were really a 99.9 percent success rate, that would be pretty hard to argue with. But it’s rather hard to square that claim with the numbers coming out of the waste, fraud and abuse reports. By the same token, it’s worth remembering that when you’re handing out a trillion dollars per year to tens of millions of people you don’t need to miss all that often before the mistakes add up well into the billions.

This report brings the focus away from the entire Social Security system as a whole and onto the disability payments which are sent out. The total overpayment figures seem to have shot up, but not because they’re making mistakes more often. There are just a lot more people collecting disability than they had originally anticipated. This is a fairly recent phenomenon which began to seriously swell at the height of the economic crisis.

The New York Post reported Sunday that as unemployment checks run out, many jobless are trying to gain government benefits by declaring themselves unhealthy.

More than 10.5 million people — about 5.3 percent of the population aged 25 and 64 — received disability checks in January from the federal government, the Post wrote, a 18 percent jump from before the recession.

Among those claiming disability, 43 percent are asking for benefits because of mental illness, the Post wrote. A growing number of those people are older, former white-collar workers.

By way of contrast, this seemingly bungling bureaucratic behemoth often manages to make life a living hell for people with legitimate needs. I can personally speak to the case of a very good friend of mine who has a family member who was struck with an incontrovertibly permanent and serious disability brought about by a potentially fatal medical condition. And yet the system manages to appear like clockwork roughly every 24 months demanding renewed proof that they are “still disabled.” In that case, the amount of money in question is something of a pittance because the patient was disabled at an early age after only having worked a few years, yet they seem to be watching those pennies very closely.


The question which isn’t answered in these figures is how many people who went on disability after their unemployment ran out were truly disabled? And once they got on the system, how many of them came back off after the jobs situation began to improve? There are clearly people out there in need of disability support, such as the case I described above, and the system provides an important safety net for them. But we’ve seen far too many instances of fraud among recipients of benefits to pretend that the bogus ones we’ve seen are isolated incidents. The pool is being drained pretty quickly here and something is going to have to change in the very near future. (If only someone had warned us years ago. #sigh )

Here’s an idea. One of the easier changes they could start with is to invest in more investigative resources using their massive government employee payroll and cut out the remaining waste and fraud. While doing their investigations, they could create some sort of code for those with obviously permanent disabilities and stop wasting time chasing them every couple of years. Between those two adjustments they could likely find more legitimate fraud and save money in the long run. We can save the battle over changes to the program until the wolves are truly at the door I suppose.

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