# Annual Work Plan

Our Annual Work Plan (Plan) outlines our perspective of the top
management challenges facing the Social Security Administration (SSA)
and serves as a tool for communicating our priorities to SSA, the
Congress, the Office of Management and Budget (OMB), and other
interested parties. The activities described address the fundamental
goals related to SSA's mission to administer Social Security programs
and operations effectively and efficiently. Our work is prioritized to
focus our resources on those areas that are most vulnerable to fraud,
waste and abuse. To ensure we provide a coordinated effort, we work
closely with the Offices of Investigations, Chief Counsel to the
Inspector General, and Resource Management.

Our Plan is categorized to mirror the top management challenges that cut
across the Government, as outlined in the President's Management Agenda
(PMA) and rated by OMB's Scorecard.

The PMA was designed to coordinate agency efforts to "address the most
apparent deficiencies and focus resources where the opportunity to
improve performance is the greatest." The PMA's goal is to establish a
more responsible and responsive Government that is citizen-centered,
results-oriented, and market-based. OMB provides each Federal agency a
scorecard rating its performance. The scorecard is designed around a
simple grading system: green for success, yellow for mixed results, and
red for unsatisfactory. Following is the status of SSA's efforts, as
reported by OMB's June 2006 Scorecard.

Subject to budgetary constraints, we plan to complete 105 reviews, begin
97 reviews, and oversee the review of 13 performance indicators in FY
2007 in the following issue areas.

· Social Security Number Protection

· Management of the Disability Process

· Improper Payments and Recovery of Overpayments

· Internal Control Environment and Performance Measures

· Systems Security and Critical Infrastructure Protection

· Service Delivery and Electronic Government

To assist us in this analysis, we cross-walked the PMA, Commissioner
Priorities, Social Security Advisory Board, and Government
Accountability Office (GAO) high-risk areas to those identified by our
prior and ongoing work. The following table demonstrates that our
perspective is congruent with other key decisionmakers.

In preparing this Plan, we solicited suggestions from the Agency. We
received a number of suggestions for inclusion in our Plan, and we have
incorporated as many of them as possible.

We recognize this Plan is dynamic, so we encourage continuous feedback
and additional suggestions. This flexibility enables us to meet emerging
and critical issues evolving throughout the upcoming year.

For more information on this Plan, please contact the Office of Audit at
(410) 965-9700.

# SOCIAL SECURITY NUMBER PROTECTION

# Efforts to Protect the Social Security Number

The Social Security number (SSN) has become a key to social, legal, and
financial assimilation in this country. Because the SSN is so heavily
relied on as an identifier, it is also valuable as an illegal commodity.
Criminals improperly obtain SSNs by (1)false documentation; (2) stealing
another person's SSN; (3)an SSN; (4) using the SSN of a deceased
individual; or (5) contriving an SSN by selecting any nine digits.

To improve controls in its enumeration process, SSA verifies all
immigration documents before assigning SSNs to noncitizens. SSA also
requires mandatory interviews for all applicants age 12 or older
(lowered from age 18) who request an SSN. In addition, SSA has
established Enumeration Centers in Brooklyn and Queens, New York, and
Las Vegas, Nevada, that focus exclusively on assigning SSNs and issuing
SSN cards---and it has plans to open several more, as resources permit.
Finally, in FY 2005, SSA implemented new systems enhancements by
requiring field office use of software called the *SS-5 Assistant*. This
program has simplified the interpretation of, and compliance with, SSA's
complex enumeration policies and, unlike the traditional process, will
not process an SSN request unless SSA staff obtains and enters all of
the applicant's required information.

In addition to these improvements, SSA has implemented several
enhancements that will better ensure SSN protection. These endeavors
were required by the *Intelligence Reform and Terrorism Prevention Act
of 2004 *and include

· restricting the issuance of multiple replacement SSN cards to 3 per
year and\
10 in a lifetime;

· requiring independent verification of any birth record submitted by a
U.S.-born individual to establish eligibility for an SSN, other than for
purposes of enumeration at birth;

· coordinating with the Department of Homeland Security (DHS) and other
agencies to further improve the security of Social Security cards and
numbers; and

· strengthening the standards and requirements for identity and
citizenship documents presented with SSN applications to ensure the
correct individual obtains the correct SSN.

We applaud the Agency for these efforts and believe it has made
significant strides in providing greater protection for the SSN.
Nevertheless, incidences of SSN misuse continue to occur. To further
protect SSN integrity, we believe SSA should

· encourage public and private entities to limit use of the SSN as an
individual identifier,

· continue to address identified weaknesses in its information security
environment to better safeguard SSNs, and

· continue to coordinate with partner agencies to pursue any data
sharing agreements that would increase data integrity.

# The Social Security Number and Reported Earnings

Properly posting earnings ensures eligible individuals receive the full
retirement, survivor and/or disability benefits due them. If earnings
information is reported incorrectly or not reported at all, SSA cannot
ensure all individuals entitled to benefits are receiving the correct
payment amounts. In addition, SSA's programs depend on earnings
information to determine whether an individual is eligible for benefits
and calculate the amount of benefit payments.

SSA must use its limited resources to resolve incorrect earnings data
reported by employers. The Earnings Suspense File (ESF) is the Agency's
record of annual wage reports for which wage earners' names and SSNs
fail to match SSA's records. As of October 2005, the ESF had accumulated
about \$520 billion in wages andmillion wage items for Tax Years (TY)
1937 through 2003. For TY 2003, SSA posted approximately 8.8wage items,
representing about \$58 billion in wages.

While SSA has limited control over the factors that cause erroneous wage
reports submitted each year, there are still areas where the Agency can
improve its processes. SSA can improve wage reporting by educating
employers on reporting criteria, identifying and resolving employer
reporting problems, and encouraging greater use of the Agency's SSN
verification programs. SSA also needs to coordinate with other Federal
agencies with separate, yet related, mandates. For example, the Agency
works with the Internal Revenue Service (IRS) to achieve more accurate
wage reporting. We have also encouraged greater collaboration with DHS
on some of these employer issues.

SSA has taken steps to reduce the size and growth of the ESF. For
example, in June, SSA expanded its voluntary Social Security Number
Verification Service (SSNVS) to all interested employers nationwide.
SSNVS allows employers to verify the names and SSNs of employees before
reporting their wages to SSA. SSA also participates in the Basic Pilot
program with DHS, which verifies the names and SSNs of employees as well
as their citizenship and authorization to work in the U.S. In December
2004, the Basic Pilot program was made available to employers
nationwide.

The Agency is modifying the information it shares with employers. Under
the *Intelligence Reform and Terrorism Prevention Act of 2004*, SSA is
required to add both death and fraud indicators to the SSN verification
systems for employers, State agencies issuing drivers' licenses and
identity cards, and other verification routines, as determined
appropriate by the Commissioner of Social Security.

# The Social Security Number and Unauthorized Work

SSA assigns nonwork SSNs to noncitizens who are (1) legally in the
United States without authorization to work and are entitled to a State
or local general assistance benefit that, by law, requires an SSN or (2)
entitled to federally financed benefits that, by law, require an SSN. In
either case, the noncitizen must meet all requirements for the benefit
other than having an SSN. SSA tracks earnings reported under a nonwork
SSN and reports this information to DHS. Nonetheless, our audits have
noted several issues related to nonwork SSNs, including the (1) type of
evidence provided to obtain a nonwork SSN, (2) reliability of nonwork
SSN information in SSA's records, (3) significant volume of wages
reported under nonwork SSNs, and (4) payment of benefits to noncitizens
who qualified for their benefits, in part, as a result of unauthorized
work in the United States.

In March 2004, Congress placed new restrictions on the receipt of SSA
benefits by noncitizens who are not authorized to work in the United
States. Under the *Social Security Protection Act of 2004*, if a
noncitizen worker was first assigned an SSN on or after January, 2004,
Title II benefits are precluded based on his/her earnings unless the
noncitizen was ever assigned an SSN for work purposes or admitted to the
United States as a visitor for business or as an alien crewman. SSA's
implementation of this new law will require increased coordination with
DHS to ensure SSA has the correct work status information in its
records.

In FY 2007, we plan to complete 16 reviews and begin 9 reviews in this
area.

# We plan to complete the following reviews in FY 2007

Assigning Social Security Numbers to Fiancé Visa Nonimmigrants

Congressional Response Report: Accuracy of the Social Security
Administration's Numident File

Congressional Response Report: Employer Feedback on the Social Security
Administration's Verification Programs

Effectiveness of Educational Correspondence to Employers

F-1 Students' Use of Social Security Numbers

Original Social Security Numbers Assigned to Individuals Age 12 or Older

Social Security Numbers Assigned to Citizens of Compact of Free
Association Countries

Social Security Numbers Assigned to Exchange Visitors

State and Local Governments' Collection, Use, and Disclosure of Social
Security Numbers

The Social Security Administration's Compliance with SS-5 Assistant
Policies and Procedures

The Social Security Administration's Employee Verification Programs

The Social Security Administration's Las Vegas Social Security Card
Center

The Social Security Administration's Single Select Edit Routine

The Social Security Statement in Correcting Earnings Records

The Validity of Earnings Posted to the Social Security Administration's
Master Earnings File for Children Ages 7 Through 13

Unauthorized Redisclosure of Social Security Administration Information
to State Agencies in Region VII

# We plan to begin the following reviews in FY 2007

Earnings Records with Multiple Employers

Effectiveness of Blanket Adjustments of Earnings

Follow-up: The Enumeration at Entry Process

Follow-up: The Social Security Administration's Internal Use of Employee
Social Security Numbers

Individuals Applying for Replacement Social Security Cards Using
Different Places of Birth

Medicare's Use of Social Security Numbers on Cards Issued to
Participants

Non-program Social Security Number Verification Requests from Third
Parties

Social Security Administration/Internal Revenue Service Wage
Reconciliation Process

The Office of Quality Performance's New Earnings Suspense File Edits and
the Impact on Earnings Integrity

# Assigning Social Security Numbers to Fiancé Visa Nonimmigrants

## Objective

To (1) evaluate SSA's compliance in assigning SSNs to fiancé visa
nonimmigrants and (2) determine whether vulnerabilities exist in this
process that may allow noncitizen fiance's whose immigration status has
expired to remain in the United States and improperly use their SSNs.

## Background

U.S. citizens who are engaged to a foreign national may petition the
State Department for a fiancé classification. The marriage must take
place within 90 days of the fiancé entering the United States. If the
marriage does not take place within 90 days, the State Department
requires that the fiancé leave the United States.

SSA policies and procedures state that fiancé visa holders are eligible
to receive an SSN upon producing evidence of age, identity and a valid,
unexpired U.S. Citizenship and Immigration Services Form I-94,
*Arrival-Departure Record, *which contains the appropriate certification
from DHS that entry to the United States has been permitted with a
fiancé visa classification. SSA assigns about 14,000 original SSNs
annually to individuals who have fiancé visas. SSA field office
personnel have expressed concern that the Agency assigns SSNs to fiancé
visa holders whose legal duration of stay in the United States may only
be 90 days. An SSN card makes it easier for individuals who do not marry
to remain in the United States.

# Congressional Response Report: Accuracy of the Social Security Administration's Numident File

## Objective

To assess the accuracy of SSA's Numident file information relied on in
employment verification services.

## Background

SSA provides employers and third-party submitters several verification
programs and services that allow them to match their employees' names
and SSNs with SSA's records. The Basic Pilot, one of these verification
programs, is a joint effort between SSA and DHS to assist employers in
verifying newly hired employees' authorization to work in the United
States.

On April 7, 2006, the Chairman of the House Committee on Ways and Means,
Subcommittee on Social Security, requested that we assist the
Subcommittee in obtaining information on the reliability of the data SSA
and DHS use to verify employee information submitted by employers. The
Chairman asked that we assess the accuracy of the SSN Numident fields on
which the Basic Pilot relies. Additionally, the Chairman requested that
we provide information for each of the following populations of
numberholders:\
(1) native-born U.S. citizens,

\(2\) foreign-born U.S. citizens, and

\(3\) non-U.S. citizens.

# Congressional Response Report: Employer Feedback on the Social Security Administration's Verification Programs

## Objective

To assess employers' satisfaction with SSA's verification programs.

## Background

In April 2006, the Chairman of the House Committee on Ways and Means,
Subcommittee on Social Security, requested information on the
experiences of employers who have used one of SSA's three verification
programs, including:

1\. SSNVS---an on-line program available to employers to ensure their
employees' names and SSNs are valid before submitting their Form W-2 to
SSA. It was rolled out nationwide in June 2005.

2\. Basic Pilot---a joint effort between SSA and DHS to assist employers
with verifying newly hired employees' authorization to work in the
United States.

# Effectiveness of Educational Correspondence to Employers

## Objective

To assess the effectiveness of Educational Correspondence (EDCOR) in
communicating wage reporting problems to employers and reducing the size
of the ESF.

## Background

SSA sends an employer an EDCOR letter when more than 10 *Wage and Tax
Statements* (Forms W-2) in the employer's wage report do not match SSA's
records, and these mismatches exceed 0.5 percent of the total number of
W-2s in the report. The EDCOR letter notes the importance of accurate
names and SSNs and encourages employers to provide SSA corrected
information so the wages can be posted to the appropriate earners'
accounts. SSA mailed approximately 128,000 EDCOR notices to employers in
TY 2005.

# F-1 Students' Use of Social Security Numbers

## Objective

To assess (1) F-1 students' use of SSNs to determine whether they work
on- or off-campus or are unemployed and (2) schools' compliance with
governing policies.

## Background

Approximately 600,000 foreign students were enrolled in educational
institutions in the United States during the 2004-2005 academic year.
The F-1 classification, one of three nonimmigrant classifications for
foreign students, is unique in that it is assigned to students who are
eligible to work on-campus without obtaining specific approval from DHS.
Instead, DHS requires that the school ensure the F-1 student is
attending classes full-time and in good academic standing. If so, the
student is eligible to work on-campus up to 20 hours per week.

In October 2004, SSA began requiring that F-1 students who do not have
an Employment Authorization Document or authorization for curricular
practical training provide evidence of on-campus work authorization and
verification they had secured employment or a promise of employment
before SSA assigned an SSN.

# Original Social Security Numbers Assigned to Individuals Age 12 or Older

## Objective

To determine whether SSA complied with established policies when
assigning original SSNs to U.S. citizens age 12 or older.

## Background

When a U.S. citizen age 12 or older requests an original SSN or a new
(different) SSN, an in-person interview must be conducted to ensure the
validity of the request. The interview is conducted to assist the
individual in recalling possible instances when an SSN may have been
needed (such as when the applicant attended school or applied for
admission; registered to vote; held a job; or had a savings account) and
to prevent the assignment of an SSN to an individual who is assuming a
false identity.

# Social Security Numbers Assigned to Citizens of Compact of Free Association Countries

## Objective

To (1) determine whether SSA is following procedures when issuing SSNs
to individuals from Compact of Free Association countries and (2)
identify any vulnerabilities in the process.

## Background

Individuals who are citizens of Compact of Free Association countries
(the Federated States of Micronesia, Republic of the Marshall Islands,
and Republic of Palau) may enter, reside in, and work in the United
States without regard to immigration laws.

SSA instructions state that a citizen of a Compact of Free Association
country in the United States is treated as an alien lawfully admitted
for permanent residence. Their SSN card application should be processed
without a legend. However, if the Compact of Free Association applicant
resides outside the United States, he/she must provide a valid nonwork
reason for an SSN. If the nonwork need is valid, the application is to
be processed for a nonwork card.

The evidence required for issuing an SSN is DHS' I-94. The I-94 bears an
entry date but no expiration date. Some citizens of Compact of Free
Association countries entered the United States before DHS began issuing
I-94s for permanent nonimmigrants.

# Social Security Numbers Assigned to Exchange Visitors

## Objective

To (1) assess SSA's compliance in assigning SSNs to exchange students
and (2) determine whether vulnerabilities exist in this process that may
allow exchange visitors whose immigration status has expired to remain
in the United States and improperly continue using their SSNs.

## Background

Exchange visitors who enter the United States to take part in an
Exchange Visitor program designated by the Department of State are given
special immigration status. These exchange visitors usually study;
teach; receive training; or, as in the case of the Summer Student
Travel/Work program, obtain general employment while being sponsored by
an approved organization. Some categories of exchange visitors are
automatically authorized to work while others require permission from
their sponsors.

SSA policy provides that certain categories of exchange visitors are
presumed to have employment authorization, including camp counselors and
individuals performing summer work and travel. For the 6-week period
ended September 30, 2005, SSA assigned over 31,000 SSNs to individuals
who had Exchange Student visas.

# State and Local Governments' Collection, Use, and Disclosure of Social Security Numbers

## Objective

To assess State, city, and county governments' (including K-12 schools)
collection, use, and disclosure of SSNs and any potential risks
associated with these practices.

## Background

SSNs are widely used by Federal, State, and local agencies to provide
services and benefits to the public. These agencies use SSNs to manage
their records and facilitate data sharing with others. They share SSNs
and other personal information to verify eligibility for benefits,
collect debts owed the government, and conduct and/or support research
and evaluation. In addition to using SSNs for program purposes, many of
these agencies reported using employees' SSNs for such activities as
payroll, wage reporting, and providing employee benefits. These agencies
occasionally display SSNs on documents that may be viewed by others who
do not have a need for this personal information.

# The Social Security Administration's Compliance with SS-5 Assistant Policies and Procedures

## Objective

To determine whether SSA field office staff complied with enumeration
policies and procedures when processing SSN applications through the
SS-5 Assistant program.

## Background

SSA requires that applicants for an original or replacement SSN card
complete a Form SS-5, *Application for a Social Security Card. *The SS-5
Assistant, a Microsoft Access-based application, guides field office
personnel in processing SSN applications by providing structured
interview questions and requiring certain data to complete the
application process. Overall, the SS-5 Assistant is intended to increase
control over the application process, improve the quality of data used
to assign an SSN, and enable management to better control this workload.

# The Social Security Administration's Employee Verification Programs

## Objective

To assess SSA's employee verification programs to identify commonalities
between the services as well as any variations.

## Background

SSA offers three employee verification programs that allow employers and
third-party submitters to match existing and newly hired employees'
names and SSNs with SSA's records.

1\. EVS for Registered Users---an electronic or paper process available
to employers to ensure their employees' names and SSNs are valid before
submitting their Forms W-2 to SSA.

2\. SSNVS---an on-line program that allows employers to verify up to\
10 names and SSNs at once and receive an immediate result. Employers can
upload batch files of up to 250,000 names and SSNs and receive the
results the next business day.

3\. Basic Pilot---a joint effort between SSA and DHS to assist employers
with verifying the name, SSN, and work authorization of newly hired
employees.

# The Social Security Administration's Las Vegas Social Security Card Center

## Objective

To evaluate SSA's compliance with policies and procedures when
processing applications for SSNs at the Las Vegas Social Security Card
Center.

## Background

In April 2005, SSA opened the Las Vegas Social Security Card Center as
part of its efforts to improve public service and strengthen the
integrity of the enumeration process. The Center will process all
requests for initial and replacement SSN cards for residents of the Las
Vegas Valley and greater southern Nevada area. It was the second Social
Security office in the nation devoted entirely to processing SSN
applications.

# The Social Security Administration's Single Select Edit Routine

## Objective

To assess the effectiveness of the Single Select edit routine in
reinstating earnings from the ESF and posting these earnings to the
correct earners' record.

## Background

The Single Select Edit process assumes the individual's reported name is
correct, but some mistake has been made with the SSN. Single Select
creates up to 89 possible variations of the SSN and matches them against
the Numident. Once a match is found, the earnings are posted under that
SSN. If no match is found, the record is marked as invalid and remains
in the ESF. Single Select is one of the first edit processes performed,
and the unresolved suspended items are sent through additional edits
and/or shared with employees and employers for resolution.

# The Social Security Statement in Correcting Earnings Records

## Objective

To assess the effectiveness of the annual Social Security Statements in
correcting individuals' earnings records and reducing the size of the
ESF.

## Background

Section 1143 of the *Social Security Act* requires that SSA send an
annual statement of potential Social Security benefits to workers who
are age 25 or older and not receiving Social Security benefits. The
statements are designed to provide workers estimates of their
retirement, disability and survivors benefits. Further, the statements
provide workers an easy way to determine whether their earnings are
accurately posted on their Social Security records. This is an important
feature because Social Security benefits are based on an individual's
career wage record. In FY 2005, SSA mailed approximately 144 million
statements.

# The Validity of Earnings Posted to the Social Security Administration's Master Earnings File for Children Ages 7 through 13

## Objective

To review controls over the validity of earnings posted to SSA's Master
Earnings File and determine whether they are sufficient to detect and
deter identity theft.

## Background

SSA identifies and investigates earnings postings for children age 6 and
younger. SSA does not have a process to validate earnings posted to
children ages 7 through 13. The Department of Labor provides guidance
that allows children of any age to work in the entertainment industry or
for their parents, deliver newspapers, and perform babysitting or minor
chores in a private home. In addition, the guidance allows for limited
work performed by 12 and 13 year olds. For example, a child age 12 or 13
may be employed in the agricultural industry outside school hours with
written parental consent. Use of a minor's SSN for work that is not
usually performed by minors may indicate SSN misuse is occurring.

# Unauthorized Redisclosure of Social Security Administration Information to State Agencies in Region VII

## Objective

To determine the extent to which information from SSA is being
redisclosed by State agencies or their agents in Region VII without
SSA's authorization.

## Background

This audit was requested by the Kansas City Regional Office because it
has experienced that some States are redisclosing information from SSA
to other State and Federal agencies as well as contractors without
proper authorization. There is a concern that this unauthorized
redisclosure may be routinely occurring.

One of the objectives of the SSA matching operations program is to
achieve more effective and efficient SSA program operations by sharing
information from SSA's automated systems of records with States to
eliminate incorrect benefit payments and decrease related program costs.
Certain computer matches having a material impact on eligibility,
benefits or privacy rights of the individual by Federal agencies must be
conducted under the *Privacy Act of 1974.*

# MANAGEMENT OF THE DISABILITY PROCESS

SSA administers the Disability Insurance (DI) and Supplemental Security
Income (SSI) programs, which provide benefits based on disability. Most
disability claims are initially processed through a network of Social
Security field offices and State Disability Determination Services
(DDS). SSA representatives in the field offices are responsible for
obtaining applications for disability benefits, disability report forms
and authorization for disclosure of information forms as well as
verifying non-medical eligibility requirements, which may include age,
employment, marital status, or Social Security coverage information.
After initial processing, the field office sends the case to a DDS to
develop medical evidence and evaluate the disability.

Once SSA establishes an individual is eligible for disability benefits
under either the DI or SSI (or both) program, the Agency turns its
efforts toward ensuring the individual continues receiving benefits only
as long as SSA's eligibility criteria are met. For example, a continuing
disability review (CDR) may show the individual no longer meets SSA's
disability criteria or has demonstrated medical improvement.

If an individual disagrees with the Agency's decision on his/her claim
or CDR, the claimant can appeal to SSA's Office of Disability
Adjudication and Review (ODAR). ODAR's field structure consists of 10
regional and 140offices. ODAR's administrative law judges (ALJ) hold
hearings and issue decisions. Within ODAR, we have focused our attention
on issues such as the backlog of cases, case management procedures,
safeguards for sensitive information in case files, and physical
security at ODAR hearing sites.

GAO added modernizing Federal disability programs---including SSA's---to
its 2003 high-risk list due, in part, to outmoded concepts of
disability, lengthy processing times, and decisional inconsistencies. To
address improvements needed in SSA's disability programs, on March 28,
2006, the Commissioner of Social Security presented the final rule
establishing a new disability determination process that was published
in the Federal Register. The final rule provides for the following.

· A quick disability determination process for those who are obviously
disabled. Favorable decisions will be made in such cases within 20 days
after the claim is received by the State disability determination
agency.

· A new Medical-Vocational Expert System to enhance the expertise needed
to make accurate and timely decisions. The Medical-Vocational Expert
System will be composed of an Expert Unit and a national network of
medical, psychological and vocational experts who meet qualification
standards established by the Commissioner.

· A new position---the Federal Reviewing Official---that will review
State agency determinations upon the claimant's request. This will
eliminate the reconsideration step of the current appeals process. The
Federal Reviewing Official will be administered by ODAR.

· Retention of the right to request a de novo hearing and decision from
an ALJ if the claimant disagrees with the Federal Reviewing Official's
decision.

· Closing the record after the ALJ issues a decision, with provision for
certain good cause exceptions to this rule.

· A new body---the Decision Review Board---to review and correct
decisional errors and ensure consistent adjudication at all levels of
the disability determination process. The current Appeals Council will
be phased out gradually.

In addition to the Commissioner's improvements, the Agency is
transitioning to the electronic disability folder. The electronic
disability folder will allow for disability claims information to be
stored and transmitted electronically among field offices, DDSs, OQP,
and ODAR.

SSA is working to ensure individuals with disabilities who want to work
have the opportunity to do so. The Comprehensive Work Opportunity
Initiative represents the Agency's overarching strategy to assist
individuals with disabilities in attaining economic self-sufficiency and
breaking through potential barriers to employment. The Ticket to Work
program, which provides beneficiaries with disabilities expanded options
for access to employment, vocational rehabilitation, and other support
services to help them work, is one element of SSA's Comprehensive Work
Opportunity Initiative.

# Disability Fraud

Fraud is an inherent risk in SSA's disability programs. Some
unscrupulous people view SSA's disability benefits as money waiting to
be taken. A key risk factor in the disability program is individuals who
feign or exaggerate symptoms to become eligible for disability benefits.
Another key risk factor is the monitoring of medical improvements for
disabled individuals to ensure those individuals who are no longer
disabled are removed from the disability rolls.

We are working with SSA to address the integrity of the disability
programs through the Cooperative Disability Investigation program. The
Cooperative Disability Investigation program's mission is to obtain
evidence that can resolve questions of fraud in SSA's disability
programs. The Cooperative Disability Investigation program is managed in
a cooperative effort between SSA's Office of Operations, the OIG, and
the Office of Disability Programs. There are 19 Cooperative Disability
Investigation units operating in 17 States. In FY 2005, the Cooperative
Disability Investigation units saved SSA almost \$124 million by
identifying fraud and abuse related to initial and continuing claims in
the disability program.

In FY 2007, we plan to complete 10 reviews and begin 12 reviews in this
area.

We plan to complete the following reviews in FY 2007

Administrative Law Judges' Caseload Performance

Childhood Continuing Disability Reviews and Age 18 Redeterminations

Controls over Contracts for Verbatim Hearing Recordings

Disability Determinations Made for Beneficiaries Convicted of Disability
Insurance Fraud

Disabled Individuals Hiding Self-Employment Income

Impact of Statutory Benefit Continuation on Disability Insurance Benefit
Payments Made During the Appeals Process

Management's Use of Workload Status Reports at Hearing Offices

Representatives Barred from Practicing Before the Social Security
Administration

The Social Security Administration's Disability Service Improvement
Process

Ticket to Work Cost Reimbursements to Employment Networks and State
Vocational Rehabilitation Agencies

# We plan to begin the following reviews in FY 2007

Aged Cases at the Hearing Level

Analysis of Disability Decisions Reversed by the Office of Disability
Adjudication and Review

Cap on Attorney Assessments Under Public Law 108-203

Disabilities Classified by the Social Security Administration as
Difficult to Prove

Disability Insurance and Supplemental Security Income Payments not
Stopped Timely Following a Disability Cessation

Electronic Disability Processing in the Hearing Offices at the Office of
Disability Adjudication and Review

Medical Consultants Contract Review

Office of Disability Adjudication and Review Contract Oversight

Overpayment Waivers Appealed to the Office of Disability Adjudication
and Review

Predictive Modeling Used for Quick Disability Determinations

Proper Classification of Terminally Ill Beneficiaries by the Social
Security Administration

Transfers of Case Workload Among Hearing Offices

# Administrative Law Judges' Caseload Performance

## Objective

To evaluate SSA's oversight of ALJ caseload performance.

## Background

Federal legislation prevents SSA from requiring that ALJs process a
certain number of cases. However, SSA may set reasonable production
goals for ALJs as long as the goals do not infringe on ALJs' independent
decision-making processes.

Federal legislation also prevents SSA from establishing a performance
appraisal system for ALJs. However, disciplinary actions can be taken
against ALJs if the Merit Systems Protection Board finds good cause. In
two cases we reviewed, the Merit Systems Protection Board found that an
ALJ may be disciplined for substandard production, but SSA did not
provide sufficient evidence to compare ALJs' caseloads. Therefore, the
Board denied the request for action against the ALJs based on poor
production.

In a prior review, we determined the number of cases processed by ALJs
at one hearing office ranged from as few as 276 to as many as 1,892 in a
1-year period. This variance may have occurred because the ALJs were
given the discretion to determine the number of cases they would process
instead of SSA establishing the number and holding ALJs accountable for
reasonable production goals.

# Childhood Continuing Disability Reviews and Age 18 Redeterminations

## Objective

To determine whether SSA is\
(1) conducting CDRs for SSI recipients under age 18 timely and ensuring
these recipients are receiving appropriate medical treatment and (2)
conducting eligibility determinations in a timely manner using adult
criteria for SSI recipients attaining age 18.

## Background

The *Social Security Act* requires that SSA

· perform CDRs at least every 3 years on all children under age 18 whose
impairments are likely to improve;

· obtain evidence from the child's representative payee at the time of a
CDR that the child is, and has been receiving treatment to the extent
considered medically necessary and available for, the disabling
impairment; and

· redetermine, within 1 year of an individual's 18^th^ birthday, the
eligibility of any SSI recipient who was on the childhood disability
rolls the month before he/she attained age 18.

# Controls over Contracts for Verbatim Hearing Recordings

## Objective

To determine whether the contract to acquire hearing reporters for ODAR,
effective for FY 2006, is (1) effective in obtaining hearing reports;
(2) clear in the specifications related to contractor duties; and (3)
consistently implemented in each region.

## Background

Hearing reporters are responsible for delivering complete summary notes
of the hearing; a complete set of exhibits; and a complete and audible
tape or digital recording. The hearing reporter may only perform those
services for SSA that are stated in the contract.

The contract stipulates that the prices quoted by SSA will be as low, or
lower, than those charged to the contractor's most favored customer.
Also, the contract stipulates for payment per final product, rather than
payment per hour. Payment per final product does not consider that
hearings may take as short a time as\
30 minutes or as long as 60 minutes; preparation of recording equipment;
and preparation of compact discs to record hearings.

# Disability Determinations Made for Beneficiaries Convicted of Disability Insurance Fraud

## Objective

To examine disability fraud cases, at each level of review within the
disability determination process, to identify individuals who were
approved for disability benefits and later convicted of disability
fraud.

## Background

SSA representatives in the field offices are responsible for obtaining
applications for disability and verifying non-medical eligibility
requirements. After initial processing, the field office sends the case
to a DDS to develop medical evidence, evaluate the disability, and
determine whether the applicant is disabled. Decisions that an applicant
is not disabled can be appealed to SSA's Office of Disability
Adjudication and Review, which can, and often does, rule in the
applicant's favor with a finding that the individual is disabled.

Over the past few years, we and GAO have conducted reviews of SSA's
disability process and DI fraud. Some examples of fraud include
individuals who (1) feign or exaggerate symptoms to become eligible for
disability benefits or (2) collaborate with a middleman or intermediary
to get on the rolls; or (3) hide their income under another individual's
SSN. Information from our Office of Investigations indicates there were
about 1,400 disability fraud convictions during FYs 2003 through 2005.

# Disabled Individuals Hiding Self-Employment Income

## Objective

To identify individuals receiving DI benefits who may have participated
in self-employment activities and concealed the income by transferring
it to a spouse.

## Background

An individual is considered disabled, for the purposes of the DI
program, if she/he cannot engage in any substantial gainful activity.
Substantial gainful activity is used to describe a level of work
activity and earnings. Substantial work activity involves doing
significant physical or mental work, or a combination of both that is
productive. If an individual is engaging in substantial gainful
activity, she/he is generally not eligible for disability benefits.

Because of the substantial gainful activity stipulations, individual's
awarded disability benefits under the DI program may be inclined to
deliberately conceal work by transferring the income to a spouse.
Individuals report self-employment income to the IRS on their annual tax
return. The IRS, in turn, reports the income to SSA. SSA maintains
earnings records for all individuals with an SSN to assist in
determining an individual's eligibility for disability and other
benefits.

# Impact of Statutory Benefit Continuation on Disability Insurance Benefit Payments Made During the Appeals Process

## Objective

To evaluate the financial impact on the Trust Fund when beneficiaries
receive DI payments while appealing a medical cessation decision.

## Background

A determination of benefit cessation is made when a CDR reveals the
beneficiary no longer meets the requirements for disability benefits.
Benefit cessation decisions are made by disability examiners in the
Office of Central Operations and the DDSs, as well as by disability
specialists in the program service centers. Public Law 97-455, as
extended by Public Law 101-508, provides the disabled beneficiary the
option for DI benefit continuation through the reconsideration and/or
ALJ hearing process in medical cessation determinations.

Benefit payments made during the appeals process are considered
overpayments if the cessation decision is upheld. SSA waives the
overpayment when the claimant is found to be without fault in causing
the overpayment, and recovery or adjustment would defeat the purpose of
the disability program.

# Management's Use of Workload Status Reports at Hearing Offices

## Objective

To assess the effectiveness of the benchmarks used in the Case
Processing and Management System *No Status Change *report to identify
stagnant claims and bottlenecks in the hearing process.

## Background

The Case Processing and Management System was implemented in August 2004
to (1) control and process hearing claims and (2) produce management
information. Hearing office employees assign a status code to each claim
as it moves through the adjudication and review process. Each status
code identifies the claim's location and processing status.

For each of the 12 status codes tracked by the Case Processing and
Management System *No Status Change *report, ODAR has set a benchmark
time (measured in days) to process a claim. If a claim stays in status
beyond the benchmark time, the claim appears in the Case Processing and
Management System *No Status Change *report. The claim will stay in this
status until it is processed and the status code changes.

# Representatives Barred from Practicing Before the Social Security Administration

## Objective

To review controls over SSA's implementation of section 205 of the
*Social Security Protection Act of 2004* with respect to the
recognition, disqualification, and reinstatement of claimant
representatives.

## Background

A claimant may designate an attorney or a non-attorney to represent
him/her at a hearing or appeal before SSA. The Agency must ensure these
representatives are of good character. The *Social Security Protection
Act of 2004* provides that SSA may refuse to recognize a representative,
or disqualify a representative already recognized, if the attorney or
non-attorney has been disbarred or suspended from any court, bar,
Federal program or Agency he or she was previously admitted to practice
or participate in. Moreover, under the *Social Security Protection Act
of 2004* a representative who has been disqualified or suspended from
appearing before SSA shall be barred from appearing before SSA until
full restitution is made to the claimant.

# The Social Security Administration's Disability Service Improvement Process

## Objective

To assess SSA's implementation of the Disability Service Improvement
process in the Boston Region.

## Background

SSA established the Disability Service Improvement process in March 2006
to be implemented in the Boston Region in August 2006. SSA plans to
implement the Disability Service Improvement process in the Denver
Region 1 year later, followed by one region every 6 months---with full
implementation expected within 5 years.

# Ticket to Work Cost Reimbursements to Employment Networks and State Vocational Rehabilitation Agencies

## Objective

To conduct a performance review of SSA and its contractor, Maximus,
Inc., to ensure cost reimbursements to Employment Networks and State
Vocational Rehabilitation Agencies are in accordance with the *Ticket to
Work and Work Incentives Improvement Act*.

## Background

The *Ticket to Work and Work Incentives Improvement Act* was enacted to
enable eligible Social Security and SSI recipients with disabilities to
receive a ticket they can use to obtain employment, vocational
rehabilitation, or other support services from an approved provider of
their choice, either from organizations called an Employment Network or
from State vocational rehabilitation agencies. The Employment Networks
and vocational rehabilitation agencies help disabled beneficiaries
return to work. As of May 23, 2006, SSA had enrolled 1,359 employment
networks and\
79 Vocational Rehabilitation Agencies, issued over 10 million tickets,
and assigned approximately 134,000 tickets.

The program manger is responsible for administering most aspects of the
ticket to work program, including recruiting and managing employment
networks, and managing the ticket process. SSA selected Maximus, Inc.,
to serve as its program manager on September 30, 2003.

# IMPROPER PAYMENTS AND RECOVERY OF OVERPAYMENTS

Improper payments are defined as any payment that should not have been
made or was made in an incorrect amount. Examples of improper payments
include inadvertent errors, payments for unsupported or inadequately
supported claims, or payments to ineligible beneficiaries. Furthermore,
the risk of improper payments increases in programs with a significant
volume of transactions, complex criteria for computing payments, and an
overemphasis on expediting payments.

SSA and the OIG have discussed such issues as detected versus undetected
improper payments and avoidable versus unavoidable overpayments that are
outside the Agency\'s control and a cost of doing business. OMB issued
specific guidance to SSA to only include avoidable overpayments in its
improper payment estimate because those payments can be reduced through
changes in administrative actions. Unavoidable overpayments that result
from legal or policy requirements are not to be included in SSA's
improper payment estimate.

The President and Congress have expressed interest in measuring the
universe of improper payments in the Government. In August, OMB
published the PMA, which included a Government-wide initiative for
improving financial performance, including reducing improper payments.
The *Improper Payments Information Act of 2002* was enacted in November
2002, and OMB issued guidance in May 2003 on implementing this law.
Under the *Improper Payments Information Act of 2002*, SSA must estimate
its annual amount of improper payments and report this information in
its annual Performance and Accountability Report. OMB will then work
with SSA to establish goals for reducing improper payments in its
programs.

SSA issues billions of dollars in benefit payments under the Old-Age,
Survivors and Disability Insurance (OASDI) and SSI programs---and some
improper payments are unavoidable. Since SSA is responsible for issuing
timely benefit payments for complex entitlement programs to millions of
people, even the slightest error in the overall process can result in
millions of dollars in over- or underpayments. In FY 2005, SSA reported
that it detected over \$4.2in overpayments. SSA also noted in its
Performance and Accountability Report for FY 2005 that it recovered over
\$2in overpayments.

In January 2005, OMB issued a report *Improving the Accuracy and
Integrity of Federal Payments* that noted that seven Federal
programs---including SSA's OASDI and SSI programs---accounted for
approximately 95 percent of the improper payments in FY 2004. However,
this report also noted that SSA had reduced the amount of SSI improper
payments by over \$100since levels reported in FY.

SSA has been working to improve its ability to prevent over- and
underpayments by obtaining beneficiary information from independent
sources sooner and using technology more effectively. For example, the
Agency is continuing its efforts to prevent payments after a beneficiary
dies through Electronic Death Registration information. Also, the
Agency's CDR process is in place to identify and prevent beneficiaries
who are no longer disabled from receiving payments. Additionally, in FY,
SSA implemented eWork---a new automated system to control and process
work-related CDRs---which should strengthen SSA's ability to identify
and prevent improper payments to disabled beneficiaries.

In April 2006, we issued a report on overpayments in SSA's disability
programs where we estimated that SSA had not detected about \$3.2
billion in overpayments for the period Octoberthrough November 2005 as a
result of conditions that existed as of Octoberor earlier. We also
estimated that SSA paid about \$2.1 billion in benefits annually to
potentially ineligible beneficiaries. We will continue to work with SSA
to identify and address improper payments in its programs. SSA has taken
action to prevent and recover improper payments based on several OIG
reviews.

· Working with us on an audit of *Individuals Receiving Benefits Under
Multiple Social Security Numbers at the Same Address,* SSA identified
about \$12.2in overpayments; and as of April 2006, about 10 percent of
the funds had been recovered.

· In another review---*School Attendance by Student Beneficiaries over
Age---*we estimated that SSA disbursed about \$70 million in incorrect
payments to 32,839. SSA agreed with our recommendation to ensure the
overpayments are established and collection activities initiated for the
incorrect payments identified in this audit.

We have helped the Agency reduce improper payments to prisoners and
improper SSI payments to fugitive felons. However, our work has shown
that improper payments---such as those related to workers' compensation
(WC)---continue to occur.

In FY 2007, we plan to complete 24 reviews and begin 33 reviews in this
area.

# We plan to complete the following reviews in FY 2007

Accountability over Duplicate Payments, Equipment and Records in the
Hurricane Recovery Area

Accuracy of Overpayment Adjustments When Critical Payments are Issued

Accuracy of the Social Security Administration's Second Clean-up of
Title II Disability Insurance Cases with a Workers' Compensation Offset

Controls over Changes Made to Title II Direct Deposit Routing Numbers

Controls over Miscellaneous Payments Made Using the Social Security
Administration's Single Payment System

Controls over Survivors Benefits When Indications Exist a Wage Earner is
Alive

Corporate Officers Receiving Disability Insurance or Supplemental
Security Income Payments

Cross-program Recovery of Benefit Overpayments

*Federal Employees' Compensation Act*---Nationwide Review of Federal
Employees with Wages on the Master Earnings File

Government Pension Offset Exemption for Texas School Districts'
Employees

Improper Retirement and Survivor Payments Resulting from the Annual
Earnings Test

Multiple Direct Deposits for Title XVI Recipients into the Same Bank
Account

Supplemental Security Income Recipients Eligible as Disabled Children
Under the Old-Age, Survivors and Disability Insurance Program

Supplemental Security Income Recipients Whose Medicare Benefits Were
Terminated Because of Death

Supplemental Security Income Underpayments on Prior Records Not Released
or Offset for Outstanding Overpayments

The Social Security Administration's Accountability of Federal Emergency
Management Agency Funds Provided for Hurricane Relief Efforts

The Social Security Administration's Controls and Procedures over
Supplemental Security Income Death Alerts

The Social Security Administration's Monitoring of Dedicated Accounts
for Supplemental Security Income Recipients

The Social Security Administration's Title II Disability Insurance
Triennial Redetermination Process

Title II Beneficiaries Living in Canada and England (2 Reviews)

Title XVI Payments Sent to Social Security Administration Field Offices

Unprocessed Manual Recalculations for Title II Overpayments

W-2 Earnings for Individuals Related to Disabled Workers

# We plan to begin the following reviews in FY 2007

AB Accruals Processed Through Manual Adjustment, Credit and Award
Processes

Accuracy of Manually Posted Title II Overpayments

Benefit Payments Managed by Representative Payees of Children in Foster
Care

Concurrently Entitled Beneficiaries with Inconsistent Payment Status
Codes

Controls of Override Actions in the Single Payment System

Controls over Changes Made to Title Direct Deposit Routing Numbers

Death Underpayments Payable on Behalf of Title II Beneficiaries

Debt Collection Tool - Interest Charging

Follow-up: Controls over Recording Supplemental Security Income
Overpayments

Follow-up: Impact on the Social Security Administration's Programs When
Auxiliary Beneficiaries Do Not Have their Own Social Security Numbers

Follow-up: The Social Security Administration's Management of Its
*Federal Employees' Compensation Act *Program

Fugitive Provisions for Title II Beneficiaries

Improper Benefit Payments Related to Changes in Supplemental Security
Income Eligibility Factors

Multiple Benefit Payments to the Same Post Office Box or Commercial
Mailbox

Overstated Earnings and the Impact on Title XVI Recipients

Social Security Administration Payments to Railroad Retirement Board

Social Security Administration Utility Bills

Spouses Entitled to Higher Retirement Benefits

Status of Repayment Agreements

Supplemental Security Income Payments to Individuals Receiving Tribal
Gaming Revenues

Supplemental Security Income Recipients Not Using Medicaid Benefits

Supplemental Security Income Recipients with Automated Teller Machine
Withdrawals Indicating They Are Outside the United States

Suspension of Supplemental Security Income Eligibility for Failure to
Provide Information

The Medicare Non-Usage Project

The Social Security Administration's Administrative Sanctions Process

The Social Security Administration's Controls over Deleted Overpayments

The Social Security Administration's Foreign Enforcement Questionnaire

The Social Security Administration's Management Controls for
Underpayments Deposited into Dedicated Accounts

The Social Security Administration's Match of Disability Insurance
Records with Ohio Workers' Compensation Payment Data

Title II Administrative Finality Provisions

Title II and XVI Direct Deposit Payments into the Same Bank Account
Owned by Individuals Not Concurrently Entitled

Title XVI Immediate Payments Resulting in Overpayments

Workers' Compensation Rates Recorded on the Master Beneficiary Record as
"Not Proven"

# Accountability over Duplicate Payments, Equipment and Records in the Hurricane Recovery Area

## Objective

To review the process for identifying and collecting overpayments
resulting from duplicate payments issued during storm recovery and
determine whether SSA adequately accounted for and safeguarded equipment
and records disposed of after the storms.

## Background

Hurricanes Katrina and Rita struck the coastal regions of Alabama,
Louisiana, Mississippi, and Texas in August and September 2005. About 1
million beneficiaries and recipients receiving approximately \$700
million in monthly benefit payments were affected. In September and
October 2005, SSA issued over 84,750 immediate payments, totaling\
\$45.5 million, in the affected regions. By comparison, SSA issued
22,894 immediate payments, totaling \$13.5 million nationwide in
September and October 2004.

Those beneficiaries and recipients who did not receive their benefit
checks were instructed to go to any open SSA office to receive an
emergency or immediate payment. In September and October 2005, 8,100
OASDI beneficiaries who received their benefits via electronic fund
transfer also received an immediate payment. SSA began sending notices
on January 30, 2006, advising those beneficiaries they were being
charged with an overpayment.

Numerous SSA facilities were affected, with facilities, records, and
equipment damaged or contaminated and having to be destroyed.

# Accuracy of Overpayment Adjustments When Critical Payments are Issued

## Objective

To determine whether SSA is properly recomputing overpayment balances
when a critical payment is made to compensate a beneficiary who
belatedly applied for partial withholding.

## Background

When SSA establishes a Title II overpayment for a beneficiary who is in
pay status, the system sets up a diary to withhold the beneficiary's
full monthly payments to recover the overpayment. However, beneficiaries
can request that only a portion of the monthly payment be withheld.
Often, a request for partial withholding is not processed until 1 or
more months' full benefits have been withheld. In these cases, SSA
repays the beneficiary the excess amount withheld and posts the paid
amount back to the overpayment balance.

# Accuracy of the Social Security Administration's Second Clean-up of Title II Disability Insurance Cases with a Workers' Compensation Offset

## Objective

To assess the accuracy of SSA's second clean-up of Title II DI cases
involving a WC offset.

## Background

Workers injured on the job may qualify for DI benefits under Title II of
the* Social Security Act*. In addition to DI benefits, disabled workers
may be eligible for benefits under Federal and State WC programs.
However, when an injured worker receives both DI and WC benefits the
individual may receive more in disability benefits than what he/she
earned while working. To prevent this, SSA offsets (reduces) DI payments
based on the amount of the monthly WC benefits.

Recognizing the payment accuracy of the WC offset workload needed to be
improved, SSA formed a work group to study the issue. SSA determined the
improvement process should include a "clean-up" of this work load. The
clean-up involved redeveloping and reverifying the offset calculations
of beneficiaries who met specific criteria. To date, SSA has completed
two clean-up projects, which included a review of some 111,000 WC offset
cases. The first clean-up reviewed about 61,000 cases, and the second
clean-up reviewed about 50,000 cases.

# Controls over Changes Made to Title II Direct Deposit Routing Numbers

## Objective

To determine the effectiveness of SSA's controls over multiple changes
to direct deposit routing numbers.

## Background

This review was predicated by a request for investigative assistance
from the New York Police Department, which arrested two individuals
after they cashed a stolen check. During an initial debriefing, one of
the subjects stated the other subject was receiving personal identifying
information from an SSA teleservice representative. The New York Police
Department contacted OIG for assistance, and the subject was
re-interviewed by OIG and Secret Service agents.

The investigation revealed a scheme in which the SSA teleservice
representative, working with 3 co-conspirators, victimized at least 17
beneficiaries who had called SSA's 800-number for assistance. The
defendants redirected the recipients' benefits to accounts they
controlled. In several instances, the defendants took over recipients'
bank accounts using confidential information illegally obtained. Once
payments were deposited into one of the controlled accounts, the
defendants concealed the fraud by putting the correct bank account
information back on the record.

# Controls over Miscellaneous Payments Made Using the Social Security Administration's Single Payment System

## Objective

To determine whether SSA established adequate controls to ensure
miscellaneous payments made through the Single Payment System are valid.

## Background

SSA uses the Single Payment System to issue payments for attorney fees
and OASDI payments that cannot be made through the Title II system
(miscellaneous payments). It was created to ensure the timeliness of
payments, stop duplicate and erroneous payments and document management
information.

The Single Payment System is used to make miscellaneous payments in the
following situations.

· When payments due for a prior period and the continuing status of the
case is deferred.

· When the computed net amount due equals or exceeds \$30,000.

· To pay a death underpayment to a non-beneficiary.

· To issue an excess refund to a non-beneficiary or financial
institution.

# Controls over Survivors Benefits When Indications Exist a Wage Earner is Alive

## Objective

To determine the appropriateness of continued survivors benefits when
SSA records contain evidence the wage earner is alive and identify any
improper payments.

## Background

SSA accepts and posts death reports for nonbeneficiaries received from a
relative, friend, neighbor, or other reporter. The reporter must provide
the name, date of birth, and SSN before SSA can add the death to the
Numident record. These reports can be made by mail, telephone, or in
person. Although SSA may accept death reports for nonbeneficiaries from
third parties, proof of death is required when a claimant files on the
record of a deceased person or when a claimant's eligibility is
dependent on another person's death. If the death report is posted in
error, SSA deletes the death data from the Numident record.

During a prior audit, we found survivors benefits paid without proof of
death. We also identified cases in which the primary account holder
personally applied for a replacement SSN card while a survivors payment
was being made based on the individual's death.

# Corporate Officers Receiving Disability Insurance or Supplemental Security Income Payments

## Objective

To determine whether DI beneficiaries or SSI recipients are reporting
employment as corporate officers to SSA for determining continued DI and
SSI eligibility.

## Background

To qualify for DI benefits, an individual must meet a test of covered
work before becoming disabled. SSI is a means-tested program designed to
provide or supplement the income of aged, blind or disabled individuals
with limited resources. Under these programs, individuals must report to
SSA if they take a job or become self-employed. As of September 30,
2005, there were about 8.2 million DI beneficiaries and 4.6 million SSI
recipients.

In April 2006, the Railroad Retirement Board's OIG reported on an
investigative effort initiated to identify Railroad Retirement Board
disability annuitants who might be concealing employment and income
under corporations established in the State of Georgia. An annuitant was
determined to be disabled in November 1989; however an investigation
revealed the beneficiary incorporated a freight company in 1994.

# Cross-program Recovery of Benefit Overpayments

## Objective

To review SSA's actions pertaining to cross-program recovery of benefit
overpayments as authorized by the *Social Security Protection Act of
2004*.

## Background

SSA administers the OASDI, Special Veteran Benefit, and SSI programs
under Titles II, VIII and XVI of the *Social Security Act*. World War II
veterans who are eligible for SSI payments may also be entitled to
receive a Special Veteran Benefit. SSI is a cash assistance program that
provides a minimum level of income to financially needy individuals who
are aged, blind or disabled.

Before the *Social Security Protection Act of 2004* was passed, SSA had
limited authority to collect overpayments using cross-program recovery.
Cross-program recovery is the process of collecting overpayments by
withholding (offsetting) the payable benefits individuals are to receive
from another benefit program SSA administers. Section 1147 of the*
Social Security Act *limits SSA's use of cross-program recovery to
collect SSI overpayments. The SSI overpayment could be collected from
OASDI or Special Veteran Benefit but only if the individuals were no
longer eligible for SSI payments.

# *Federal Employees' Compensation Act*---Nationwide Review of Federal Employees with Wages on the Master Earnings File

## Objective

To determine whether Federal employees are receiving *Federal Employees'
Compensation Act* (FECA) payments for periods in which wages were
reported on SSA's Master Earnings File.

## Background

FECA provides income and medical cost protection to covered Federal
civilian employees injured on the job, employees who have incurred a
work-related injury or occupational disease and beneficiaries of
employees whose death is attributable to a job-related injury or
occupational disease. It provides payment as compensation for lost
wages, monetary awards for bodily impairment or disfigurement, medical
care, vocational rehabilitation, and survivor's compensation.

FECA is administered by the Office of Workers' Compensation Programs,
Department of Labor. This Office is responsible for making eligibility
determinations and for the initial reconsideration if a claim is denied.
Benefits are paid from the Employees' Compensation Fund, which is
principally funded through chargebacks to the Federal agency that
employs the injured worker. Therefore, the FECA program affects the
budgets of all Federal agencies.

# Government Pension Offset Exemption for Texas School Districts' Employees

## Objective

To determine whether beneficiaries who were previously employed by
certain Texas school districts are exempt from Government Pension
Offset.

## Background

Social Security benefits for a spouse or surviving spouse are generally
reduced for individuals who receive a monthly pension from a State or
local government agency. However, Government Pension Offset does not
apply if an individual's last day of employment was in a position that
was covered by both Social Security and a State or local government
pension plan. The exemption applies only to those individuals whose last
day of employment was before July 1, 2004. The *Social Security
Protection Act of 2004* subsequently amended the Government Pension
Offset provisions to require that State and local government employees
be covered by Social Security throughout their last 60 months (5 years)
of employment to be exempt from Government Pension Offset. This review
will determine whether approximately 22,000 individuals who retired from
several Texas school districts before July 1, 2004 were improperly
exempted from Government Pension Offset because they did not meet the
last day of employment provision.

# Improper Retirement and Survivor Payments Resulting from the Annual Earnings Test

## Objective

To determine whether SSA properly identifies and adjusts benefits to
individuals who are subject to the Annual Earnings Test.

## Background

Social Security benefits are meant to replace, in part, earnings lost to
an individual or family because of retirement, disability or death. SSA
uses an earnings test to measure the extent of a beneficiary's
retirement and determine the amount, if any, to be deducted from monthly
benefits. Benefit deductions are made from benefits due any beneficiary
under Full Retirement Age who earns an amount, either in wages or
self-employment income or both, over the annual exempt amount.

To ensure beneficiary compliance with the earnings test, SSA uses the
earnings posted to the Master Earnings File and compares those amounts
to what the beneficiary may have reported for purposes of the earnings
test. This process is designed to detect overpayment situations where a
beneficiary incorrectly reported his/her earnings for the year. Certain
potential underpayment situations are also identified, and the
beneficiary is notified that an annual earnings report is required for
the underpayment to be paid.

# Multiple Direct Deposits for Title XVI Recipients into the Same Bank Account

## Objective

To determine whether individuals are improperly receiving SSI payments
through multiple direct deposits to the same bank account.

## Background

SSA maintains a Supplemental Security Income Record to administer SSI
payments. The Supplemental Security Income Record includes information,
such as the recipient's name, SSN, address, representative payee
information, bank account information, and payment history. SSA's SSI
Duplicate Payment Project is designed to eliminate the possibility of a
recipient receiving duplicate payments based on multiple SSI records.
SSA runs the SSI Duplicate Payment Project quarterly, and cases that
meet the matching criteria are transmitted to the appropriate SSA
office. However, the potential risk in diverting funds exists due to the
lack of procedures to match bank account information and identifying
unrelated individuals depositing payments in the same bank account.

# Supplemental Security Income Recipients Eligible as Disabled Children Under the Old-Age, Survivors, and Disability Insurance Program

## Objective

To determine whether SSI recipients who previously received OASDI
benefits as child beneficiaries are eligible for additional OASDI
benefits.

## Background

The SSI program provides cash assistance to individuals who have limited
income and resources and who are either age 65 or older, blind or
disabled. The OASDI program provides benefits to qualified retired and
disabled workers and their dependents, and to survivors of insured
workers. According to SSA policy, an application for benefits under any
one program is considered an application for all programs administered
by the Agency.

Individuals receiving SSI payments may also be eligible for benefits as
disabled children under the OASDI program. To be eligible, individuals
must

· be disabled before attaining age 22;

· not be entitled to OASDI benefits based on their own work history; and

· have parents who are receiving OASDI benefits or are deceased.

Generally, non-medical factors are not considered when determining
eligibility for OASDI benefits when applicants are classified as
disabled children.

# Supplemental Security Income Recipients Whose Medicare Benefits Were Terminated Because of Death

## Objective

To determine whether SSI payments should be terminated for recipients
whose Medicare benefit records indicate they are deceased.

## Background

In October 2005, we were asked to evaluate an idea that was submitted
through SSA's Employee Suggestion Program. The employee provided several
examples in which SSI payments continued even though the recipients'
Medicare benefit records were terminated for death. To evaluate this
suggestion, we obtained limited Medicare and SSI data and identified
seven individuals who were paid \$41,576 in SSI funds after their deaths
were recorded on their Medicare records.

# Supplemental Security Income Underpayments on Prior Records Not Released or Offset for Outstanding Overpayments

## Objective

To determine whether SSA's internal controls are adequate to ensure SSI
underpayments on closed records are identified and properly released or
offset for overpayments.

## Background

In a 2001 audit, we reviewed overpayments on prior SSI records that were
not carried forward for collection on current payment records. We found
outstanding overpayments were not transferred to newly established
Supplemental Security Records. We identified \$93.54 million in
overpayments that should have been transferred to recipients' current
records. Information obtained during our prior review indicated this
condition was also occurring for SSI underpayments on prior records,
which will be the focus of this review.

# The Social Security Administration's Accountability of Federal Emergency Management Agency Funds Provided for Hurricane Relief Efforts

## Objective

To evaluate the effectiveness of SSA's internal control procedures and
accountability of funds provided by the Federal Emergency Management
Agency (FEMA) in response to Hurricanes Katrina, Rita, and Wilma.

## Background

To effectively manage Federal response and recovery efforts following a
national incident, FEMA, which is part of DHS, is authorized to use
Mission Assignments. These Assignments expedite aid by requesting
reimbursable assistance from other Federal agencies. Mission Assignments
direct other Federal agencies to complete specific tasks in preparation
for, or response to, a Presidential declaration.

SSA was authorized \$1.2 million for costs associated with its Mission
Assignments. The Mission Assignment included a reimbursable cost
estimate for travel, per diem, and overtime costs for volunteers. To
date, SSA has received reimbursement for 58 employees who reported for
FEMA assignments.

Congress and the public have raised concerns about the management of
Federal funds provided for hurricane relief. To identify possible fraud,
waste, abuse or mismanagement, DHS OIG is requesting that Inspectors
General review the use of Mission Assignment funds within their
respective agencies.

# The Social Security Administration's Controls and Procedures over Supplemental Security Income Death Alerts

## Objective

To evaluate the effectiveness of SSA's controls and procedures for
resolving SSI death alerts and the recovery of improper payments after a
beneficiary's death.

## Background

Most SSI recipient deaths are reported by relatives, friends, and
funeral homes. The remaining deaths are identified through computer
matches of death reports SSA receives from Federal and State agencies.
SSA compares these death reports to its payment files using the Death
Alert Control and Update System. If the comparison indicates payments
have been made after death or there is conflicting information about the
date of death, the Death Alert Control and Update System generates an
alert. SSA's procedures state that field offices should resolve death
alerts within 30 days.

# The Social Security Administration's Monitoring of Dedicated Accounts for Supplemental Security Income Recipients

## Objective

To determine whether SSA complied with its policies and procedures
regarding the monitoring of dedicated accounts for SSI recipients.

## Background

Public Law 104-193, enacted August 22, 1996, requires that certain past
due payments for SSI recipients under age 18 be placed in dedicated
accounts, which are separately maintained from other accounts and may
only be used for certain expenditures. Only SSI underpayments may be
deposited into dedicated accounts.

A dedicated account must be established when the applicable past due SSI
payment exceeds six times the maximum monthly benefit payable. There are
over 26,000 recipients with dedicated account indicators on their
Supplemental Security Record. As of April 2006, these dedicated accounts
totaled about \$65 million.

Generally, these funds are managed by representative payees, who may
only use the funds for allowable expenses. Allowable expenses must be
related to the recipients' impairments and include impairment-related
expenses for medical treatment and education or job skills training. The
funds may not be used for nonimpairment-related expenses, including
food, housing, clothing, and personal items. Repayments of SSI
overpayments are not considered allowable expenses. However, SSA may
approve use of dedicated account funds for basic living expenses to
prevent a recipient from becoming homeless or malnourished.
Representative payees are required to annually file a *Representative
Payee Report of Benefits and Dedicated Account*, SSA-6233 BK, to report
how dedicated funds were spent.

# The Social Security Administration's Title II Disability Insurance Triennial Redetermination Process

## Objective

To determine whether SSA is accurately processing DI cases that require
a triennial redetermination.

## Background

Workers injured on the job may qualify for DI benefits under Title II of
the *Social Security Act*. In addition to DI benefits, disabled workers
may be eligible for benefits under Federal and State WC programs.
However, when an injured worker receives both DI and WC benefits, the
individual may receive more in disability payments than they earned
while working. To prevent this, SSA offsets (reduces) DI payments based
on the amount of monthly WC benefits.

To protect beneficiaries against inflation, SSA is required to
redetermine the beneficiary's average current earning when the DI
benefit has been subject to a WC offset for 3 consecutive years. The
triennial redetermination can result in additional DI benefits.

# Title II Beneficiaries Living in Canada and England (2 Reviews)

## Objective

To verify the existence of Title II beneficiaries residing in Canada and
England and ensure SSA's records are accurate.

## Background

SSA pays retirement, disability or survivor benefits to eligible
individuals and/or family members under Title II of the *Social Security
Act*. Beneficiaries receiving Social Security benefits may continue
collecting benefits while residing outside the United States. However,
because these individuals reside outside the United States, there is a
risk SSA will not timely detect events---such as death---that could
impact a beneficiary's eligibility or payment amount.

Of the approximately 400,000 Title II beneficiaries residing outside the
United States, about 97,000 have an address in Canada. Also, about 95
percent of the beneficiaries in Canada are over age 65 and receiving
retirement benefits; whereas the remaining 5 percent are either
receiving disability or survivor benefits.

Since 95 percent of the approximately\
24,000 Social Security beneficiaries residing in England are collecting
retirement benefits, the greatest risk for SSA is that the beneficiary
could die and benefits would continue to be paid. This could lead to
both improper payments and fraud if someone else were to use the funds.

# Title XVI Payments Sent to Social Security Administration Field Offices

## Objective

To determine whether SSA complied with its policies governing
recipients' use of field office addresses to receive SSI payments.

## Background

Consistent with the requirements of the *Homeless Eligibility
Clarification Act*, SSA policy allows eligible SSI recipients to use
field office addresses if they do not reside in a permanent dwelling or
do not have a fixed home or mailing address. Using a field office
address should be a last resort and should not be simply for security
reasons. SSA field offices are required to maintain records of approved
individuals and log the distribution of all checks.

Based on an initial data extract pulled before Hurricane Katrina, we
estimate that SSA uses field office addresses to mail checks to
approximately 3,800 SSI recipients. This totals approximately \$2
million in monthly payments received and distributed by personnel in SSA
field offices.

# Unprocessed Manual Recalculations for Title II Overpayments

## Objective

To determine whether SSA (1) adjusts Title II benefits when earnings are
removed from individuals' earnings record and\
(2) calculate and assess overpayments, when appropriate.

## Background

As part of an earlier audit, we found cases where earnings were removed
from Title II beneficiaries' earnings records, but no recomputation of
their benefits was performed. As a result, these individuals were being
overpaid. Although the earlier audit focused on individuals who had
self-employment income removed from their earnings record, a review of
all earnings (wages and self-employment) that were removed may identify
additional situations where manual recomputations have not been
performed, resulting in overpayments.

# W-2 Earnings for Individuals Related to Disabled Workers

## Objective

To identify individuals receiving DI benefits who may have participated
in work activity and hidden income by using a relative's SSN.

## Background

Disabled beneficiaries who return to work may lose their Social Security
benefits. As a result, beneficiaries who do not report their earnings to
SSA increase their available income by continuing to receive benefits
while also working. We have identified cases where beneficiaries hid
their wages from SSA by using a relative's name and SSN when working.

# INTERNAL CONTROL ENVIRONMENT AND PERFORMANCE MEASURES

Internal control comprises the plans, methods, and procedures used to
meet missions, goals, and objectives. SSA's management is responsible
for establishing and maintaining internal control to achieve the
objectives of effective and efficient operations, reliable financial
reporting, and compliance with applicable laws and regulations.
Similarly, SSA management is responsible for determining, through
performance measurement and systematic analysis, whether the programs it
manages achieve intended objectives.

*OMB Circular A-123* requires that the Agency and its managers take
systematic and proactive measures to develop and implement appropriate,
cost-effective internal control for results-oriented management. One of
the main work processes SSA manages is the development of disability
claims under the DI and SSI programs. Accordingly, SSA management is
responsible for establishing appropriate controls over this process.
Disability determinations under DI and SSI are performed by DDSs in each
State in accordance with Federal regulations. Each DDS is responsible
for determining claimants' disabilities and ensuring adequate evidence
is available to support its determinations. SSA reimburses the DDS for
100 percent of allowable expenditures up to its approved funding
authorization.

From FY 2000 through May 2006, we conducted 46 DDS administrative cost
audits, identifying over \$82 million in questioned costs and/or funds
that could be put to better use. In 25 of the 46 audits, we identified
internal control weaknesses. For example, we reported that improvements
were needed to ensure Federal funds were properly drawn and payments to
medical providers were in accordance with Federal regulations. The lack
of effective internal controls can result in the mismanagement of
Federal resources and increase the risk of fraud. We will conduct
multiple audits of state DDSs in FY 2007 to ensure the costs claimed by
the DDSs are allowable and the DDSs have proper internal controls over
the accounting and reporting of the administrative costs SSA reimburses.

Another area that requires sound management and effective internal
controls is the selection and oversight of contractors that assist the
Agency in meeting its mission. Contracting is increasingly seen as an
effective way to support Federal agencies in managing increasing
workloads with diminished levels of staff. The volume of Federal
contract spending---\$328 billion in FY 2004, up 87 percent from FY
1997---demonstrates the importance of developing and managing Federal
contracts in ways that will ensure the best contract outcomes and the
best return on the taxpayers' dollar. In FY 2005, SSA spent over \$848
million on contracts. We will review multiple contracts in FY 2007 to
ensure SSA is getting the services it is paying for and that SSA has
proper internal controls in place to ensure effective oversight of
contractors.

The *Government Performance and Results Act* requires that SSA develop
multi-year strategic and annual performance plans that establish the
Agency's strategic and annual performance goals. The performance plans
also contain the Agency's annual performance measures used to determine
whether SSA is achieving its goals. In addition to legislation calling
for greater accountability in the Government, the PMA has focused on the
integration of the budget and performance measurement processes. The PMA
calls for agencies to identify high quality outcome measures, accurately
monitor programs' performance, and integrate this presentation with
associated costs. Also, SSA managers, Congress, external interested
parties, and the general public need sound data to monitor and evaluate
SSA's performance. In FY 2007, we will continue to assess the
reliability of SSA's performance data and the meaningfulness of SSA's
performance measures to ensure that SSA has the information needed to
effectively manage its programs and track progress towards meeting its
goals.

In FY 2007, we plan to complete 31 reviews, begin 20 reviews and oversee
the reviews of 13 performance measures in this area.

## We plan to complete the following reviews in FY 2007

Administrative Costs Claimed by State Disability Determination Services:
California, Florida, Idaho, Illinois, Maryland, Mississippi, Missouri,
New York, Puerto Rico, Rhode Island, Tennessee, Vermont, and West
Virginia

Association of University Centers on Disabilities Contract Number
0600-01-60127

Contract Audits: I. Levy and Associates, Inc., Meridian Management
Corporation, Paragon Systems, Inc., and Riojas Enterprise, Inc.

Controls over Contract Costs for the Demonstration Project for
Non-Attorney Representatives

Controls over Representative Payee Accounting of Social Security Funds

Fiscal Year 2006 Financial Statement Audit Oversight

Fiscal Year 2006 Inspector General Statement on the Social Security
Administration's Major Management Challenges

Indirect Costs for the Connecticut Disability Determination Services for
the Period July 1, 2003 Through September 30, 2005

Process for Awarding Sole Source Contracts

The Social Security Administration's Compliance with Employee Tax
Requirements

The Social Security Administration's Oversight of the PSI Group, Inc.

## We plan to begin the following reviews in FY 2007

Administrative Costs Claimed by the Alabama, Colorado, District of
Columbia, Georgia, Kentucky, Nebraska, New Mexico, Pennsylvania, Utah,
and Washington Disability Determination Services

Contract Audit - I. Levy and Associates, Inc., Contract for Development
and Implementation of the Data Management Architecture at the Oklahoma
Disability Determination Services

Contract Audit, MDRC

Controls over the Social Security Administration's Business Services
Online Program

Credit Evaluations for Social Security Administration Employees Before
the Issuance of Government Charge Cards

Fiscal Year 2007 Financial Statement Audit Oversight

Fiscal Year 2007 Inspector General Statement on the Social Security
Administration's Major Management Challenges

Grants Management

MAXIMUS' Incurred Cost Rates for Fiscal Years 2004 and 2005

MAXIMUS' Youth Continuing Disability Review Contract (Contract Number
0600-99-38740)

Social Security Administration Procedures for Collecting Backup
Withholdings Taxes

## We Plan to Oversee Reviews of 13 Performance Indicators

# Administrative Costs Claimed by State Disability Determination Services

We will be conducting reviews in the following DDSs: California,
Florida, Idaho, Illinois, Maryland, Mississippi, Missouri, New York,
Puerto Rico, Rhode Island, Tennessee, Vermont, and West Virginia to

1\. Evaluate the DDS' internal controls over the accounting and
reporting of administrative costs,

2\. Determine whether costs claimed by the DDS were allowable and funds
were properly drawn, and

3\. Assess limited areas of the general security controls environment.

## Background

The DI program was established in 1956 under Title II of the *Social
Security Act* to provide benefits to wage earners and their families in
the event the wage earner becomes disabled. In 1972, Congress enacted
the SSI program to provide a nationally uniform program of income to
financially needy individuals who are aged, blind, or disabled.
Disability determinations under the DI and SSI programs are performed by
an agency in each State in accordance with Federal regulations. In
carrying out its obligation, each State agency is responsible for
determining the claimants' disabilities and ensuring that adequate
evidence is available to support its determinations.

# Association of University Centers on Disabilities Contract Number--- 0600-01-60127

## Objective

To determine whether costs claimed by the Association of University
Centers on Disabilities for Contract Number\
600-01-60127 were allowable, allocable, and reasonable according to
applicable Federal regulations and the contract's terms.

## Background

SSA's Office of Acquisitions and Grants requested an audit of costs
incurred by the Association of University Centers on Disabilities for
Contract Number\
600-01-60127. The purpose of the contract was for the Association to
determine ways SSA can improve policies and procedures for the
adjudication of childhood cases. The contract period was from\
September 2001 through May 2005. The total cost claimed for the contract
period was approximately \$1.6 million.

# Contract Audits

## Objective

To (1) review the services provided and the related costs charged to SSA
for adherence to the negotiated contract terms and applicable
regulations and (2) ensure SSA personnel properly monitored the contract
for the following five contracts.

## Background

## **I Levy and Associates, Inc.**: The first contract we will review was awarded to migrate I. Levy software from the DDSs WANG VS computer systems to the new IBM AS-400 computer systems. The contract was completed between September 2000 and September 2005 at 26 DDSs for a total cost of \$18 million.

The second contract we will review was awarded to I. Levy and
Associates, Inc., to develop and implement an electronic folder
interface and data management architecture at State DDSs. The contract,
which began in September 2002, is on-going and valued at \$17 million.

**Meridian Management Corporation**: SSA contracted with Meridian
Management Corporation for facilities management services. SSA initiated
a \$15 million contract for maintenance, repair, and rebuilding
activities at the Great Lakes Program Service Center which will be the
focus of our review. The fixed price contract is for the period of April
2003 through November 2006.

**Paragon Systems, Inc**.: The contract was to provide Security Guard
Services---Armed/Unarmed Security Guard Services at the SSA National
Computer Center and Security West Building in Woodlawn, Maryland. The
contract is for \$40 million for the period January 2006 through January
2007.

**Riojas Enterprises, Inc.: **The contract was awarded to provide case
folder filing support services at SSA's Megasite Folder Storage
Facility. The contract was performed between August 1998 and March 2004
at a total cost of about \$32 million.

# Controls over Contract Costs for the Demonstration Project for Non-Attorney Representatives

## Objective

To review the contract costs associated with the demonstration project
for non-attorney representatives.

## Background

In January 2005, SSA awarded a \$335,000,\
1-year renewable contract to a California company to assist in
determining the eligibility of non-attorney representatives to
participate in the demonstration project. The contractor was to develop
a website, accept applications and fees, verify education and
experience, conduct background checks, assist SSA in developing the
examination, and administer the examination.

# Controls over Representative Payee Accounting of Social Security Funds

## Objective

To ensure annual representative payee accounting is done timely and
accurately and to ensure that, when the accounting is not completed, SSA
takes appropriate action.

## Background

The *Social Security Protection Act of 2004 *gives SSA the authority to
redirect delivery of benefit payments when a representative payee fails
to provide required accounting reports.

# Fiscal Year 2006 Financial Statement Audit Oversight

## Objective

To fulfill our responsibilities under the *Chief Financial Officers Act*
and related legislation for ensuring the quality of the audit work
performed, we will monitor PricewaterhouseCoopers' audit of SSA's
financial statements.

## Background

The *Chief Financial Officers Act* requires that agencies annually
prepare audited financial statements. Each agency's Inspector General is
responsible for auditing these financial statements to determine whether
they provide a fair representation of the entity's financial position.
This annual audit also includes an assessment of the agency's internal
control structure and its compliance with laws and regulations. The
audit work to support this opinion of SSA's financial statement will be
performed by PricewaterhouseCoopers. We will monitor the contract to
ensure reliability of PricewaterhouseCoopers' work to meet our statutory
requirements for auditing the Agency's financial statements.

# Fiscal Year 2006 Inspector General Statement on the Social Security Administration's Major Management Challenges

## Objective

To summarize for inclusion in SSA's *Performance and Accountability
Report*, our perspective on the most serious management and performance
challenges facing SSA.

## Background

In November 2000, the President signed the *Reports Consolidation Act of
2000*, which requires that Inspectors General provide a summary and
assessment of the most serious management and performance challenges
facing Federal agencies and the agencies' progress in addressing them.
This document responds to the requirement to include this statement in
SSA's* Performance and Accountability Report*.

The top management issues facing SSA in FY 2006, as determined by the
OIG, were:

· Social Security Number Protection,

· Management of the Disability Process,

· Improper Payments and Recovery of Overpayments,

· Internal Control Environment and Performance Measures,

· Systems Security and Critical Infrastructure Protection, and

· Service Delivery and Electronic Government.

# Indirect Costs for the Connecticut Disability Determination Services for the Period July 1, 2003 Through September 30, 2005

## Objective

To assess the indirect costs for the Connecticut DDS for the period July
1, 2003-September 30, 2005 and follow up on our prior recommendations.

## Background

SSA requested an audit of the indirect costs at the Connecticut DDS.

# Process for Awarding Sole Source Contracts

## Objective

To assess the Office of Acquisition and Grants' compliance with its
noncompetitive contract award process. Specifically, we will review the
process SSA used to justify sole source acquisitions.

## Background

The Office of Acquisition and Grants is responsible for awarding and
administering contracts, orders, and grants. It also issues SSA's
acquisition policies and procedures. The Office of Acquisition and
Grants uses various mechanisms to award contracts to purchase supplies
or services. One mechanism is a sole source acquisition. The Federal
Acquisition Regulation 2.101 defines sole source acquisition as "a
contract for the purchase of supplies or services that is entered into
or proposed to be entered into by an agency after soliciting and
negotiating with only one source."

# The Social Security Administration's Compliance with Employee Tax Requirements

## Objective

To determine whether SSA is (1) appropriately paying employment taxes on
wages and (2) reporting required wage information and other payments on
the designated IRS forms.

## Background

The IRS has requested that each OIG determine whether its parent agency
is complying with Federal tax laws. Federal agencies are subject to the
same employment tax requirements as all other employers. The Internal
Revenue Code requires that employers pay employment taxes on wages and
report wages and certain other payments on various IRS forms. Federal
employment taxes include Federal income tax withholdings, Social
Security, and Medicare taxes. Employers are required to make deposits of
employment taxes on a daily, weekly, or semi-weekly schedule depending
on the amount of tax they accumulate for deposits.

# The Social Security Administration's Oversight of PSI Group, Inc.

## Objective

To evaluate SSA's oversight of PSI Group, Inc. Presort Mail Contract for
the period August 2005 to August 2006. Specifically, we will determine
whether SSA's mail (which includes SSN cards) was sorted timely, within
specifications and at the agreed-upon price.

## Background

In a prior report, we recommended SSA "periodically perform and document
a comprehensive security review of the presort mail contractor's
facility."

The contractor processes about 21 million pieces of mail each year. The
contract was awarded for \$391,000 and covered the period August 2005 to
August 2006. The contract can be renewed for 4 additional years.

# Performance Indicator Audits: The Social Security Administration's Performance Data

## Objective

To determine the reliability of the performance data SSA uses to measure
selected performance indicators.

## Background

Congress passed the *Government Performance and Results Act of 1993* to
bring greater accountability to Federal agencies. The Act establishes a
system for strategic and annual performance planning and reporting to
set goals for program performance and to measure results. The law
requires each agency to create\
(1) 5-year strategic plans, (2) annual performance plan, and (3) annual
performance reports.

The success of SSA's performance measurement initiatives hinges on the
quality of the data used to measure and report on program performance.
Consequently, it is important that SSA have assurance that the data
reported is reliable, meaningful and that its performance report will be
useful to Congress and agency management.

We will oversee a contract to review SSA's performance data and the
systems from which it is generated to gain assurance that the data
reported in the performance plan are reliable and meaningful. In FY
2007, the contractor will issue reports on

· Claims Processing,

· DDS Processing,

· Electronic Service Delivery, and

· Hearing and Appeals Processing.

The contractor will also begin reviews to assess the reliability of the
data used with the following performance measures.

· Issue annual SSA-Initiated Social Security Statements to eligible
individuals age 25 or older

· Minimize skill and knowledge gaps in mission-critical positions

· Align employee performance with Agency mission and strategic goals

· Percent of OASDI payments free of\
overpayments and underpayments

· Average processing time for hearings appeals

· DDS net accuracy rate (allowances/denials combined)

· Number of SSI disabled beneficiaries earning at least \$100 per month

· Remove 3 percent of the earnings items remaining in the ESF for a new
TY and post the earnings to the correct earnings record

· Continue to achieve 2 percent productivity improvement on average

· Maintain the number of initial disability claims pending in the DDS

· Percent of individuals who do business with SSA rating the overall
service is "excellent," "very good," or "good"

· SSI non-disability redeterminations processed

· SSA hearings case production per work year

# SYSTEMS SECURITY AND CRITICAL INFRASTRUCTURE PROTECTION

In a global information society, where information routinely travels
through cyberspace, the importance of security is widely accepted. In
addition, information and the infrastructures that deliver the
information are pervasive throughout organizations---from the user\'s
platform to local and wide area networks to servers to mainframe
computers. The growth in computer interconnectivity brings a heightened
risk of the disruption of the operation of critical information systems
and exposure of sensitive data. The Government must continually strive
to secure information systems and the data contained therein.

SSA's information security challenge is to understand and mitigate
system vulnerabilities. At SSA, this means ensuring the security of its
critical information infrastructure and sensitive data. A recent
incidence of the massive loss of personal information by a Federal
agency demonstrates the importance of data security. The public will be
reluctant to use electronic access to SSA services if it does not
believe its systems and data are secure. Without due diligence,
sensitive information can become available to those who should not have
it and may use it for personal gain. To address increasing work loads
and a changing work environment, SSA constantly introduces new
technologies, such as IPv6 and Voice Over Internet Protocol. New
technology often brings advantages, but also security challenges. The
Agency needs to understand and address potential risks before such
technology is implemented.

SSA addresses critical information infrastructure and systems security
in a variety of ways. For example, it has created a Critical
Infrastructure Protection work group that works toward compliance with
various directives, such as the Homeland Security Presidential
Directives (HSPD) and the *Federal Information Security Management Act
of 2002 *(FISMA). SSA routinely releases security advisories to its
employees and has hired contractors to provide expertise in assessing
and addressing security vulnerabilities. In addition, SSA plans to
minimize the risks associated with a single, national computing facility
by acquiring a second fully functional, co-processing data center.

HSPD 12 mandates the development of a common identification standard for
all Federal employees and contractors. Federal Information Processing
Standard 201, *Personal Identity Verification of Federal Employees and
Contractors*, was developed to satisfy the requirements of HSPD 12. The
Agency created a work group that coordinates with other agencies and OMB
to address HSPD 12. SSA expects to meet the October 27, 2006 date for
compliance with PIV I, which addresses the verification of suitability
of Federal employees and contractors, and is making progress on PIV II,
which addresses the technical aspects of implementing HSPD 12. The
Agency has 2 years to become fully compliant. We plan to evaluate SSA's
efforts to comply with HSPD 12.

Under FISMA, we annually evaluate SSA's security program. FISMA requires
that Agencies institute a sound information security program and
framework. Since FISMA's inception, we have worked with the Agency to
ensure prompt resolution of security issues. The House Government Reform
Committee rated the Agency "A+" in 2005 on computer security based on
its compliance with FISMA.

We continuously monitor the Agency's efforts to protect its valuable
information as well as its implementation of new technology, such as
IPv6 and Voice Over Internet Protocol to ensure its information security
program is operating effectively.

In FY 2007, we plan to complete 13 reviews and begin 14 reviews in this
area.

## We plan to complete the following reviews in FY 2007

Compliance with On-site Security Control and Audit Review
Requirements---Four Reviews

*Federal Information Security Management Act*

Follow-up: The Social Security Administration's Monitoring of Potential
Employee Systems Security Violations

Follow-up: The Social Security Administration's Processing of Internal
Revenue Service Overstated Wage Referrals

General Controls of the Florida Division of Disability Determinations
Claims Processing System

Social Security Administration Data Access Provided by Disability
Determination Services Positional Profiles

The Social Security Administration's Information Technology Maintenance
and Local Area Network Relocation Contract

The Social Security Administration's iSeries Patch Management Process

The Social Security Administration's Management of Information
Technology Development Projects

The Social Security Administration's Second Data Processing Center

## We plan to begin the following reviews in FY 2007

Accuracy of Death Information in the Death Alert Control and Update
System

Controls over Manual Wage Adjustments

Follow-up: Physical Security for the Social Security Administration's
Laptop Computers, Cellular Telephones, and Pagers

Follow-up: The Social Security Administration's Implementation of
Program Operations Manual System Security Requirements at Disability
Determination Services

General Controls of the Pennsylvania Disability Determination Services'
Claims Processing System

Medicare Modernization Act Project

Productivity Gains Realized from System Development Projects

Security Review of the Social Security Administration's Internet
Protocol Version 6

The Effectiveness and Security of the eWork System

The Social Security Administration's Contracting for its Purchase
Order/Contract System

The Social Security Administration's Efforts to Meet Suitability
Requirements

The Social Security Administration's Implementation of Active Directory

The Social Security Administration's Incident Response and Reporting
System

The Social Security Administration's Voice over Internet Protocol

# Compliance with On-site Security Control and Audit Review Requirements (4 Reviews)

## Disability Determination Services, Field Offices, ODAR, and Program Service Centers

## Objective

To assess each Region's procedures for (1) selecting offices for an
Onsite Security Control and Audit Review (OSCAR), (2) ensuring
appropriate coverage of vulnerable areas, (3) correcting identified
deficiencies, and (4) using the results to improve the overall OSCAR
process.

## Background

SSA must comply with the Federal requirements associated with management
controls and provide assurance the financial, program and administrative
processes are functioning as intended. These requirements include its
*Federal Managers' Financial Integrity Act*. SSA designed the OSCAR
program to satisfy these requirements.

SSA conducts OSCARs at DDSs, field offices, teleservice centers, hearing
offices, and program service centers. These reviews cover several
program and administrative functions. For example, the field office
OSCARS cover (1) third-party draft accounts; (2) acquisitions; (3)
refund and remittance processes; (4) time and attendance; (5) security
of automated systems; (6) physical and protective security; (7)
enumeration; and\
(8) integrity review areas.

Successful implementation of the OSCAR process, as well as appropriate
follow up on problem areas, can correct deficiencies in SSA's programs,
ensure adequate controls, and reduce the potential risk to (1) the
safety of Federal employees and the public, (2) Federal resources, and
(3) sensitive information.

# Federal Information Security Management Act

## Objective

To determine whether SSA is in compliance with FISMA.

## Background

FISMA requires that agencies maintain an agency-wide information
security program. Annual reviews of the security program are performed
by the Agency and the OIG. Each year, OMB issues questions to be
answered concerning agencies' compliance with FISMA.

# Follow-up: The Social Security Administration's Monitoring of Potential Employee Systems Security Violations

## Objective

To determine whether SSA implemented recommendations in our report,
*Social Security Administration's Monitoring of Potential Employee
Systems Security Violations*.

## Background

In June 1998, SSA established a uniform set of Sanctions for
Unauthorized Systems Access Violations to secure the integrity and
privacy of the personal information contained in the Agency's computer
systems and ensure any violations of the confidentiality of its computer
records are treated consistently.

Our prior report recommended SSA take corrective actions to improve the
effectiveness of controls over employee systems security violations. The
Agency agreed with our recommendations. This review will assess SSA's
progress in implementing the recommendations as well as other controls
in place to monitor employee system security violations.

# Follow-up: The Social Security Administration's Processing of Internal Revenue Service Overstated Wage Referrals

## Objective

To determine whether SSA has\
(1) processed IRS wage referrals and\
(2) coordinated with the IRS to streamline or automate the wage referral
process.

## Background

Each year, a number of taxpayers contact the IRS to dispute wages posted
to their earnings record as well as the associated taxes. If the IRS
concurs with the taxpayer, it sends a referral to SSA stating the
earnings reported under a specific SSN do not belong to the person
assigned the SSN. The IRS does not collect Federal income tax from the
individual on the disputed earnings and notifies SSA to correct the
individual's earnings record. SSA and the IRS have previously agreed on
the information that is needed to process these referrals.

In our March 2003 audit, *The Social Security Administration's
Processing of Internal Revenue Service Overstated Wage Referrals*, we
found that SSA had not processed approximately 12,000 IRS referrals to
determine whether the individuals had overstated wages on their earnings
records. We recommended that SSA begin processing these referrals. SSA
concurred with our recommendations.

# General Controls of the Florida Division of Disability Determinations Claims Processing System

## Objective

To assess the general controls environment for the Florida Division of
Disability Determinations claims processing system.

## Background

The DI program provides benefits to wage earners and their families in
the event the wage earner becomes disabled. The SSI program is designed
to help blind, and/or disabled people who have limited resources.
Disability determinations under both programs are performed by an agency
in each State or other responsible jurisdiction. In carrying out its
obligation, each responsible agency determines claimants' disabilities
and ensures there is adequate evidence available to support its
determinations.

Sensitive SSA data, processed and stored by each DDS, should be
protected from inappropriate or unauthorized access, use, and
disclosure. DDSs are expected to provide a control environment that
meets SSA's minimum security requirements.

# Social Security Administration Data Access Provided by Disability Determination Services Positional Profiles

## Objective

To determine whether the positional profiles assigned to DDS employees
provide more access to SSA data than needed to do their jobs.

## Background

FISMA and SSA's Information Systems Security Handbook require that user
access to SSA information systems be based on the principles of "need to
know" and "least privilege." As such, the information users may be
authorized to access, use and/or modify, must be limited to that
required to perform authorized work.

DDS employees have been given access to SSA data. SSA uses positional
profiles controlled by security access software to limit access for SSA
and DDS staff to the "need to know" and "least privilege" principles.
Each positional profile is linked to a job title and has access to a
certain subset of SSA's applications while limiting the types of access
(establish, update, or query) based on the needs of that job.

# The Social Security Administration's Information Technology Maintenance and Local Area Network Relocation Contract

## Objective

To determine whether SSA has adequate controls in place for the
administration, oversight and accountability of its contract for
information technology maintenance and local area network relocation.

## Background

Earned value management (EVM) is a project (investment) management tool
effectively integrating the investment scope of work with schedule and
cost elements for optimum investment planning and control. It is a
numerical representation of project costs and schedule status. Earned
value is the budgeted value earned when the budgeted work is performed.
Earned value is then compared to the actual costs and the planned values
(budgets) to measure performance.

On August 23, 2004, OMB issued Memorandum M-04-24, *Expanded Electronic
Government President's Management Agenda Scorecard Cost, Schedule and
Performance Standard for Success*. This memorandum sets forth the
criteria to be used and evidence necessary to evaluate whether a Federal
agency has complied with the EVM standard. To achieve a "green" level of
performance for this initiative, the agency's actual performance cannot
vary by more than\
10 percent from its cost, schedule and performance goals.

# The Social Security Administration's iSeries Patch Management Process

## Objective

To determine the effectiveness of the patch management process
implemented by SSA and the DDSs for the iSeries platform.

## Background

Vulnerabilities are weaknesses in software that a malicious entity could
exploit to gain greater access and/or permission than is authorized. A
'patch' is a piece of software code that is inserted into a program to
temporarily fix a previously unknown software defect. The software
needing a patch can be either hardware or application specific. Patches
are developed and released by software vendors when vulnerabilities are
discovered. GAO reported that patch management is a critical process
that can be used to alleviate many of the challenges involved with
securing computing systems from attack.

# The Social Security Administration's Management of Information Technology Development Projects

## Objective

To determine whether SSA is receiving the intended value from its
acquisition and management of information technology resources.

## Background

One of SSA's strategic goals supports the delivery of citizen-centered
service and the expansion of the E-Government element of the PMA.
Technology is essential to achieving efficiencies and enabling employees
to deliver the kind of service that every claimant, beneficiary and
citizen needs and deserves. This requires the development of new IT
projects. Without proper management, it is difficult to get the
appropriate outcome that will have sufficient impact on SSA.

# The Social Security Administration's Second Data Processing Center

## Objective

To determine whether SSA's acquisition of a second data processing
center was conducted in accordance with Government standards and
industry best security practices.

## Background

SSA needs to mitigate and/or minimize the risks associated with a
single, national computing facility. The Agency plans to accomplish this
objective by acquiring a second, fully functional, co-processing data
center. The data centers will be engineered so the critical workloads of
each facility can be assumed by the other center if the need arises.

# SERVICE DELIVERY AND ELECTRONIC GOVERNMENT

This area includes the challenges of the Medicare Prescription Drug
Program, Representative Payee Process, Electronic Government and
Managing Human Capital.

# Medicare Prescription Drug Program

The *Medicare Prescription Drug, Improvement and Modernization Act of
2003 *requires that SSA undertake several Medicare-related
responsibilities. This includes making low-income subsidy
determinations, notifying individuals of the availability of these
subsidies, and withholding premiums from monthly benefits for eligible
beneficiaries who request such an arrangement. By April 30, 2006, SSA
had rendered over 3.9 million subsidy eligibility decisions.

# Representative Payee Process

When SSA determines a beneficiary cannot manage his or her benefits, it
selects a representative payee who must use the payments for the
beneficiary's needs. SSA has reported there are about 5.3 million
representative payees who manage benefit payments for approximately 7
million beneficiaries. While representative payees provide a valuable
service for beneficiaries, SSA must provide appropriate safeguards to
ensure they meet their responsibilities to the beneficiaries they serve.

Our audits have identified

· deficiencies with the accounting for benefit receipts and
disbursements,

· vulnerabilities in the safeguarding of beneficiary payments,

· poor monitoring and reporting to SSA of changes in beneficiary
circumstances,

· inappropriate handling of beneficiary-conserved funds, and

· improper charging of fees.

The *Social Security Protection Act of 2004* provided several new
safeguards for those individuals who need a representative payee. In
addition, it presented significant challenges to SSA to ensure
representative payees meet beneficiaries' needs. For example, it
requires that SSA conduct periodic on-site reviews of representative
payees and a statistically valid survey to determine how payments made
to representative payees are used. It also authorizes SSA to impose
civil monetary penalties for offenses involving misuse of benefits
received by a representative payee.

# Electronic Government

E-Government has changed the way Government operates and the way
citizens relate to Government. Within the next 5 years, SSA expects to
provide cost-effective, e-Government services to citizens, businesses
and other government agencies that will allow them to easily and
securely conduct most of their business with SSA electronically. SSA has
five goals to support this vision.

1\. Offer citizens the e-Government services they want and need.

2\. Ensure stewardship by protecting on-line security and privacy and
the integrity of the SSA benefit payment process.

3\. Pursue e-Government partnerships and collaborations with other
government agencies and private sector organizations.

4\. Implement e-Government programs that offer sound business case
justification.

5\. Align the organization and invest in human capital to maximize
e-Government progress.

SSA's e-Government strategy is based on the deployment of high-volume,
high-payoff applications, for both the public and the Agency's business
partners. To meet increasing public demands, SSA has pursued a portfolio
of services that include on-line and voice-enabled telephone
transactions to increase opportunities for the public to conduct SSA
business electronically in a private and secure environment. As of June
30, 2006, SSA had scored "green" for "Current Status" and "red" for
"Progress" in Implementing the PMA on the Executive Branch Management
Scorecard.

# Managing Human Capital

SSA, like many other Federal agencies, is being challenged to address
its human capital shortfalls. As of February 2005, GAO continued to
identify strategic human capital management on its list of high-risk
Federal programs and operations. GAO initially identified human capital
management as high-risk in January 2001. In addition, Strategic
Management of Human Capital is one of five Government-wide initiatives
contained in the PMA.

By the end of 2012, SSA projects its DI rolls will increase by 35
percent. Further, by FY 2015, 54 percent of current SSA employees will
be eligible to retire. This retirement wave will result in a loss of
institutional knowledge that will affect SSA's ability to deliver
quality service to the public. Along with the workload increase, the
incredible pace of technological change will have a profound impact on
both the public's expectations and SSA's ability to meet those
expectations.

The critical loss of institutional skills and knowledge, combined with
greatly increased workloads at a time when the baby-boom generation will
require its services must be addressed by succession planning, strong
recruitment efforts, and the effective use of technology. As of June 30,
2006, SSA had maintained "green" in "Current Status" and "Progress in
Implementing the President's Management Agenda" in Human Capital in the
Executive Branch Management Scorecard. The scorecard tracks how well the
departments and major agencies are executing the five Government-wide
management initiatives.

In FY 2007, we plan to complete 11 reviews and begin 9 reviews in this
area.

## We plan to complete the following reviews in FY 2007

Field Office Visitor Intake Process

Follow-up: Information Concerning Representative Payee Misuse of
Beneficiaries' Funds

Follow-up: The Social Security Administration's Procedures to Identify
Representative Payees Who are Deceased

"In Care of" Addresses Used by Title II Beneficiaries and Title XVI
Recipients

Medicare Modernization Act-Part D Subsidy Income and Resource
Verification

Representative Payees for the Social Security Administration (4 Reviews)

The Accuracy of Addresses on the Social Security Administration's Social
Security Statements

The Social Security Administration's 800-Number Automation

## We plan to begin the following reviews in FY 2007

Individuals Convicted of Offenses Serving as Representative Payees

Notices Generated By the Title II Redesign System

Organizational Payees That Do Not Promptly Notify the Social Security
Administration When a Beneficiary in Their Care Dies

Public Law 108-203, Section 105, Liability of Representative Payees for
Misused Funds

Small and Disadvantaged Business Utilization

Social Security Administration Controls to Ensure Non-Governmental Fee
for Service Organizational Payees are Licensed and Bonded

Social Security Administration Employees Serving as Representative
Payees

The Social Security Administration's Efforts to Ensure Continued
Eligibility for Recipients and Beneficiaries Aged 100 or Older

The Social Security Administration's Site Reviews of Representative
Payees

# Field Office Visitor Intake Process

## Objective

To assess the effectiveness of SSA's Visitor Intake Process in providing
quicker check-in and more timely control of field office interviews.

## Background

Effective October 1, 2004, use of the Visitor Intake Process was
mandated in all field offices. The objective of the Visitor Intake
Process is to provide quicker check-in and better/more timely control of
field office interviews. The Process, a Microsoft Access database
program, is a revision of the Automated Interview Tracking System. It is
designed to track all scheduled appointments, monitor visitor
information, and provide reports and charts on a variety of statistical
data. The Visitor Intake Process is designed to inform field office
interviewing staffs and management of who is in the office, whether they
have an appointment, and how long visitors have been waiting.

# Follow-up: Information Concerning Representative Payee Misuse of Beneficiaries' Funds

## Objective

To determine the extent to which SSA implemented certain recommendations
from our prior report.

## Background

Our June 2002 report identified several problems in SSA's monitoring and
oversight of representative payees. SSA did not always refer misuse
cases to the OIG; retained representative payees who committed misuse;
and used representative payees who had their own representative payees.
To address these conditions, we included among our recommendations that
SSA:

· Develop and implement a process to identify and refer prior known
instances of representative payee misuse to the OIG for possible
criminal, civil and/or administrative remedies.

· Follow existing policy for referring all future representative payee
misuse cases to the OIG for possible criminal, civil and/or
administrative remedies.

· Comply with Agency policy that representative payees are rarely
retained after misuse has occurred.

· Periodically assess the continued suitability of representative payees
who previously misused benefit payments.

· Automate the process that identifies incarcerated representative
payees.

· Implement management controls to prevent the appointment of
individuals as representative payees when they have a representative
payee managing their own benefits.

# Follow up: The Social Security Administration's Procedures to Identify Representative Payees Who are Deceased

## Objective

To determine whether SSA identifies all cases in which a new
representative payee is needed when a former payee dies.

## Background

In our September 1999 report, *The Social Security Administration's
Procedures to Identify Representative Payees Who Are Deceased*, we found
SSA's procedures did not ensure a new representative payee was selected
when a former payee died. We estimated that 2,091 deceased payees were
issued \$17.3 million in OASDI and SSI payments from the date of the
payee's death through June 1998. Since SSA was not aware payments were
sent to these deceased payees, SSA could not be sure these payments were
used for the sole benefit of the intended beneficiaries or recipients.
SSA agreed with the six recommendations in our prior report.

# "In Care of" Addresses Used by Title II Beneficiaries and Title XVI Recipients

## Objective

To determine the extent of abuse of "in care of" addresses by
individuals, organizations, or facilities.

## Background

Some facilities, such as nursing homes, instruct residents to change
their address to "in care of" the facility. This circumvents the
representative payee process and allows the facility to avoid the
obligations that accompany being officially designated as a
representative payee for the beneficiary. This is done without regard to
the resident's capability to manage his/her funds. The funds are
directly deposited to an account the facility controls.

"In care of" addresses may also disguise other schemes to assume control
of beneficiaries' funds or make it appear the beneficiaries are living
in the United States when they are not.

# Medicare Modernization Act-Part D Subsidy Income and Resource Verification

## Objective

To determine whether SSA verified income and resource information
provided by applicants for the low-income subsidy.

## Background

The *Medicare Prescription Drug, Improvement and Modernization Act of
2003* established a new voluntary Part D Prescription Drug Program
effective January 1, 2006. The Act requires that SSA take applications
and determine eligibility for a new subsidy program. The subsidy program
assists some Medicare beneficiaries who have limited financial means, to
pay for voluntary Medicare prescription drug coverage under the Medicare
Part D program. Individuals who have Medicare and are receiving SSI
and/or Medicaid or who participate in the Medicare Savings Program are
deemed eligible for a subsidy.

SSA makes subsidy eligibility determinations by comparing the income and
resource information provided on the application with income and
resource data SSA obtains through matching agreements with other
agencies. If data inconsistencies are detected, the case will go through
SSA's verification process.

# Representative Payees for the Social Security Administration

## Objective

We will be conducting reviews of organizational or individual
representative payees in the New York, Atlanta, Kansas City, and San
Francisco Regions.

To determine whether the representative payee

· has effective safeguards over the receipt and disbursement of Social
Security benefits and

· uses and accounts for Social Security benefits in accordance with
SSA's policies and procedures.

## Background

SSA provides benefits to the most vulnerable members of society---the
young, the elderly, and the disabled. Congress granted SSA the authority
to appoint representative payees for those beneficiaries judged
incapable of managing or directing the management of their benefits.

Representative payees (organizations or individuals) receive and manage
payments on behalf of these beneficiaries. Given the vulnerability of
the beneficiaries and the risk a representative payee may misuse
beneficiaries' funds, it is imperative that SSA have appropriate
safeguards to ensure representative payees meet their responsibilities.

# The Accuracy of Addresses on the Social Security Administration's Social Security Statements

## Objective

To determine the accuracy of addresses SSA uses to mail Social Security
statements and its impact on SSA's ability to reach individuals to
inform them about their earnings and future benefits.

## Background

Effective FY 2000, SSA is required to provide annual statements with
benefits and earnings information to individuals over age 25 who have an
SSN, have wages or earnings from self-employment, and for whom a mailing
address can be obtained. Each statement is required to contain an (1)
estimate of potential monthly Social Security benefits, (2) wages and
self-employment income earned, and (3) Social Security and Medicare
taxes paid. The statements are generally mailed about 3 months before
the individual's birthday. In FY 2005, SSA mailed statements to more
than 140 million people. SSA obtains mailing addresses from the IRS. SSA
reaches about 85 percent of all earners through this process---the IRS
lacks addresses for the remaining 15 percent of earners.

# The Social Security Administration's 800-Number Automation

## Objective

To assess the level of service provided by and efficiency gained by
SSA's\
800-number automated features.

## Background

SSA's national 800-number network was implemented in 1998 to provide the
general public better access to SSA. The national 800-number network was
also implemented to provide the public with the ability to request
changes to their individual records (that is, addresses, earnings, etc).
Although the general public has a variety of other service options when
obtaining information or conducting business with SSA (that is,
internet, field offices, etc.), most of the customers conduct their
business with SSA via the telephone. When calling the 800-number,
customers can use automated features to conduct their business or to
talk to a teleservice center agent, or operator. In FY 2005, SSA
estimated that 57 million customers would access the national 800-number
network to conduct business with the Agency.