United States General Accounting Office

GAO Report to the Committee on Finance,

U.S. Senate, and the Committee on Ways

and Means, House of Representatives

February 1996 PASS PROGRAM

SSA Work Incentive for

Disabled Beneficiaries

Poorly Managed

GAO/HEHS-96-51

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-259613 

February 28, 1996

The Honorable William V. Roth, Jr.

Chairman

The Honorable Daniel Patrick Moynihan

Ranking Minority Member

Committee on Finance

United States Senate

The Honorable Bill Archer

Chairman

The Honorable Sam M. Gibbons

Ranking Minority Member

Committee on Ways and Means

House of Representatives

This report responds to the request in House Conference Report 103-670 that we review the

Social Security Administration’s plan for achieving self-support (PASS) program. The PASS work

incentive program was established in 1972 as part of the Supplemental Security Income

program to help disability benefit recipients to return to gainful employment. However, very

few recipients have left the federal disability rolls by returning to work. In this report we

provide data on the characteristics and uses of individual PASSes and provide recommendations

for strengthening PASS program implementation and internal controls.

We will send copies of this report to the Commissioner of Social Security, the Secretary of

Health and Human Services, and other interested parties. We will also make copies available to

others upon request.

Please contact me on (202) 512-7215 if you or your staff have any questions concerning this

report. Other GAO contacts and contributors for this report are listed in appendix VII.

Jane L. Ross

Director, Income Security Issues
Executive Summary

Purpose The increased recognition of the employment capabilities of people with

disabilities corresponds with the desires of many to obtain or maintain

meaningful work. Currently, income support for the disabled is provided

primarily through two federal programs, the Supplemental Security

Income (SSI) program and the Disability Insurance (DI) program, both

administered by the Social Security Administration (SSA). The SSI program

provides income assistance and health benefits to low-income blind,

disabled, and elderly people. The DI program provides cash and health

benefits to disabled former workers who paid taxes into the DI trust fund.

In 1994, the value of benefits paid out by both programs to about 7 million

individuals exceeded $100 billion. Despite increasing societal emphasis on

employment for the disabled, the number of individuals enrolled in one or

both programs doubled between 1985 and 1994, and each year only a few

individuals leave either program by returning to work.

In 1972, the Congress enacted the provision establishing the plan for

achieving self-support (PASS) work incentive, referred to in this report as

the PASS program, as part of the SSI program to “provide every opportunity

and encouragement” for people with disabilities to undertake gainful

employment. The PASS program allows disabled SSI recipients and DI

beneficiaries to receive higher SSI monthly benefits by excluding from their

SSI eligibility and benefit calculations any income or resources used to

pursue a work goal. Although the PASS program has been available for

more than 20 years, little information exists on its implementation, use,

and outcomes. As a result, the Congress requested GAO to conduct a study

of the PASS program and procedures. GAO designed its study to

• evaluate SSA’s management of the PASS program, including the program’s

impact on employment, and

• determine whether the PASS program is vulnerable to abuse.

To address its objectives, GAO interviewed staff in SSA’s headquarters,

reviewed PASS program regulations and guidance, and observed the initial

activities of an SSA work group considering proposed program changes. In

addition, GAO visited 19 SSA field offices, located in seven states, that have

approved high numbers of PASSes; interviewed staff in each of the 10 SSA

regional offices; reviewed 380 randomly selected PASSes; and spoke with

individuals who prepare PASSes for disability benefit recipients. Finally,

GAO analyzed data for PASS program participants from an extract of the

Supplemental Security Record and from the Master Beneficiary Record,

the main databases of the SSI and DI programs, respectively, as well as SSA’s

annual earnings database of employer-reported earnings.

Page 2 GAO/HEHS-96-51 PASS Program Poorly Managed
Executive Summary

Background Almost 7.2 million people under age 65 received federal disability

assistance in 1994 from the SSI or DI programs. Nearly 700,000 people—or

10 percent—received payments from both programs, making them

concurrent beneficiaries. Eligibility for both programs is based on medical

impairment(s) that prevent gainful employment, currently measured as

employment that results in earnings of $500 or more a month. Once benefit

eligibility is established, relatively few individuals subsequently become

employed; claimants in both programs receive cash benefits for an average

of a decade or more.

PASS program applicants submit individualized, written plans outlining

their employment goal, which are reviewed by staff in one of the more

than 1,300 SSA field offices that administer SSI. An approved PASS allows

disabled individuals to exclude any non-SSI income or resources they have,

including DI benefits, from the determination of the amount of their SSI

cash payment. The excluded moneys are to be used to pay for expenses

related to the employment goal, such as special adaptive equipment,

tuition, training, transportation, materials, or supplies. Excluding income

and resources from consideration under a PASS can result in a person

becoming eligible for SSI or receiving higher monthly SSI cash payments.

For example, under a PASS, an SSI recipient with monthly earnings of $200

may set aside these funds for job training costs to become an electrician

and still receive the full SSI payment each month. Under the PASS program,

individuals whose income and assets would otherwise bar them from

eligibility in SSI can establish or continue eligibility for the SSI program and

associated benefits, including Medicaid.

Results in Brief SSA has done a poor job implementing and managing the PASS program.

Because SSA has provided insufficient program direction and support to its

field office staff, these staff have difficulties approving and denying

program applications. While the PASS program is currently small—only

about 10,300 individuals participated in December 1994—the number of

PASSes has increased more than fivefold in the past 5 years as awareness of

the provision has grown, and millions more DI and SSI beneficiaries are

eligible to participate. Reflecting diversity in the disability community, the

PASSes GAO reviewed encompassed a wide variety of goals, ranging from

doing janitorial work to becoming a college professor. About 40 percent of

PASS program participants, largely DI beneficiaries, would not be eligible

for federal SSI payments if some of their income was not being disregarded

under a PASS.

Page 3 GAO/HEHS-96-51 PASS Program Poorly Managed
Executive Summary

The impact of the PASS program on employment is unknown because SSA

lacks basic data on PASS program participation. While GAO found that many

former program participants were working after their PASS ended, many

also worked before participating in the program, and few left the SSI and DI

rolls. Nearly all DI beneficiaries who had participated in the PASS program

were receiving their full benefits in May 1995, resulting in virtually no

savings for the DI trust fund. GAO estimated the cost of additional SSI

payments to all program participants at $2.6 million for January 1995, or

about $30 million annually.

A lack of safeguards has also left the PASS program vulnerable to abuse.

Internal control weaknesses include the broad and vague nature of PASS

program guidelines, the lack of a standardized application form, and the

absence of limits on the number of PASSes an individual may have

approved in his or her lifetime. In addition, SSA headquarters management

has not adequately addressed the potential problems presented by

professional PASS preparers, whose fees—as much as $800—are often

included as PASS expenses. Although SSA is attempting to address some of

these internal control weaknesses in its recently established work group, it

cannot now provide reasonable assurance that taxpayer dollars are being

used appropriately.

Principal Findings

PASS Program Poorly

Managed, Growing

SSA has not specified criteria for its staff to use in assessing the

appropriateness of plans proposed by PASS program applicants, or the

basis on which success of those plans should be measured. GAO found that

field office staff apply varying measures of successful outcomes to PASSes

when evaluating their feasibility, including gaining work experience,

reducing cash benefits through earnings, and leaving the disability rolls as

a result of work. Reflecting the diversity of the disability population, GAO

found a wide variety of goals and proposed expenditures in the plans it

reviewed, although most included cars, computers, or tuition.

In addition, the PASS program currently lacks several key elements that

could contribute to effective management. For example, SSA guidance does

not require PASSes to capture information on the applicant’s disability,

education, and skills. Further, the SSA staff responsible for reviewing

Page 4 GAO/HEHS-96-51 PASS Program Poorly Managed
Executive Summary

individual plans lack the necessary vocational training, experience, and

guidance to assess whether applicants can achieve their work goals.

Although the PASS program encompassed only about 10,300 claimants, or

less than 1 percent of the SSI population in December 1994, the number of

participants increased over 500 percent between 1990 and 1994. Further

growth is predicted, because millions of SSI and DI beneficiaries are eligible

to participate. Currently, the program includes primarily DI beneficiaries

who have unearned income to set aside under a PASS. Three-quarters of

PASS participants are concurrent beneficiaries—those who receive benefits

from both the DI and SSI programs—and 40 percent of all PASS participants,

almost all of them DI beneficiaries, had additional income that exceeded

the income eligibility level for federal SSI payments. However, as a result of

PASS program participation, these individuals received an average of $318

in additional federal SSI payments in January 1995.

Because SSA has not collected sufficient management data on PASS program

participation and outcomes and has not defined clear program goals, the

agency is unable to monitor the program’s effectiveness. Using the

available data, GAO’s analysis of more than 4,000 former PASS participants

found that while they were more likely to work than other SSI recipients

and often had earnings high enough to reduce their SSI payments, most had

also worked prior to participating in the PASS program. Furthermore,

almost no recipients eligible only for SSI had left that program by

December 1994. Nearly all concurrent beneficiaries were still receiving DI

benefits after their PASSes ended; many who had left the rolls did so for

reasons other than earnings, such as death. Earnings below the level of

substantial gainful activity—$500 a month for most beneficiaries—do not

reduce DI benefits or accrue any savings to the DI trust fund. In contrast,

earnings by all working SSI recipients, including former PASS program

participants, reduced SSI payments by more than $18 million in

January 1995. GAO estimated the cost of additional benefits paid out to PASS

program participants was $2.6 million for January 1995.

Inadequate Internal

Controls Compromise

PASS Program Integrity

GAO’s review of the PASS program showed limited adherence to existing

regulations as well as insufficient safeguards to protect SSI program

integrity. Internal control weaknesses include (1) minimal or nonexistent

PASS program participation requirements, such as no penalties for willful

noncompliance and no limits on the number of PASSes a person may have

approved; (2) broad and nonstandardized PASS guidance and compliance

reviews, which create inconsistent program administration; and (3) lack of

Page 5 GAO/HEHS-96-51 PASS Program Poorly Managed
Executive Summary

SSA policy regarding third-party PASS preparers, including the fees some

charge for plan development and their potential financial conflicts of

interest. SSA is aware of and is considering addressing some of these

weaknesses, but cannot now provide reasonable assurance that funds are

spent appropriately.

Matter for

Congressional

Consideration and

Recommendations

GAO is offering one matter for consideration to the Congress to address

program eligibility. GAO is also making several recommendations to the

Commissioner of SSA in the areas of improving consistency of program

management, support to field office staff, data collection and program

evaluation, and internal controls. (See ch. 4.)

Agency Comments SSA generally concurred with GAO’s recommendations, which it noted were

consistent with its work group study findings, and cited plans to address

them. However, SSA commented that it had limited statutory authority to

address all of GAO’s recommendations. As stated in GAO’s

recommendations, SSA may find it necessary to seek legislation to

implement program changes. More details on SSA’s specific proposed

actions, as well as a full copy of SSA’s comments and GAO’s response, are

included in appendix VI.

Page 6 GAO/HEHS-96-51 PASS Program Poorly Managed
Page 7 GAO/HEHS-96-51 PASS Program Poorly Managed
Contents

Executive Summary 2

Chapter 1 

Introduction

10

The DI and SSI Programs 10

PASS Program Structure and Participants 11

Objectives, Scope, and Methodology 13

Chapter 2 

PASS Program

Reflects Management

Inattention

16

PASS Goals and Expenditures Vary 16

PASS Program Not Well Defined, Growing 18

SSA’s Management of the PASS Program Is Poor 22

PASS Program Impact Unknown 25

Chapter 3 

Oversight and Internal

Control Weaknesses

Leave Program

Vulnerable to Abuse

29

PASS Requirements Minimal, Not Always Met 29

PASS Internal Controls Insufficient to Guarantee Taxpayer

Protection

30

Chapter 4 

Conclusions, Matter

for Congressional

Consideration, and

Recommendations

38

Matter for Congressional Consideration 39

Recommendations 39

SSA’s Comments and Our Evaluation 40

Appendixes Appendix I: Sample PASS Format 42

Appendix II: Demographics of Program Participants 43

Appendix III: Sites GAO Visited 45

Appendix IV: Methodology 46

Appendix V: Selected Data From PASSes GAO Reviewed 49

Appendix VI: Comments From the Social Security Administration

and Our Evaluation

51

Appendix VII: GAO Contacts and Staff Acknowledgments 63

Tables Table II.1: PASS Program Participants Are Younger Than

Working-Age SSI Population

43

Page 8 GAO/HEHS-96-51 PASS Program Poorly Managed
Contents

Table III.1: Sites GAO Visited 45

Table IV.1: Status of 1991-93 PASS Program Participants as of

December 1994

47

Figure Figure 2.1: Education Is a Major Component of Many PASS Goals 17

Abbreviations

DI Disability Insurance

MBR Master Beneficiary Record

OIG Office of the Inspector General

PASS plan for achieving self-support

POMS Program Operations Manual System

SGA substantial gainful activity

SSA Social Security Administration

SSI Supplemental Security Income

SSR Supplemental Security Record

Page 9 GAO/HEHS-96-51 PASS Program Poorly Managed
Chapter 1 

Introduction

The Social Security Administration’s (SSA) Disability Insurance (DI) and

Supplemental Security Income (SSI) programs are the two largest federal

programs providing cash and medical assistance to people with severe,

long-term disabilities, at an annual cost of more than $100 billion. The DI

program offers partial income replacement for disabled workers who have

earned Social Security benefits. The SSI program provides federal and state

cash assistance to people who are elderly, blind, or disabled, regardless of

insured status, whose income and resources are below a specified amount.

In the legislation authorizing the SSI and DI programs, the Congress

articulated its aim to rehabilitate into productive activity as many

disability benefit recipients as possible.

Consistent with this goal, the Congress has passed several work incentive

provisions to reduce the risks of seeking employment for recipients, by

safeguarding cash and medical benefits while a recipient tries to work.

One such provision authorized the plan for achieving self-support (PASS)

program as part of the SSI program in 1972. In explaining this provision, the

pertinent House Report stated that the Ways and Means Committee

wanted to “provide every encouragement and opportunity” for participants

to work.

The DI and SSI

Programs

The DI program, authorized in 1956, provides cash and medical benefits to

workers under age 65 who become disabled and cannot continue working,

as well as to their dependents. The DI program is funded through Federal

Insurance Contribution Act taxes paid into a trust fund by employers and

workers. In 1994, 3.3 million people with disabilities were enrolled in DI

and received, on average, cash benefits of about $660 a month.

The SSI program was authorized in 1972 under title XVI of the Social

Security Act as a means-tested income assistance program for people who

are elderly, blind, or disabled. Unlike DI beneficiaries, SSI recipients do not

need to have a work history to qualify for benefits, but need only have low

income and limited assets. General government revenues provide the

federal funding for the SSI program, while some states supplement federal

payments with their own funds. SSI disabled beneficiaries receive an

average monthly cash benefit of about $380 (beneficiaries in the 43 states

that provide a monthly supplement received, on average, an additional

$110 in 1993) and immediate Medicaid eligibility in most states. In 1994,

2.3 million blind and disabled adults under age 65 and 893,000 children

were enrolled in SSI. Individuals who are insured under Social Security, but

fall below SSI’s income and resource eligibility threshold, can qualify for

Page 10 GAO/HEHS-96-51 PASS Program Poorly Managed
Chapter 1 

Introduction

both DI and SSI benefits. An additional 671,000 people under age 65, called

concurrent beneficiaries, were enrolled in both programs in 1994.

To be considered disabled under either program, a person must be unable

to engage in substantial gainful activity (SGA)1

 because of a medically

determinable physical or mental impairment that is expected to last not

less than 12 months or result in death. The severity of the impairment must

prevent the applicant not only from doing his or her previous work, if any,

but also from engaging in any other kind of substantial work in the

national economy, considering his or her age, education, and work

experience. The process used to determine eligibility for benefits is the

same for both programs.

PASS Program

Structure and

Participants

In establishing the SSI and DI programs, the Congress considered it very

important that disabled persons be helped to return to self-supporting

employment wherever possible. To this end, over the years the Congress

has enacted numerous work incentive provisions in both the SSI and DI

programs to encourage more people to work their way off the disability

rolls. These include the PASS program and extended eligibility for Medicare

benefits to working DI beneficiaries. During a beneficiary’s work attempt,

these work incentive provisions allow varying degrees of safeguards for

cash and medical benefits, as well as program eligibility. However, despite

the Congress’ aim to return the maximum number of DI and SSI

beneficiaries to work, few beneficiaries have actually done so. Only 1 in

every 500 DI beneficiaries is terminated from the rolls because he or she

has returned to work. While SSA has no comparable measures for the SSI

population, we recently reported that this population’s return-to-work rate

is similarly low.2

The PASS program was established by the Congress as part of the SSI

program to assist disability benefit recipients with beginning or returning

to work. The PASS program is administered by staff in the approximately

1,300 SSA field offices nationwide, based on policy and regulations

developed by SSA headquarters staff in the Office of Program Benefits

Policy. The Program Operations Manual System (POMS) is the primary

policy guidance to staff on the PASS program. Work incentive staff in SSA’s

10 regional offices provide additional guidance and oversight to field office

1

Regulations currently define SGA as monthly earnings of more than $500. This limit changes each year

for blind individuals to reflect changes in general wage levels; in 1994 it was $930 a month.

2

Social Security Disability: Management Action and Program Redesign Needed to Address

Long-Standing Problems (GAO/T-HEHS-95-233, Aug. 3, 1995).

Page 11 GAO/HEHS-96-51 PASS Program Poorly Managed
Chapter 1 

Introduction

staff. In December 1994, about 10,300 individuals participated in the PASS

program and had active PASSes.3

In commenting on the PASS provision, the pertinent House Report stated

that it should be “liberally construed,” and SSA headquarters has chosen to

place few constraints on the program in regulations or in the POMS. For

example, there is no required application format and no limit on the

number of approved plans an individual can have in a lifetime. PASSes are

written plans, developed specifically for an individual, that identify a work

goal and the items and services needed to achieve that goal. (For a sample

plan format, see app. I.) To purchase these items and services, PASS

program participants may use any non-SSI income or resources they

have—for example, DI benefits or wages from a job. Anyone can write a

PASS—the disability benefit recipient, an SSA staff member, a vocational

rehabilitation professional, staff from another agency, or a relative or

friend; no vocational rehabilitation expertise is required.

Normally, any additional income or resources would reduce the amount of

the SSI payment, but SSA disregards the income and resources included in a

PASS when determining income available to the SSI recipient. Consequently,

excluding income and resources to pursue a work goal under a PASS can

result in additional monthly SSI cash payments. For example, an SSI

recipient earning $300 a month in a part-time job is normally eligible for

about $350 in SSI benefits, if he or she is single and lives alone. However,

using a PASS, this individual could use these earnings to pay for classes and

transportation to school to become an accountant and receive the

maximum 1995 federal benefit of $458 each month.

As currently implemented, the PASS program can also be used to establish

eligibility for SSI by disabled individuals whose incomes or resources

would otherwise exceed program eligibility limits. If a DI beneficiary who

receives $620 a month in benefits, for example, can set $300 of this income

aside under a PASS to pursue a work goal, he or she becomes eligible for SSI

payments because his or her countable income is less than the federal SSI

eligibility rate. Eligibility for SSI usually brings eligibility for other

means-tested benefits, including Medicaid and food stamps.

PASSes are submitted to staff in one of the SSA field offices for review.

These staff approve or deny plans on the basis of the work goal’s

feasibility and adjust SSI payment levels for approved plans. Work goals

3

The number includes only approved plans that exclude some type of earned or unearned income from

benefit calculations; SSA does not track the number of plans that only exclude resources, such as

private retirement plans. In our review of 380 plans, we found only 8 with resource exclusions.

Page 12 GAO/HEHS-96-51 PASS Program Poorly Managed
Chapter 1 

Introduction

must be stated in terms of specific job titles or professions. For example,

education can be part of a plan but cannot be a goal in itself. As long as

applicants specify a different work goal in each PASS, there is also no limit

placed on the number of plans one individual can have, although only one

plan can be active at a time and each PASS is limited to a maximum of 48

months. However, interim guidelines issued in January 1995, in response

to a mandate in the Social Security Independence and Program

Improvement Act of 1994, allow additional 6-month extensions to ongoing

plans.

In December 1994, PASS participants represented only about three-tenths of

1 percent of the working-age disabled SSI population. The number of PASSes

varies by state, with clusters in areas where outreach by professional PASS

preparers and service providers has been greatest. As a result, knowledge

of and experience with the PASS program varies greatly among field offices

and staff. Some offices have no active PASSes, while administering the PASS

program constitutes a significant workload in others. Compared with

other SSI recipients, PASS program participants are generally younger and

more often men. In addition, PASS program participants are more likely to

have mental illness as their disabling condition. For a more detailed

description of the demographics of program participants, see appendix II.

The PASS program is unique among all DI and SSI work incentives because it

is available to disabled individuals who are not already working.

Specifically, the PASS provision allows participants to exclude unearned, as

well as earned, income for consideration in determining benefit amount.

All other work incentive protections, such as extended eligibility for health

and cash benefits for working recipients, apply to earned income only.

Furthermore, while SSI and DI beneficiaries who work can use the

impairment-related work expense provision to deduct from their gross

wages the cost of items and services needed to work, only half these costs

are offset by increased SSI benefits. In contrast, PASS expenses are

deducted after all other exclusions when determining an individual’s

countable income, and therefore fully subsidized by additional SSI cash

payments, up to the maximum benefit amount.

Objectives, Scope,

and Methodology

House Conference Report 103-670, accompanying the Social Security

Independence and Program Improvement Act of 1994 (P.L. 103-296), asked

that we review SSA’s PASS program. Specifically, we were asked to provide

data for the last 5 years, to the extent possible, on (1) the number and

characteristics of individuals who have applied for a plan, (2) the number

Page 13 GAO/HEHS-96-51 PASS Program Poorly Managed
Chapter 1 

Introduction

and characteristics of those whose plans have been approved, (3) the

kinds of plans that have been approved and their duration, (4) the success

of individuals in fulfilling their plans, and (5) the extent to which

individuals who have completed a PASS have become economically

self-sufficient. We were also asked to study whether improvements can or

should be made to the PASS program, including the process used to

approve plans. Because SSA’s Office of Program Integrity Review was

already tracking PASS program participants’ compliance with their plans

and the outcome of PASS program participation, we focused our efforts on

PASS program management and internal controls.

To analyze PASS program implementation and determine what changes and

improvements were needed, we reviewed PASS guidance, legislation, and

regulations. We also interviewed Social Security headquarters staff

responsible for the program and monitored an SSA work group charged

with considering PASS program policy changes. In addition, we met with

staff in 19 SSA field offices, located in California, Colorado, Maine,

Massachusetts, Michigan, Vermont, and Wisconsin, that had high numbers

of active PASSes to discuss their experience with the work incentive. (For a

list of locations visited, see app. III.) In these same states, we met with 38

individuals, representing 32 different organizations, who prepare PASSes

for disability benefit recipients. In addition, we spoke with the PASS

program liaison in each of the 10 SSA regional offices to learn about

program trends nationwide.

To determine the numbers and characteristics of PASSes and program

participants, we analyzed an extract of the Supplemental Security Record

(SSR), the main database of SSI participants. We also used data from the SSR,

the Master Beneficiary Record (MBR) of DI beneficiaries, and SSA’s Master

Earnings File maintained for all workers to assess the current earnings

and benefit status of former PASS participants. We were unable to evaluate

program impact, because most program participation has been recent, and

SSA has only 4 years of historical data on the PASS program, which includes

no data on the outcomes of program participation. In addition, individuals

self-select into the PASS program, and may already be different from other

SSI and DI beneficiaries in ways that would affect their future employment

and earnings. Finally, we reviewed 380 randomly selected PASS files in 17

field offices to gather additional data about PASSes, including the types of

work goals and proposed purchases. We did not, however, verify that

specific program participants complied with the goals and activities

specified in their PASSes. For more information about our methodology,

see appendix IV.

Page 14 GAO/HEHS-96-51 PASS Program Poorly Managed
Chapter 1 

Introduction

We did our work between January and November 1995 in accordance with

generally accepted government auditing standards.

Page 15 GAO/HEHS-96-51 PASS Program Poorly Managed
Chapter 2 

PASS Program Reflects Management

Inattention

SSA has not translated the PASS program’s goals of providing opportunities

for participants to work into a well-defined program structure with

specific objectives. Confusion about program objectives has resulted in

different and sometimes conflicting PASS approvals and denials across field

offices. In addition, SSA field office staff find it difficult to approve or deny

PASSes because SSA headquarters has not developed clear criteria for

evaluating PASSes. Most field office staff do not have expertise or training

in evaluating work opportunities for people with disabilities, whose needs

are extremely diverse. Reflecting this diversity, the PASSes we reviewed

encompassed a wide array of work goals, from janitorial work to

professional positions, and included expenditures ranging from business

cards to new cars. Finally, the PASS program includes primarily DI

beneficiaries, many of whom use the PASS program to gain eligibility for

federal SSI payments.

Because SSA has not developed measures to evaluate how well the PASS

program is helping participants become or stay employed, the agency

lacks adequate management data on PASS use. For this reason, we could

not accurately measure PASS program impact. We did find that many

former PASS participants are earning enough income to at least reduce their

SSI payments, compared with other SSI recipients, although many had

worked prior to participating in the PASS program. Few, however, have

earned enough to end SSI payments. In addition, nearly all concurrent

beneficiaries continue to receive DI benefits after their plans end, even if

they leave the SSI program, limiting the potential federal savings stemming

from the PASS program.

PASS Goals and

Expenditures Vary

The 380 PASSes we reviewed encompassed a wide variety of goals,

including increasing hours and responsibilities at a current job, seeking a

new job, or pursuing education as a step toward work. (See fig. 2.1.) About

one-third of plans had education as a major component, although the level

of education desired ranged from attending culinary school to pursuing a

Ph.D. in philosophy. Another one-third of PASS program applicants were

seeking new jobs, while about 10 percent proposed to maintain or increase

their hours or responsibilities at a current job. For those individuals

proposing specific occupational goals, the demands of these jobs, as well

as their likely income, were highly variable. We found that many PASSes

were written to help applicants achieve low-skill, low-wage service jobs,

such as janitorial work, product assembly, or employment in fast-food

restaurants; however, we also saw plans written to help participants

become psychotherapists, computer programmers, engineers, and college

Page 16 GAO/HEHS-96-51 PASS Program Poorly Managed
Chapter 2 

PASS Program Reflects Management

Inattention

professors. Some program participants’ goals were more unusual,

involving self-employment in music, arts, and crafts. Self-employment was

the goal in 15 percent of the PASSes we reviewed, including small

businesses in tailoring, tree stump removal, and window washing. In

addition, some PASS program participants were approved to support

themselves as professional PASS preparers, writing plans for other

disability benefit recipients for a fee. (See app. V for a sample of

occupational goals listed on the approved PASSes we reviewed.)

Figure 2.1: Education Is a Major

Component of Many PASS Goals

36% • Education to Become/Stayed

Employed

32%•

New Job

11%•

Maintain Current Job/Increase

Hours or Responsibilities

•15%

Self-Employment

•

4%

Other

2%

Not Available

The proposed purchases listed on PASSes varied, as did their cost.

Automobiles (new and used vehicles as well as insurance, maintenance,

and modification costs), tuition, and computers were common items in

Page 17 GAO/HEHS-96-51 PASS Program Poorly Managed
Chapter 2 

PASS Program Reflects Management

Inattention

PASS budgets. More than 80 percent of the plans we reviewed included at

least one of these items. Costs for these items ranged from a $41,000

wheelchair-modified van or thousands of dollars in highly specialized

computer equipment to a $19 monthly bus pass. SSA has placed no absolute

limits on the types or costs of items that PASSes can be used to purchase as

long as they are necessary to achieve the work goal and reasonably priced.

The wide range of approved purchases we saw included photographic

film, cellular telephone service, business advertising, professional attire,

job coaching, and school supplies.

The total budget also ranged considerably in the PASSes we reviewed,

depending on the amount of the income excluded and the plan’s time

length. The average monthly exclusion for all PASSes in December 1994

was $400, although some individuals were excluding more than $1,000 a

month. Total costs associated with a single PASS could be significant; for

example, one plan had a budget of $67,233 for an individual to return to

work as a radiological technologist, which included items such as a

standing wheelchair, a modified van and insurance, a track lift system, and

a computer. Field staff in at least eight of the offices we visited raised

concerns about PASS applications in which proposed purchases were

exactly equal to total excludable income. Several PASS preparers confirmed

that they develop budgets based on the maximum excludable income,

regardless of the occupational goal.

We were not able to determine the average time length of PASSes, because

extensions and end-dates were not always documented in the files we

reviewed. In addition, this information is not captured in the Supplemental

Security Record (SSR), the database of SSI recipients. We found, however,

that half of the current exclusions as of December 1994 had been active 9

or fewer months. In addition, more than 1,700 PASSes begun in 1993 were

no longer active in December 1994. No comprehensive data are currently

available on the total number of PASS applications, because SSA does not

track denied plans. However, staff in almost all the field offices we visited

agreed that the majority of PASSes are approved.

PASS Program Not

Well Defined, Growing

SSA has neither clearly articulated the objectives of the PASS program nor

established criteria for evaluating whether an individual plan will be

successful. This lack of clear goals is reflected in inadequate guidance to

field office staff and inconsistent and inefficient PASS program

administration. Our interviews revealed a wide range of standards applied

by SSA field office staff and third-party PASS preparers in assessing the

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feasibility of individual PASSes, ranging from cessation of all disability

benefits to improved quality of life. Current PASS participants constitute

less than 1 percent of the working-age SSI population; nonetheless, the

number of PASSes has grown by more than 500 percent in the last 5 years.

As a result of congressional direction to liberally construe the PASS

provision, SSA has permitted individuals to become eligible for SSI by using

a PASS. Consequently, the PASS program includes primarily DI beneficiaries,

many of whom use PASS to gain eligibility for SSI payments.

Lack of Clear Outcome

Measures Hinders Program

Administration

In establishing the PASS program, the Congress specified that the work

incentive should “provide every opportunity and encouragement to the

blind and disabled to return to gainful employment.” SSA headquarters

staff, however, have not issued regulations translating this goal into

specific outcome measures of PASS program success, choosing instead to

leave the interpretation open to the field office staff who administer it. As

a result, the SSA field office staff and third-party PASS preparers we

interviewed used different, and sometimes conflicting, interpretations of

successful outcomes when developing and reviewing individual PASSes.

For example, some field office staff will not approve a PASS unless they

believe it will result in the applicant leaving the disability rolls, while the

preparer may have written it to give the applicant a chance to attend

school and try working, but not become self-supporting.

SSA field office staff in nearly all the offices we visited said that PASS use

should result in a reduction, if not cessation, of SSI benefits. While 10 of the

38 PASS preparers we interviewed shared this view, others offered broader

definitions of success, including working or attending school, improved

self-esteem, and fuller participation in society. Some PASS preparers and

SSA staff expressed concern that immediate economic self-sufficiency was

not feasible for some members of the SSI population, and that the

appropriate PASS outcome depended on the individual.

PASS program guidance from SSA headquarters to the field offices

contributes to confusion over the goal of the work incentive. Prior to

January 1995, the POMS, SSA’s primary written guidance to field office staff

who administer the PASS program, stated that the occupational objectives

on PASSes must ultimately produce enough additional earned income to

reduce or eliminate SSI payments. The guidance also noted that the PASS

program was “not intended to subsidize a continuing level of current work

activity.” In contrast, the POMS transmittal concerning PASS issued in

January 1995 directed field office staff to evaluate individual PASSes in

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terms of the applicant’s higher earnings potential upon completion of the

PASS, and weakens the link between earnings and benefits payments. In

addition, this guidance includes increased on-the-job independence and

decreased reliance on employment support, irrespective of earnings, as

acceptable PASS goals. According to field office staff, the verbal guidance

they receive from regional and headquarters staff encourages them to be

liberal and err on the side of approving individual PASSes. Agency literature

available to SSI recipients primarily defines the PASS program in terms of

employment goals, with little or no focus on reduced or eliminated

benefits, or increased earnings potential.

SSA field office staff in half the offices we visited said PASS approvals and

denials were inconsistent, and nearly all field office staff expressed

frustration with the inadequate guidance they received from SSA

headquarters on approving or denying PASSes. Some SSA field and regional

offices have developed their own guidance for approving PASSes to

compensate for gaps they see in the POMS. As a result, we found that the

PASS program was implemented differently by location or even by

individuals in the same location, depending on the prevailing beliefs about

program goals. For example, some field offices in Wisconsin use a PASS

evaluation form that requires applicants to estimate their pre- and

post-PASS earnings to demonstrate increased earnings capacity before they

will approve a plan. Staff in other field offices said they only look to see if

there is even a “remote chance” of achieving a proposed occupational

goal. The basis for decisions about acceptable cost items also varies. For

example, some field office staff approved computer expenditures for

students without documentation that computers were required, while staff

in another office denied a request for computer equipment, noting that the

university the applicant planned to attend did not require students to have

computers. Work incentive staff in some regional offices review PASS

approvals and denials made by the field offices; however, staff in SSA’s

headquarters do not provide direct oversight of this process.

Program Has Few

Participants, but More

Growth Predicted

PASS program participants in December 1994 represented only three-tenths

of 1 percent of the working-age SSI population. Nonetheless, the number of

PASSes has risen dramatically in recent years, from 1,546 in March 1990 to

10,329 in December 1994. PASS program growth has been much slower

during 1995; the number of plans increased by only 169 between

December 1994 and June 1995. However, SSA field staff in 15 of the 19

offices we visited predicted that the number of PASSes will continue to

grow. Several PASS preparers also told us they believe that more outreach

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will increase PASS use. Outreach efforts, especially by outside

organizations, have already increased awareness of the PASS program. For

example, in the Denver area, several professional PASS preparers have

established businesses that seek out clients. Since the late 1980s,

individuals and organizations across the nation have assisted disability

benefit recipients to understand and use work incentives, especially the

PASS program. At the same time, some state agencies that provide

employment services to the disabled have started to use PASSes to

supplement other funds. Private agencies, too, are being encouraged to

look at the PASS program as a funding source for their clients.

The potential universe of PASS program participants is significant and

increasing with the recent tremendous growth in the number of federal

disability benefit recipients.4

 All 4 million DI beneficiaries are potentially

eligible for a PASS. In addition, any of the 2.3 million blind or disabled

adults receiving SSI with additional income or resources to exclude could

potentially participate in the PASS program.

Participants Are Largely DI

Beneficiaries; Many Gain

SSI Eligibility Through

PASS Program

The PASS program encompasses primarily DI beneficiaries, who can

exclude their DI benefits under a PASS. Of the approximately 10,300 PASS

participants in December 1994, about 75 percent were concurrent

beneficiaries, many of whom would not receive federal SSI benefits

without a PASS. In comparison, about 30 percent of disabled adults in the

overall SSI program also received DI benefits. We estimated that, overall,

more than 40 percent of all PASS program participants had earned or

unearned income, primarily DI benefits, in excess of the eligibility level for

federal SSI benefits. These individuals received, on average, $318 in

monthly federal SSI payments. Without the PASS program, they would not

have been eligible to receive any federal SSI payments. The federal cost of

PASS program participation for these individuals who use a PASS to

establish SSI eligibility is often higher than just the SSI payment, because

the participants may also gain access to other means-tested benefits, such

as Medicaid and food stamps, while retaining access to DI payments and

Medicare. In these instances, Medicaid supplements Medicare benefits,

covering deductibles, medications, and other medical costs not covered by

Medicare. Nearly one-fourth of recipients whose plans started in 1994 first

applied for SSI benefits that year.

4

See Social Security: Disability Rolls Keep Growing, While Explanations Remain Elusive

(GAO/HEHS-94-34, Feb. 8, 1994).

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PASS program participation for SSI recipients who are not concurrent

beneficiaries is generally limited to those who are already working and can

exclude their earned income or who receive other types of income or

resources, such as an inheritance. Many SSI recipients who may benefit

from the PASS program are unable to participate because they lack income

or resources and cannot make the initial investments in education and

skills that can be key to successful vocational rehabilitation.

SSA’s Management of

the PASS Program Is

Poor

Our field work suggests that SSA’s current implementation of the PASS

program is poorly managed and designed. Information required of

applicants is inadequate for evaluating plan feasibility. SSA field staff lack

the training, guidance, and expertise to effectively review PASSes, and the

PASS program competes with other field tasks, such as processing initial

claims, that receive more work credit in SSA’s system for measuring office

productivity.

Staff Lack Necessary Data,

Expertise, and Guidance to

Evaluate PASSes

POMS guidance specifically directs field office staff to evaluate applicants’

goals in light of their impairments and other disability-related factors.

However, the POMS does not require much of the information that would be

relevant to determine whether a work goal is feasible, including the nature

of an applicant’s disability, on a PASS application. This information may not

be otherwise available to field office staff. Because of this inconsistency,

staff may approve or deny PASSes without knowledge of the applicant’s

skills, education, work history, impairments, or even the disabling

condition. Further, PASSes are not required to provide any information

about the demands of the proposed job, and required skills and

qualifications. We also found that diagnosis information was missing on

the SSR, which is accessible by field office staff, for more than 40 percent

of recipients with PASSes in December 1994. In addition, the detailed

assessments of applicants’ work ability compiled by state Disability

Determination Services during its reviews to decide program eligibility are

often not sent to staff in SSA’s field offices.

Field office staff also lack specific training and experience in determining

the vocational capabilities and needs of people with disabilities. As a

result, staff in every office we visited reported that they do not feel

equipped to adequately evaluate PASS work goals and expenditures. Staff in

half of these field offices described the evaluation process as inconsistent

between and often within offices, and some noted it was unfair to PASS

program applicants. SSA headquarters staff are aware of the field staff’s

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concerns, which were discussed at a 1994 work group on the PASS

program. Field office staff’s lack of knowledge and training is also

frustrating to third-party PASS preparers; half of those we interviewed said

they did not believe field office staff were qualified to make decisions

about PASS feasibility. In addition, at least 14 of 38 PASS preparers raised

concerns about field office staff’s lack of awareness and understanding

about disability issues, including the vocational capabilities of people with

disabilities. The differences in plan approvals and denials have also led

some PASS preparers to “shop around” within a field office or across offices

to find someone who will approve a plan that has been denied elsewhere,

according to field office staff and preparers.

According to field office staff who evaluate plans, the guidance and

criteria for approving and denying PASSes is inadequate, given their lack of

expertise. While the POMS acknowledges that self-support is “highly

subjective and often complex” to define, staff are directed to use a

“common sense approach” when evaluating plans. When no licensed or

accredited vocational rehabilitation agency or individual has been

involved in developing a PASS, field office staff can seek outside input from

a vocational rehabilitation or other employment services agency, or use

their “judgment and intuition” to determine PASS feasibility. As a result, SSA

field office staff can make highly individual decisions about plans based on

their personal beliefs. For example, one field office staff member told us

she denied a plan with the goal of writing a cookbook because she

believed there were already too many cookbooks on the market.

Furthermore, if they seek guidance outside of SSA, field office staff are

limited to vocational agencies willing to provide evaluations of the

feasibility of proposed work goals at no cost, unless the program applicant

agrees to include the cost of the evaluation on his or her PASS. These

agencies, however, are not required to advise SSA, and we found that some

public agencies did not provide assistance to SSA field offices for

individuals who were not already their clients. Field office staff also

contact regional or central office work incentive staff with questions about

feasibility; however, the staff in the regional and central offices are not

necessarily trained in vocational rehabilitation.

The field office staff’s lack of vocational rehabilitation knowledge and the

limited guidance they receive also limits their ability to evaluate whether

charges for particular items in PASS budgets are reasonable or necessary.

Staff in at least eight field offices said they had no basis on which to judge

whether a proposed item was reasonably priced. POMS guidance directs

staff to be “as pragmatic as possible” when evaluating questionable

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expenses or determining the relationship of an item or service to the work

goal. We found that some staff used personal criteria for evaluating the

appropriateness of certain costs, especially automobiles and computers.

For example, one field staff member told us she denied a plan that

included a $22,000 automobile because she herself could not afford a car

that expensive, even with a job, so “why should someone receiving federal

assistance be allowed to buy one?” Some PASS preparers reported that they

were frustrated with the inconsistent and subjective criteria they believed

staff used when assessing the appropriateness of expenses.

Items and services purchased with PASS funds do not need to be directly

related to the claimant’s disability, but only necessary to achieve the work

goal. Field office staff provided examples of expenses they considered

excessive or unnecessary, including new cars and doctoral degrees, that

were submitted on PASS plans and permissible under PASS guidelines. In

addition, some field office staff said they have difficulty evaluating

specialized or highly technical equipment with which they are not familiar.

SSA headquarters has also not determined whether only new cost items

related to the goal should be approved, or whether the PASS can be used to

pay for existing expenses, such as car loan payments, deemed necessary

to achieve the goal.

PASS Program Given

Lower Priority Than Other

Field Office Activities

SSA field office staff in many of the offices we visited reported that time

spent administering the PASS program is not adequately reflected in SSA’s

work credit system.5

 The time necessary to thoroughly evaluate a PASS,

including seeking additional information about feasibility, was estimated

by field office staff as up to 8 hours or more. The work credit for reviewing

PASSes submitted by individuals already entitled to SSI, which is grouped

with other tasks including recording wages earned, was 6.8 minutes in

June 1995. Furthermore, PASS denials receive no credit at all, yet some field

office staff reported that plan denials take even longer than approvals,

because of the amount of evidence needed to justify the denial. Requests

from two regional offices that SSA create a separate work credit category

just for the PASS program were turned down by SSA headquarters. In our

interviews, few field office staff identified the PASS program as a high

priority workload. Many reported that initial claims and other tasks

necessary to secure or start benefits for claimants were a higher priority

than PASS. Monitoring PASS program compliance is also considered to be a

time-consuming effort by field office staff, especially when participants

5

SSA’s work credit system measures individual office productivity, through tracking of specific tasks,

and is used to allocate staffing resources across field offices nationwide.

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have not kept adequate records. POMS guidance on reviewing PASSes and

monitoring compliance includes a number of steps that could take several

hours to complete.

More than half the PASS preparers we spoke with reported significant

concern about the length of time required by field offices to approve plans.

POMS directs field office staff to review PASSes “as soon as possible.” SSA

does not track the length of time PASS program applicants must wait for a

decision on their plan. We were not able to develop an estimate because

submission and approval dates were frequently not recorded on the plans

we reviewed. However, we saw and heard examples of plans reviewed and

approved within a day, as well as delays of several months before a

response was given on a submitted PASS. Delays in approval could result in

lost employment and schooling opportunities for applicants, and the slow

approval process serves as a disincentive to PASS program participation,

according to PASS preparers. For example, the two agencies involved in a

demonstration project attempting to increase PASS use and evaluate PASS

effectiveness in funding supported employment, conducted in 1989 and

1990 by the Association for Retarded Citizens of the United States,

ultimately withdrew as a result of lengthy delays in approving PASSes. On

the other hand, quick reviews may not effectively screen out applicants

with infeasible PASSes.

PASS Program Impact

Unknown

Although the PASS program has been in existence for more than 20 years,

SSA has no published data on the PASS program’s effect on employment and

benefits, nor has the agency maintained the type of management data

necessary for measuring program impact. We attempted to evaluate the

PASS program’s impact on employment among former participants.

However, we were unable to adequately determine the long-term effect of

PASS program participation for a number of reasons, including the fact that

most PASS use has been very recent and that SSA has not maintained

comprehensive historical data on PASS program participants. Furthermore,

participation in the PASS program is based on self-selection, and therefore

PASS program participants may well be different from other SSI and DI

beneficiaries in ways that could affect their future employment and

earnings, independent of the program.

On the basis of the limited data available, we examined the current status

of former participants using selected economic measures of potential

success—increasing earnings, reducing SSI benefits, and leaving the

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disability rolls.6 Among the SSI population, former PASS program

participants were more likely than other SSI recipients to have sufficient

earnings to reduce their SSI benefits, but few left the rolls as a result of

their earnings. The PASS population was also likely to have been working

before using the work incentive. Nearly half had earnings higher than

before they had the PASS. Success in returning DI beneficiaries to work was

negligible. Generally, earnings among concurrent beneficiaries who were

former PASS program participants were not high enough to terminate DI

benefits. While many concurrent beneficiaries we reviewed left the SSI

program after their PASS ended, nearly all were still receiving their DI

benefits in May 1995. We estimated the cost of additional cash payments to

PASS participants in January 1995 as $2.6 million, or about $30 million

annually.

SSA Lacks Outcome Data

on PASS Program

The lack of clear outcome measures prevents SSA from evaluating the PASS

program’s success in helping recipients return to work. Consequently, the

agency does not have data on the PASS program’s effect on employment

during the more than two decades since its inception and thus cannot

make informed decisions on and changes to the program, such as

developing appropriate criteria for setting time limits on PASSes or

determining the best candidates to target, as well as improving program

implementation. While SSA’s current database for the SSI program, the SSR,

includes some characteristics of PASS program participants, it does not

systematically track PASS denials, PASSes that exclude only resources and

not income, and the occupational objectives and budgets listed on plans.

Therefore, SSA also does not know, for example, the acceptance and denial

rates for PASS program applicants, nor the total number of applicants or

active plans. SSA officials responsible for the PASS program are considering

changes to the way program data are tracked, which would capture some

of this information, including denials and resource-only exclusions.

Former Participants More

Likely to Work Than Other

SSI Recipients; Few Left

SSI Rolls

Former PASS participants who remained in the SSI program were more

likely to have earnings that reduced their SSI cash payments than were

other SSI recipients. We examined December 1994 earnings and benefit

data for 4,751 former PASS program participants whose plans had ended by

that date. We excluded from our analysis concurrent former PASS

participants who stopped receiving SSI payments after their PASS exclusion

6

Although mentioned by some PASS preparers and field office staff as valid indicators of PASS

success, we did not evaluate other possible measures of self-support, including increased

employability, self-esteem, and social integration, or decreased reliance on employment supports such

as job coaching.

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ended. More than one-third of the 4,751 were reporting earnings to the SSI

program, and the majority of these earned enough income to at least

partially reduce their SSI payment amount. Half of the wage earners still

receiving benefits reported wages of $360 or more for the month, which

would result in a reduction in monthly benefits of about $147.7

 About

one-fifth of the 4,751 former PASS participants were earning more than

$500, SSA’s measure of substantial gainful employment for most claimants.

SSI benefits and reported earnings received before program participation

were not available for all of the former PASS holders, and therefore we

could not determine whether their earnings had increased or benefits had

decreased after participating in the PASS program. Similarly, we could not

estimate the cost of PASS program participation for this group of 4,751

former participants.

In contrast to the experience of former PASS participants, only about

8 percent of other working-age disabled SSI recipients reported any

earnings during December 1994, averaging $300 per person. Similarly,

while 14 percent of the 4,751 former PASS program participants had

earnings high enough to end their cash benefits altogether, and were

receiving Medicaid benefits only, only about 1 percent of other

working-age disabled SSI recipients earned this much.

Very few former PASS program participants left the SSI rolls in the relatively

short time frames for which data were available. Among the SSI-only

former program participants we reviewed, about 160 had stopped

receiving SSI or Medicaid by December 1994 for any income-related reason.

They represented only about 2.5 percent of the 6,582 PASS program

participants 1991 through 1993, including those concurrent beneficiaries

who left SSI after their PASSes ended because their unearned income was

too high. This low rate of leaving the SSI rolls by working for former PASS

program participants is consistent with the overall experience of both the

SSI and DI programs, which have traditionally seen low rates of return to

work. However, even very limited workforce participation by SSI recipients

can accrue significant federal savings. For example, the reduced benefits

paid to all working recipients in January 1995, including former PASS

program participants, lowered SSI cash payments by $18.6 million in that

month alone.

7

The SSI program disregards the first $65 of earned income, and half of all earnings over that amount,

when determining the payment amount.

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Many Participants Had

Prior Earnings; Amount

Often Increased After

PASS Ended

We found that many PASS program participants had already worked while

on the rolls. Because SSI preprogram benefit and earnings data were not

available for most PASS program participants, we examined the annual

earnings data reported to SSA for all workers, regardless of disability

status, to determine whether PASS program participants had been working

before starting their PASSes. About half of both current and former PASS

program participants we analyzed had earnings the year before their plans

began, averaging between $2,000 and $3,000.

Although we did not determine whether earnings increased as a result of

the PASS, former participants’ annual earnings were frequently higher in the

year their plans ended. We reviewed pre-and post-PASS annual earnings

data for 3,659 recipients whose plans had ended by December 1993.

Approximately 55 percent had earnings in the year before their PASS, and

about 60 percent had earnings in 1993. Nearly half were earning more in

1993 than they did before they had a PASS, including those with no prior

earnings. The median increase in annual earnings for those with any

earnings was more than $3,000. In addition, about one-fifth of the entire

group had no earnings the year before their PASS started, but were working

in 1993.

PASS Program

Participation Has Limited

Impact on DI Program

PASS program participation had almost no financial impact on the DI

program. Given the high benefit paid to many DI beneficiaries—$660 a

month, on average—a successful PASS program offers a chance for

significant DI trust fund savings if participants leave the DI rolls, even with

the cost of additional SSI benefits. However, while approximately

40 percent of concurrent beneficiaries left the SSI rolls after their PASS

exclusions ended, about 93 percent were still receiving their DI benefits in

the following year. And for the remaining 7 percent, many had DI benefits

terminated for reasons other than earnings, such as death. Furthermore,

unlike the SSI program, DI benefits are not offset by monthly earnings

below $500, and previous GAO analysis has shown that earnings above this

amount may not be economically rational for DI beneficiaries who face the

loss of substantial cash and medical benefits.8

 For example, a DI

beneficiary receiving $700 or $800 a month in cash benefits, plus Medicare

benefits, could lose both for earning as little as $501 a month.

8

See Social Security: Federal Disability Programs Face Major Issues (GAO/T-HEHS-95-97, Mar. 2,

1995).

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Oversight and Internal Control Weaknesses

Leave Program Vulnerable to Abuse

While the PASS work incentive provision is designed to be flexible and

individual, oversight from SSA headquarters has been lax and required little

accountability, leaving the PASS program open to abuse. Although SSA has

established few required elements for PASS plans, we found evidence of

noncompliance even with these minimal standards. In addition, we found

that SSA’s guidance to its field staff on administering the PASS program, as

discussed in chapter 2, also lacks several internal control measures

necessary to adequately ensure that expenditures are appropriate and

beneficial. Specifically, SSA has no standard application form or effective

time limits for PASSes, no penalties for willful noncompliance with the PASS

program, and no standards for third-party PASS preparers. These internal

control weaknesses result in SSA having little or no reasonable assurance

that the PASS program is being used appropriately. While SSA headquarters

is aware of many of these inadequacies and has established a work group

to address some, efforts to date are not sufficient to protect taxpayer

dollars and to restore public confidence.

PASS Requirements

Minimal, Not Always

Met

SSA regulations require only minimal information to be provided in PASSes,

yet we found that even this information was not always present. According

to regulations, the PASS must be in writing and (1) state a specific

occupational goal, (2) disclose the amount of money the applicant has and

will receive, (3) specify how this money will be spent to attain his or her

occupational goal, and (4) explain how the PASS money will be kept

separate from the applicant’s other funds. SSA’s PASS program guidance also

states that PASSes should be “as descriptive as possible about the

occupational objective.” In addition, the occupational objective must be a

job or profession, or increased hours or responsibilities at a job already

held by the applicant; completion of education/training programs or the

purchase of transportation are not occupational objectives, although they

may be a means to attain an objective.

Field office staff sometimes approve PASSes even when these minimum

standards are not met. Oversight of field office approvals and denials

varies among the 10 regional offices; not all regions review the decisions

made by their field offices. Our analysis of 366 approved PASSes found at

least 20 that did not have acceptable occupational goals as defined in the

most recent POMS. These included 11 approved plans with objectives solely

to complete education/training programs, 4 plans with objectives to

purchase automobiles and/or maintain car payments, and 5 plans in which

no job or profession was identified. One of these plans, for example, stated

that a PASS was necessary to “obtain a second job.”

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Our review of PASSes also revealed plans that did not state the amount of

money recipients had and would receive, nor how the PASS money would

be kept separate from the applicant’s other funds. For example, 27 of the

PASSes we reviewed did not show what money and other resources the PASS

program applicant had or would receive to use in attaining the

occupational objective. Without this information, SSA field office staff

cannot determine whether the occupational goal is economically feasible.

Further, at least 75—or about 20 percent—of the PASSes did not describe

how the applicant would keep income/resources separate from other

assets. If PASS funds are commingled with other benefits in the same

account, it is difficult for SSA field office staff to measure compliance and

ensure that PASS funds are spent only for approved items.

PASS Internal

Controls Insufficient

to Guarantee

Taxpayer Protection

SSA’s internal controls over the PASS program result in only limited

guarantees that program moneys are being used appropriately and that

taxpayer dollars are being spent judiciously. SSA regional and field office

staff raised concerns about the integrity of the PASS program, noting that in

its current state the program may be vulnerable to abuse. While not all of

the internal control weaknesses we found have a proven adverse impact,

each contributes to the potential for misuse. Internal control weaknesses

we noted included the lack of a standard application form, no effective

limits on the length of time a PASS may be in effect, few penalties for willful

noncompliance with the PASS program, infrequent and nonstandardized

compliance reviews, and inadequate controls over third-party PASS

preparers. While SSA headquarters staff are aware of field office concerns,

their efforts to date, including an internal work group on the PASS program

and a new version of the POMS, have not sufficiently addressed them.

No Standard Application

Form Required

SSA regulations do not require a standard PASS program application form,

and as a result, PASSes vary in specificity and completeness both within

and across SSA field offices nationwide. Further, some SSA field office staff

told us that many of the details they would find helpful for evaluating

PASSes were often not provided on plans. SSA has developed a sample form,

included in a pamphlet for SSI recipients, which captures the minimum of

required types of information necessary to process the application. (See

app. I.) However, applicants are not required to use this form. PASSes we

reviewed ranged from a few sentences to very detailed business plans. For

example, one PASS program applicant submitted a nine-page plan to open a

business providing on-site fish aquarium maintenance for offices and other

business establishments. Another presented an application to become a

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self-employed seamstress, which included an assessment of the market

demand for her services and a detailed description of the need for

proposed purchases. We also saw PASSes consisting of a few words jotted

on notebook paper as well as plans lacking any specific occupational goal

or discussion of the need for proposed purchases.

No Real Limits on Length,

Number of PASSes

Current limits on the length of PASSes are being reviewed by SSA and may

soon be removed in response to a congressional mandate that SSA develop

individualized criteria for determining the time limit of a plan. Program

regulations provide that PASSes be approved for an initial period of up to 18

months. Changes and extensions must be approved by SSA, with a

36-month maximum for general occupational goals and 48 months

maximum for PASSes that require lengthy educational or training programs.

These time limits have been successfully challenged in one federal district

court as “unreasonable” and without consideration of individual needs,9

and some PASS advocates have actively lobbied to have them removed. In

1992, the SSI Modernization Project recommended that the SSA

Commissioner remove the regulatory limit on PASS length, and an internal

SSA memo recommended allowing extensions beyond the existing limits,

noting that time limits could be viewed as an additional barrier that keeps

people with disabilities from achieving self-support. These

recommendations were never implemented. Instead, the Social Security

Independence and Program Improvements Act of 1994 (P.L. 103-296)

required that SSA reexamine criteria for limits on the length of times PASSes

may be active by taking into account reasonable individual needs. In an

emergency teletype dated January 1995, SSA instructed field offices to

grant 6-month extensions to PASS program participants who have exceeded

the 36- or 48-month time limits, as long as the individual is in compliance

and still needs to exclude income or resources to achieve his or her goal.

Regulations currently under development will likely remove absolute time

limits on the length of time a PASS may be in effect, according to SSA

officials.

Because the PASS program is operating without clearly defined objectives

and other internal controls, removing all time limits for PASS completion

would likely exacerbate the program’s vulnerability to misuse. Most SSA

region and field office staff we interviewed who administer the PASS

program do not want all PASS time limits eliminated. Some staff told us

they believed that without any time limits PASS program participants may

abuse the provision, staying out of work indefinitely and continuing to

9

Panzarino vs. Heckler, 624 F.Supp. 350 (S.D.N.Y. 1985).

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receive benefits such as Medicaid as well as increased SSI payments; others

said that field office staff lack the background to make assessments of

reasonable lengths of time for proposed PASSes in light of the applicant’s

disability.

No limit is placed on the number of approved PASSes an individual can

have, provided that each one involves a different occupational objective.

While only one PASS can be in effect at a time, a participant could have an

unlimited number of subsequent plans if the first is unsuccessful.

Individuals can even have a new plan if they were found to be deliberately

noncompliant on a previous plan. While few in number, we saw instances

where individuals were on their second or third PASS. For example, we

reviewed one case in which a recipient had previous PASSes to be a word

processor and receive a vocational evaluation, and now was pursuing a

third goal of being a florist.

Guidance on Acceptable

Expenditures Unclear

The lack of adequate guidance on acceptable PASS expenditures means that

SSA cannot provide reasonable assurance that PASS funds are being spent

appropriately. While POMS states that PASSes must explain the necessity of

each proposed purchase in the PASS budget, and that these items must be

reasonably priced (moderate or fair and not extreme or excessive within

the geographic location), it offers insufficient specific guidance on

allowable PASS expenditures, according to field office staff. While the

current POMS provides examples of acceptable expenditures such as

tuition, books, uniforms, equipment, child care, and attendant care that are

acceptable if they are found necessary and reasonably priced, it places no

absolute limits on the types of items that can be approved, nor their costs.

For example, the POMS specifies only that a luxury or sports car would

“rarely” be appropriate, but sets no limit on the amount that can be spent

on an automobile. Furthermore, the standards for justifying necessity or

cost have not been specified, leaving them open to individual

interpretation. Some SSA field office staff cited examples of approved

PASSes that they believed did not contain evidence that the proposed

expenditure items were reasonably priced and/or in direct relation to the

proposed occupational goal. Not surprisingly, approved and denied

expenditures in the plans we examined were inconsistent. For example,

the proposed purchase of a $13,000 automobile in one plan was denied on

the basis that the applicant did not provide sufficient evidence to justify

the car’s cost; in another plan, the purchase of an automobile was denied

altogether because the plan did not specify why the purchase of any

automobile was necessary to achieve the occupational goal. In contrast,

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we also saw plans in which similarly expensive vehicles were approved, or

in which less justification for purchasing an automobile was provided.

Some field office staff also told us that some individuals who helped

prepare PASSes were occasionally unwilling to provide documentation to

support proposed expenditures.

Compliance Monitoring Is

Infrequent and

Nonstandardized

The periodic reviews SSA requires to determine whether PASS program

participants are complying with their plans are infrequent and

nonstandardized. These reviews are intended to ensure adherence to the

spending plan and to determine whether the occupational objective has

been reached or whether the participant is meeting plan milestones.

Recent changes to the POMS require compliance reviews at least every 12

months, compared with the previous requirement of at least every 18

months, and require reviews every 6 months under certain circumstances.

SSA field staff in most offices we visited, as well as several third-party PASS

preparers, told us that frequent reviews would help prevent

noncompliance and the resulting overpayments from additional SSI

payments to PASS program participants not following their plans. In

addition, staff in at least four offices told us they review plans more

frequently than the POMS guidelines recommend if they have concerns

about the feasibility of a plan. One field office staff member, for example,

said that she performs early compliance reviews for plans that include

high expenditures, such as a $20,000 car.

SSA headquarters, however, does not have specific requirements about how

compliance reviews should be done. The POMS directs field office staff to

conduct the review in a manner convenient to the individual, either in

person, by mail, or over the telephone. We found that all three methods

were used. Ensuring compliance consists of reconciling actual

expenditures with funds set aside under a plan and determining whether

the program participant has reached his or her goal. Field office staff cited

examples of PASS program participants submitting grocery bags or shoe

boxes of receipts to be reconciled. In addition, according to SSA field office

staff, many PASS program participants do not understand how to account

for their funds, and some have not kept records of purchases. Little

specific information about compliance reviews is included in the

notification letter sent to individuals when their PASS is approved.

Furthermore, some third-party PASS preparers told us that proper

accounting of expenditures can be a difficult task for some program

participants.

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Few Penalties Exist for

Willful Noncompliance

Guidance to field office staff does not make a distinction between willful

noncompliance and noncompliance for other reasons. While the POMS

specifies that a series of unsuccessful plans “may be grounds” for

questioning the feasibility of a new PASS, there are no prohibitions on

subsequent PASSes for individuals who have abandoned or willfully not

complied with previous ones. Materials from one organization that

prepares PASSes, for example, tells prospective clients that “there is no

penalty for not obtaining or maintaining employment after participating in

PASS.” POMS directs SSA field office staff to ask the participant for evidence

of PASS expenditures. If the participant provides none, the field office staff

must obtain authorization from the participant to contact appropriate third

parties to verify savings and purchases. Therefore, SSA field office staff

must rely on the cooperation of the program participant and the third

party to obtain needed evidence.

SSA headquarters guidance is unclear about actions field office staff should

take if a PASS program participant is noncompliant with his or her plan.

Although SSA regulations require all changes to PASSes to receive prior SSA

approval, if during a compliance review a PASS program participant is

found to be out of compliance with the terms of the PASS, the POMS gives

the participant the opportunity to amend the plan and return to

compliance. Specifically, if the PASS program participant has not met the

occupational goal or is not in compliance, the POMS states that field office

staff should amend the PASS retroactively to fit the participant’s

circumstances if this will result in compliance. For example, if an

individual proposes to use a PASS to attend college as an engineering

student and subsequently changes majors to journalism, the plan can be

amended to reflect this change if this would make the program participant

compliant with his or her amended plan. Similarly, if a PASS budget

includes the purchase of a used car and the participant leases a new car

instead, the plan can also be changed retroactively.

SSA’s POMS also does not encourage terminating PASSes for recipient

noncompliance. If the PASS cannot be amended or amendment would not

result in compliance, POMS recommends suspending the PASS.

10 Terminating

a PASS is recommended only as a last option. If they are found

noncompliant, program participants may be charged with repaying the

additional benefits they received during their PASS. However, some SSA

field office staff we interviewed were unaware they could collect these

overpayments from individuals who had not complied with their plans.

10When a PASS is suspended, PASS funds are no longer disregarded by SSA when calculating the

benefit amount. However, the PASS may be resumed any time within the next 12 months.

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The amount of overpaid funds that can be withheld by SSA from a

subsequent SSI check is limited to 10 percent of the total benefit, unless the

claimant agrees to a higher amount.

SSA Lacks Internal

Controls Over Third-Party

PASS Preparers

SSA guidance states that anyone can help prepare a PASS, including a

vocational rehabilitation counselor, an organization that helps people with

disabilities, an employer, a friend or relative, or SSA. Of the 380 PASSes we

reviewed, more than half were prepared by third parties. Although SSA staff

will help disability benefit recipients to fill out a plan free of charge, field

office staff infrequently prepare PASSes. Indeed, SSA field office staff

prepared only 14 of the 380 PASSes we reviewed. Recognizing the need for

outside help, SSA field offices are to maintain a referral list of organizations

that can assist people with writing their PASS, for a fee or not, although it

does not endorse any organization.

Although SSA has determined that anyone can help prepare a PASS, it did

not establish minimum standards for third-party PASS preparation. As a

result, the services provided by third-party PASS preparers vary greatly.

Some preparers we interviewed provide extensive assistance and

resources to their clients to determine their goals and needed expenses,

including vocational evaluations of their abilities and needs; others

provide only guidance to clients, directing them to do their own research.

In addition, the amount of vocational rehabilitation expertise and

experience varied considerably among the PASS preparers we interviewed.

Some were certified vocational rehabilitation professionals or had

graduate training; others had no special experience or training in assisting

people with disabilities with obtaining or maintaining work. In the last

several years, a number of SSI and DI recipients have received training,

generally funded by a PASS, on preparing PASSes for a fee in several states,

including Iowa, Oregon, Maine, and Colorado.

The fees charged by preparers also range considerably. For example, the

median fee charged among the PASSes we reviewed was $200, while the

highest fee for PASS preparation and monitoring was $832. Some PASS

preparers charge fees for PASS preparation as well as additional fees for

other services, such as PASS amendments and monitoring. Other PASS

preparers charge no fees but provide some or all of the services

mentioned. POMS clearly states that fees are acceptable PASS expenditure

items, but it is not clear whether SSA anticipated the amount of fees PASS

preparers would charge in some cases and whether SSA intended to allow

the applicants to claim the total amount as a planned PASS expenditure that

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would be offset by additional SSI payments. According to the current POMS,

PASS preparation fees should be evaluated on the basis of the preparer’s

involvement in formulating the plan, including the type of work done and

number of hours. However, the absence of preparer standards and

qualifications and the lack of nationwide SSA guidelines on appropriate

charges make this guidance difficult for SSA field staff to administer. At

least one SSA region issued its own guidance on acceptable fee amounts,

recommending limits of $25 an hour and a total of no more than $500 for

an individual PASS. Other regions approve fees in excess of these

recommended limits.

SSA lacks a uniform policy toward third-party PASS preparers, and conflict

exists between some preparers and the SSA field staff. While some PASS

preparers encourage good relationships with SSA, others have adversarial

relations with local field offices. The lack of written objectives and a clear

definition of success creates the potential for disagreement and conflict

regarding PASS approvals and denials. We found in at least six offices we

visited that this conflict was disruptive to field office operations.

Most of the PASS preparers we interviewed expressed frustration with the

inconsistencies in PASS approvals and denials across field offices where

they submit plans. At the same time, some SSA field office staff told us they

believed that some third-party preparers wrote “ridiculous” PASSes,

unlikely to result in economic self-support, or simply designed to

maximize an individual’s purchases or the preparer’s earnings. Field office

staff and PASS preparers we spoke with were sometimes divided as to

whether individuals who request a PASS should have a high probability of

achieving the occupational goal, or if it should just be theoretically

possible. Some PASS preparers we spoke with believed that nearly all

PASSes are feasible, citing the requirement that the PASS program be

liberally interpreted. One PASS preparer told us, for example, that the PASS

program is an individual’s opportunity “to pursue their dream.” Another

said he encourages his clients to “shoot for the stars” when developing a

PASS.

Staff in at least nine SSA field offices we visited said that they felt pressured

by third-party PASS preparers to approve PASSes. A few third-party

preparers said they use tactics such as repeated calls to SSA field offices,

involvement of advocacy groups, publicity, and letters to local

congressional representatives to pressure field office staff to approve

plans. Tension between PASS preparers and SSA field office staff may also

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arise because PASS preparers sometimes get paid their fee only if a PASS is

approved.

SSA has no internal controls to prevent conflicts of interest on the part of

third-party preparers. For example, some PASS preparers also provide

vocational and rehabilitation services for people with disabilities, and may

write PASSes to pay for the services they also provide. We saw plans, for

example, written to fund job coaching or independent living services

provided by the agency developing the PASS.

SSA Is Aware of Internal

Control Weaknesses but

Has Taken Little Action

SSA is aware of and is trying to address some, but not all, of the internal

control weaknesses present in the PASS program. Many are detailed in a

1994 internal SSA PASS program strategy paper. In addition, SSA issued new

POMS guidance on the PASS program in January 1995 in an attempt to

provide field office staff with better control over the program.

Nonetheless, field office staff in nearly every office we visited reported

that SSA’s guidance on administering the PASS program still does not

provide them with enough specifics for approving and denying plans. In

September 1994, SSA assembled a work group to address various PASS

program issues, including the role of third-party PASS preparers and field

office staff’s evaluation of plans. This group reconvened in August 1995 to

review data from an internal SSA study of the PASS program conducted by

the Office of Program Integrity Review and to address several related

policy issues stemming from this study. SSA officials responsible for the

PASS program told us they are currently considering a number of regulatory

and policy options resulting from this group. In the near future, SSA plans

to disseminate materials to educate PASS program participants and

third-party preparers about PASS rules and responsibilities, but this will not

address the issues of third-party preparer qualifications, services provided,

fees charged, or conflicts of interest.

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SSA has done a poor job implementing and managing the PASS program. The

PASS program is small, comprising less than three-tenths of 1 percent of the

working-age disabled SSI population; however, SSA pays about $30 million

in additional cash benefits to PASS program participants annually, not

including medical and other benefits. Moreover, the large potential for

future growth merits attention now to serious management and internal

control weaknesses.

As a result of the PASS program’s design, more than 40 percent of all

program participants had income, primarily DI benefits, that exceeded SSI

standards and used their PASS to gain eligibility for federal SSI payments.

These individuals maximize their federal benefits while participating in the

PASS program, but almost none leave the DI rolls as a result of work. In

addition, SSA has allowed PASS preparation and monitoring fees paid to

third parties to be disregarded when calculating benefit amounts and has

neither placed limits on the amount of such fees nor set standards for

what services those fees should cover. Administrative action on these

issues by SSA may well result in legal challenge because of SSA’s

long-standing practices of allowing DI beneficiaries to use the PASS program

as a means for gaining SSI eligibility and of allowing fees to third-party

preparers as PASS expenses.

SSA has not translated the Congress’ broad goals for the PASS work

incentive into a coherent program design, and it has not provided adequate

criteria or guidance to field offices charged with administering the

program. In following the congressional directive that the work incentive

be “liberally construed,” SSA has placed few limits on the program, such as

stringent criteria for assessing whether an individual PASS work goal is

feasible and whether proposed expenses are appropriate. SSA has also not

developed outcome measures to evaluate the program’s effect on

participants’ return to work. At the same time, field office staff who

administer the PASS program receive inadequate training, information, and

credit for this task.

Finally, SSA has not addressed internal control weaknesses that have left

the program vulnerable to abuse and undermined program integrity. The

PASS program lacks even minimal controls to provide reasonable assurance

that additional funds are being spent appropriately and to safeguard

against fraud and abuse. Currently, the lack of a standardized application

form or compliance review process results in inconsistent and inequitable

implementation, and insufficient guidelines on expenditures and lack of

penalties for willful noncompliance make the PASS program a potential

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target for abuse. Further, while third-party PASS preparers may play an

important role in assisting disability benefit recipients, some of the

services provided and fees received could create conflicts of interest and

additional potential for abuse. Through its recently assembled work group,

SSA is planning to address some of the design and internal control

weaknesses we identified, but it is too early to determine whether SSA’s

actions will be effective.

Matter for

Congressional

Consideration

The Congress may wish to consider whether individuals otherwise

financially ineligible for SSI because their DI benefits or other income

exceeds the eligibility threshold should continue to gain eligibility for SSI

through the PASS program.

Recommendations SSA needs to make major improvements in the management of the PASS

program to achieve more consistent administration, better support field

staff, collect data sufficient to control and evaluate the program, and

provide internal controls against program waste and abuse. We

recommend that the Commissioner take the following actions, or, if

necessary, seek legislation to do the following:

• clarify the goals of the PASS program;

• decide whether fees paid to third parties should continue to be

disregarded when calculating benefit payment amounts and whether the

amount of disregarded fees should be capped;

• standardize the PASS program, including the application, reporting

guidelines on expenditures for compliance reviews, and informational and

educational materials for PASS preparers;

• improve support to field staff, including enhancing their ability to evaluate

the feasibility of proposed work goals, and requiring PASSes to incorporate

additional data relevant to determining their feasibility, including the

applicant’s disability, previous work experience, if any, and education;

• gather additional management data on PASS program participation and

impact, and use these data to evaluate the impact of PASS program

participation on employment; and

• strengthen internal controls by establishing more specific guidelines on

acceptable PASS expenditures, developing penalties for willful

noncompliance with the PASS program, including a determination of

whether subsequent plans are permissible, examining the role of

third-party preparers, including their potential financial conflicts of

interest, and considering the strength of existing safeguards against abuse

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when determining the appropriate limits on the length and number of

PASSes individual participants may have.

SSA’s Comments and

Our Evaluation

SSA generally concurred with our recommendations, and cited in its

comments actions it intends to take to address them, including such

actions as developing a standardized application form and providing

improved support to field office staff. We deleted a recommendation in

our draft report regarding the work credit field office staff receive for PASS

tasks, because of the progress SSA has made in this area. SSA commented

that it had limited statutory authority to address all of our

recommendations. As we had stated in our recommendations, SSA may find

it necessary to seek legislation to implement program changes. More

details on SSA’s specific proposed actions are included in appendix VI, as

well as a full copy of SSA’s comments and our response.

Page 40 GAO/HEHS-96-51 PASS Program Poorly Managed
Page 41 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix I 

Sample PASS Format

Page 42 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix II 

Demographics of Program Participants

Relative to the whole SSI disabled population, PASS program participants

are younger and more likely to be men. More than a third of program

participants in December 1994 were 30 years old or younger, and

two-thirds were less than 40 years old. In contrast, more than half of the

working-age SSI population was 40 years or older. About 55 percent of all

PASS program participants were men, compared with only 45 percent of all

disabled SSI recipients. Half of PASS program participants had been

receiving SSI benefits for more than 4 years, and a few had been on the

rolls since the SSI program began, more than 20 years ago. (See table II.1.)

Table II.1: PASS Program Participants

Are Younger Than Working-Age SSI

Population

Numbers in percent

Characteristic

PASS

participants

Nonelderly

adult

disabled

SSI

recipients

30 years or younger 35 21a

40 years or older 33 56

Male 55 45b,c

Disabled with mental illness 41 30b

Benefits managed by a representative payee 19 31c

Concurrent beneficiary 75 32c

Note: Data are as of 1994.

aAges 29 and younger.

bIncludes disabled children.

cIncludes elderly receiving SSI because of a disability.

Source: SSA.

As shown in table II.1, a larger proportion of PASS participants (41 percent)

than the general SSI disabled population (30 percent) had mental illness as

their disabling diagnosis. However, program participants were less likely

to have another person, known as a representative payee, handling their

benefits. About one in five had a representative payee, compared with

nearly one in three disabled adult SSI recipients. A very few PASS program

participants were also using other SSI work incentives to deduct expenses

related to working, such as impairment-related work expenses or work

expenses for the blind.11

11The same expenses cannot be deducted under more than one work incentive.

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Appendix II 

Demographics of Program Participants

We found that in January 1995 approximately one-third of all unmarried

PASS program participants were eligible for the maximum federal SSI

payment allowable for persons with their living arrangements. The median

SSI payment to all PASS program participants in that month was $436. On

average, program participants received $270 more in federal SSI payments

in January 1995 than they would have been entitled to without their PASS.

Page 44 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix III 

Sites GAO Visited

We selected SSI field offices for site visits that had a comparatively large

number of approved PASSes in March 1994. To avoid duplication, we did

not visit any office included in a 1992 review of the PASS program by the

Office of the Inspector General, even through these offices often had very

high numbers of plans as well and were located in the same areas. Within

each office, we spoke with all of the claims representatives and

management staff available, as a group, who had any experience reviewing

PASSes and administering the PASS program.

Table III.1: Sites GAO Visited

Field office

Number of

PASSes

reviewed

California

Berkeley District Office 31

Fairfield District Office 20

San Francisco Civic Center District Office 17

San Francisco Western Addition Branch Office 13

Santa Rosa District Office 26

Colorado

Aurora District Office 6

Boulder District Office 9

Englewood Branch Office 19

Greeley District Office 13

Lakewood District Office 21

Maine

Portland District Office 15

Saco Branch Office Nonea

Massachusetts

Somerville District Office 11

Quincy District Office 22

Michigan

Ann Arbor District Office Nonea

Vermont

Montpelier District Office 14

Rutland District Office 46

Wisconsin

Fond du Lac District Office 26

Madison District Office 71

Total 380

aWe conducted interviews at these offices but did not review any files.

Page 45 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix IV 

Methodology

We derived statistical data on PASS plans and participants from (1) data we

collected during PASS file reviews in selected SSA field offices and

(2) existing SSA databases. The following describes our methodology for

each source.

PASS File Review We selected the 19 sites for our visits from a list of 94 offices with 20 or

more active PASSes in March 1994. In selecting offices to visit, we factored

in those in areas we knew had active third-party PASS preparers. The

Program Operations Manual System requires field offices to maintain

copies of PASSes separate from other client files in a PASS “library.” In each

office, we drew a sample of plans from the PASS library, choosing a random

starting point and reviewing every second, third, fourth, or fifth PASS,

depending on the total number of plans. We did not set a target for any

office, and the number of plans actually reviewed depended on the

complexity of the plans and the time available in each office. The files we

reviewed were a mixture of active, completed, and prematurely terminated

PASSes, including both approved and denied plans. While they are

representative of all PASSes administered by those offices where they were

reviewed, our findings regarding their characteristics cannot be

generalized to all PASSes nationwide.

Data that were captured from PASSes using a computer-based

questionnaire were then compiled and analyzed using a statistical software

package. For those data items, such as occupational goal type and title, for

which aggregate statistics are cited in this report, we did an independent

100-percent verification of the accuracy of our data entry. During

pretesting of our data capture procedure in the Ann Arbor, Michigan,

district office, we determined that much of the data we sought, such as the

approved plan starting date and approved budget for the plan, was not

routinely available from PASS files. Therefore, for items that are used only

anecdotally in this report, such as the costs of proposed purchases, we did

not do a complete data entry verification. We also did not verify that PASS

participants were actually complying with their plans, because this was

the emphasis of the internal SSA review of PASS. For this reason, our data

only reflect approved proposed work goals and purchases.

Analysis of Social

Security Data

We used three separate SSA databases to profile current and former PASS

program participants—the Workers’ Database, Master Earnings File, and

Master Beneficiary Record. The Workers’ Database contains selected data

fields on all SSI recipients with work activity in their most recent 12

Page 46 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix IV 

Methodology

months of program eligibility, regardless of when that last eligibility period

ended. The Workers’ Database is extracted monthly from the

Supplemental Security Record. We used the December files from 1991

through 1994 to determine PASS program participants’ benefit status and

the amount of earnings they were reporting to the SSI program. By

comparing these four December files, we were able to track program

participants over time. Table IV.1 shows the 1994 status of former PASS

program participants.

Because we were only interested in the potential impact of PASS program

participation on earnings, we did not access current benefit data for

former PASS program participants who were not working. We assumed that

individuals not selected into the Workers’ Database in subsequent years

had no PASS or were not reporting any earnings to the SSI program. We

could not tell if they were still receiving SSI benefits. However, we assumed

that they had not left the SSI program for earnings-related reasons because

these earnings would have been present during their last 12 months of

program eligibility.

Table IV.1: Status of 1991-93 PASS

Program Participants as of

December 1994

First year the PASS appeared on

Workers’ Database

Individual

was not

found on

1994

Workers’

Database

Individual

found on

Workers’

Database,

but had no

1994 PASS

Had 1994

PASS Total

1991 1,252 1,500 818 3,570

1992 855 1,229 1,527 3,611

1993 299 1,447 2,862 4,608

Total, all years 2,406 4,176 5,207 11,789

To obtain a more complete picture of PASS program participants’ earnings,

we obtained data from SSA’s Master Earnings File. Information on wages

and self-employment earnings for all individuals with Social Security

numbers, regardless of disability status, is sent directly to SSA from

employers and the Internal Revenue Service. We obtained annual earnings

data for all individuals with PASSes in the four Workers’ Database files. The

files contained data from 1937 to 1993, the last year of completed postings.

These data provided a more comprehensive profile of earnings and

enabled us to compare pre- and post-PASS earnings for those individuals

whose PASSes ended before December 1993.

Page 47 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix IV 

Methodology

Finally, for all PASS program participants who were concurrent

beneficiaries, we extracted selected fields from the Master Beneficiary

Record in May 1995. The MBR contains benefit and demographic data for all

DI beneficiaries. We used these data to track DI benefit status for former

PASS program participants, including those who left the SSI rolls after their

PASSes ended.

Page 48 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix V 

Selected Data From PASSes GAO Reviewed

The following is a 10-percent sample of the occupational goals, as written,

for the 366 approved PASSes we reviewed. These plans represent a mixture

of active and completed PASSes.

Occupational Goal Complete bachelor’s degree in political science to become a consultant

Computer specialist

Apply to law school to be a lawyer

Marriage, family, child counselor

Budget analyst

Receive a vocational rehabilitation evaluation

Start a lawn care business

Obtain diploma and job in medical administration

Complete degree at Boston College and seek employment

Computer science

Complete degree and become a graphics programmer

Attend the University of Massachusetts to become a theater administrator

Work 15 hours a week as a housekeeper at Budgetel

Multimedia/video production developer

Attend school to learn car repair

Maintain job as a filing clerk

Keep clerical assistant job

Licensed real estate agent

Full service custodian

Arts and crafts decorative artist

Video production degree

Education in business administration to be an accounting assistant

Counselor

Environmental scientist

Certified drafter

Accounting clerk

Train field dogs for hunting

Paralegal

Self-employed book indexer

Obtain career planning to work in accounting field

Custodian

Part-time employment as a janitor/maintenance worker

Page 49 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix V 

Selected Data From PASSes GAO Reviewed

Part-time employment as shipping/receiving clerk

Clerical work at Walmart

Biotechnology lab technician

Newspaper or magazine journalist

Video production technician

Page 50 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

Note: GAO comments

supplementing those in

the report text appear at

the end of this appendix.

Page 51 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

See comment 1.

See comment 2.

Page 52 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

See comment 3.

See comment 4.

See comment 3.

Page 53 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

Page 54 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

See comment 5.

Page 55 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

See comment 6.

See comment 7.

See comment 8.

See comment 9.

See comment 10.

See comment 11.

Page 56 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

Now on pp. 13-14.

Now on pp. 13 and 31.

See comment 12.

Now on p. 18.

See comment 13.

Now on p. 25.

See comment 14.

Now on p. 33.

See comment 15.

Now on p. 38.

See comment 16.

Page 57 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

See comment 17.

Now on p. 10.

See comment 18.

Now on p. 11.

See comment 19.

Now on p. 13.

See comment 20.

Now on p. 18.

See comment 21.

Now on p. 28.

See comment 22.

Page 58 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

The following are GAO’s comments on the Social Security Administration’s

letter dated December 20, 1995.

GAO Comments 1. We are aware of the work group study and recognize that it examined

the PASS program during the same period we conducted our review. As SSA

noted in its comments, the work group’s findings are consistent with ours.

2. Our conclusions describe possible statutory barriers to proposed

recommendations, and direct the Commissioner to seek legislative

authority, if necessary, to implement these recommendations. (See ch. 4.)

In its comments, SSA noted that it did not have the statutory authority to

address all of our recommendations. However, many of the issues we

raised are already well known to SSA, and the agency could have sought

legislative action or clarification at any time. To our knowledge, SSA has

never sought legislative remedy for its concerns. By including as a matter

for congressional consideration the issue of non-SSI recipients who use the

PASS program to gain eligibility for SSI, we acknowledged that SSA could not

unilaterally change the eligibility criteria for the PASS program.

3. The definition of self-support SSA cites is not explicitly included in

literature to claimants about the PASS program. Furthermore, while the

January 1995 POMS does note that participation in the PASS program is

expected to “produce additional earned income to eliminate, or at least

reduce, SSI payments,” many field staff expressed confusion about the

intended goals of the program. Our interviews with field office staff and

third-party PASS preparers showed that many different interpretations of

self-support were being used to develop and evaluate plans and that

approvals were inconsistent as a result. SSA did not provide us with any

specific information about forthcoming changes to the POMS or other PASS

program policies and procedures, including a strategy to operationalize

this definition of self-support. (See pp. 19-20.) We conducted our field

interviews from January through March 1995. Staff in nearly all the field

offices we visited had received and been briefed on the revised PASS

program instructions. Although they had limited experience implementing

them, the majority of staff members told us that they believed the new

instructions would not provide sufficient guidance for approving and

denying plans. (See p. 37.)

4. Language from the House Report accompanying the PASS work

incentive, including the directive that the provision be liberally construed,

Page 59 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

was included throughout the report and remains. The report was not

revised.

5. We believe that SSA’s proposal to instruct regional and local

management to be cognizant of PASS workload when allocating staff and

resources among field offices is a reasonable one. In addition, the

proposed development of PASS specialists to review and approve or deny

PASSes should mitigate the workload burden on individual offices.

Accordingly, we have deleted our recommendation on the workload credit

for the PASS program. (See p. 39.)

6. We are not suggesting that SSA implement across-the-board time limits to

cover all PASSes. Rather, the Social Security Independence and Program

Improvement Act of 1994 requires SSA to establish criteria for time limits

that take into account the reasonable length of time needed to achieve an

individual employment goal, as well as other appropriate factors. We

believe that within the confines of the law, time limits for individuals,

although not across-the-board limits, can and should be established that

do not compromise SSA’s ability to control the PASS program.

7. While we recognize that SSA does not have the statutory authority to

regulate private businesses, in its comments the agency notes that it has

the authority “to determine the appropriateness of a PASS preparation fee

as an excludable expense under a PASS.” Similarly, SSA could place limits on

the amount of the fee that could be excluded under a PASS, regardless of

the amount charged to the program participant. In addition, SSA could

issue guidelines to its field staff regarding circumstances under which fees

would not be excludable, such as when the preparer is already providing

other services to be paid with PASS funds.

8. We recognize that there are consequences for noncompliance with a

PASS, including losing the additional funds and/or SSI eligibility resulting

from PASS exclusions and that possible overpayments are subject to

recovery. Accordingly, the report was revised to acknowledge SSA’s ability

to apply statutory penalties for nonreporting. However, these

consequences are the same whether a plan has been purposely abandoned

or noncompliance has occurred for another reason beyond the claimant’s

control, such as illness or hospitalization. Specifically, as stated in the

report, neither the POMS nor PASS program regulations prohibit individuals

with a history of deliberate PASS noncompliance from having another plan

approved. The report has also been revised to clarify the limits of SSA’s

authority in recovering SSI overpayments. (See pp. 34-35.)

Page 60 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

9. We recognize that the PASS work incentive was enacted as a provision in

the SSI program legislation and was never legally established as a distinct

program. However, since the House Conference Report (103-670)

accompanying the Social Security Independence and Program

Improvement Act of 1994 refers to the “PASS program,” we have opted to

use the term for ease of understanding.

10. The report was revised to clarify the exact language authorizing the

PASS provision.

11. The request in the law that we review the PASS program was broad in

scope. Recognizing other ongoing studies of the PASS program, we reached

agreement with the relevant congressional committees on these

objectives.

12. The report was revised to clarify the reason SSA is modifying time limits

for individual plans.

13. No revision was made as this clarification about the maximum amount

of additional SSI benefits PASS program participants may receive is already

present in the report. (See p. 13.)

14. The report was revised to clarify that SSA has not published any

program impact data for the PASS program, including the internal data used

by the SSA work group, developed in a study by the Office of Program

Integrity Review. We reviewed drafts of the Office of the Inspector General

report; however, the OIG review did not encompass the PASS program’s

impact on employment and benefits.

15. The report was revised to include additional information about the

minimum frequency for compliance reviews.

16. The report has been revised to recognize that SSA made an explicit

decision to allow DI beneficiaries and others to use the PASS program to

gain eligibility for SSI payments because of congressional direction to

liberally construe the provisions of the statute. In addition, the issue of

eligibility was raised in a matter for congressional consideration in the

draft report SSA reviewed. (See pp. 38-39.)

17. We believe that participation in the PASS program does serve to

safeguard or protect cash benefits, because excluding income or resources

Page 61 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VI 

Comments From the Social Security

Administration and Our Evaluation

under an approved plan prevents a participant’s cash award from being

reduced by this income or resources. The report was not revised.

18. The report was revised to clarify Medicaid eligibility for SSI recipients.

19. The report was revised to reflect SSA’s comment regarding the

cognizant office for PASS program policy. Although the Office of Disability

does not have line responsibility for PASS program policy, the Assistant

Commissioner for the Office of Disability discussed with us the

relationship between the PASS program and the Office of Disability’s

Employment Strategy.

20. The report was revised to clarify the effect of impairment-related work

expenses on SSI benefits.

21. The report was revised to clarify that items must be reasonably priced.

However, SSA does not place any dollar limits on PASS cost items.

22. The report was revised to clarify our findings about earnings.

Page 62 GAO/HEHS-96-51 PASS Program Poorly Managed
Appendix VII 

GAO Contacts and Staff Acknowledgments

GAO Contacts Cynthia Bascetta, Assistant Director, (202) 512-7207

Sara Koerber Galantowicz, Evaluator-in-Charge, (617) 565-7463

Lisa P. Gardner, Evaluator, (303) 572-7468

Acknowledgments In addition to those named above, the following individuals made

important contributions to this report: Susan Higgins and Michelle

McCormick assisted with the design, field work, and report drafting;

Edmund Price designed our data collection instrument for field review;

Daniel Schwimer provided legal review; Jay Smale and James Wright

assisted with data analysis and presentation; and Vanessa R. Taylor

performed all analyses of Social Security data.

(105598) Page 63 GAO/HEHS-96-51 PASS Program Poorly Managed
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