DISABILITY 

INSURANCE

Work Activity 

Indicates Certain 

Social Security 

Disability Insurance 

Payments Were 

Potentially Improper

Report to Congressional Requesters

August 2013

GAO-13-635

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-635, a report to 

congressional requesters

August 2013

DISABILITY INSURANCE

Work Activity Indicates Certain Social Security 

Disability Insurance Payments Were Potentially 

Improper

Why GAO Did This Study

SSA’s DI program is the nation’s 

largest cash assistance program for 

workers with disabilities. Though 

program rules allow limited work 

activity, some work activity indicates 

beneficiaries are not disabled and 

therefore not entitled to DI benefits. 

Consequently, SSA might overpay 

beneficiaries if the agency does not 

detect disqualifying work activity and 

suspend benefits appropriately. 

GAO was asked to study potential DI 

overpayments. GAO examined the 

extent to which (1) the NDNH indicates 

that individuals received potential DI 

overpayments; and (2) SSA’s 

enforcement operation detects 

potentially disqualifying work activity 

during the waiting period. GAO drew 

random, generalizable samples of 

individuals from those whose earnings 

on the NDNH were beyond program 

limits and compared wages from their 

employers to DI program data to 

identify potential overpayments. To 

illustrate the circumstances in which 

SSA made potential DI overpayments, 

GAO reviewed case files for a 

nongeneralizable selection of six 

individuals—three who worked during 

their waiting period, and three who 

received potential overpayments for at 

least 3 years.

What GAO Recommends

GAO recommends that SSA assess 

the costs and feasibility of establishing 

a mechanism to detect potentially 

disqualifying earnings during all 

months of the waiting period and 

implement the mechanism as 

appropriate. SSA concurred, but raised 

concerns about GAO’s estimates. GAO 

believes its estimates are valid as 

discussed in this report.

What GAO Found

On the basis of analyzing Social Security Administration (SSA) data on 

individuals who were Disability Insurance (DI) beneficiaries as of December 2010 

and earnings data from the National Directory of New Hires (NDNH), GAO 

estimates that SSA made $1.29 billion in potential cash benefit overpayments to 

about 36,000 individuals as of January 2013. The exact number of individuals 

who received improper disability payments and the exact amount of improper 

payments made to those individuals cannot be determined without detailed case 

investigations by SSA. These DI beneficiaries represent an estimated 0.4 percent 

of all primary DI beneficiaries as of December 2010. Using a different 

methodology that includes additional causes of overpayments not considered in 

GAO’s analysis, SSA estimated its DI overpayments in fiscal year 2011 were 

$1.62 billion, or 1.27 percent of all DI benefits in that fiscal year. GAO estimated 

DI program overpayments on the basis of work activity performed by two 

populations of individuals. The first population received potential overpayments 

due to work activity during the DI program’s mandatory 5-month waiting period—

a statutory program requirement to help ensure that SSA does not pay benefits 

to individuals who do not have long-term disabilities. Prior to receiving benefits, 

individuals must complete a 5-month waiting period, in which the individual 

cannot exceed a certain level of earnings, known as substantial gainful activity, 

during any month in order to be eligible for DI benefits. Earnings that exceed 

program limits during the waiting period indicate that individuals might not have 

long-term disabilities. The second population received potential overpayments 

due to work activity beyond the program’s trial work period—the trial work period 

consists of up to 9 months in which a DI beneficiary may return to work without 

affecting her or his benefits. However, beneficiaries whose earnings consistently 

exceed program limits after completing a trial work period are generally no longer 

entitled to benefits. 

SSA uses its enforcement operation to generate alerts for potentially 

disqualifying earnings, but the agency’s enforcement operation does not 

generate alerts for earnings that occur in all months of the waiting period, which 

allows potentially disqualifying work activity to remain undetected. Specifically, 

GAO found that SSA’s enforcement operation will not generate an alert for 

earnings during the waiting period if the earnings occur in a year when the 

beneficiary does not receive a benefit payment. For example, in two of the 

nongeneralizable case studies GAO reviewed, SSA’s enforcement operation did 

not generate an alert for potentially disqualifying work activity during the waiting 

period because these individuals’ waiting periods occurred in the year prior to 

their first benefit payment. GAO obtained earnings records from these 

individuals’ employers that show they worked continually both during and after 

their waiting periods at a level of work that would normally result in a denial of 

benefits. GAO also reviewed information for individuals who worked beyond their 

trial work period and found that SSA had identified and established 

overpayments for these individuals. SSA officials stated that modifying its 

enforcement operation could be costly, but the agency has not assessed the 

costs of doing so. To the extent that it is cost-effective and feasible, establishing 

a mechanism to detect earnings during all months of the waiting period would 

strengthen SSA’s enforcement operation.

View GAO-13-635. For more information, 

contact Steve Lord at (202) 512-6722 or 

lords@gao.gov.
Page i GAO-13-635 Disability Insurance

Letter 1

Background 6

SSA Made $1.29 Billion in Benefit Payments That Were Potentially 

Improper as of January 2013, Mostly as a Result of Work Activity 

during the 5-Month Waiting Period 11

SSA Is Assessing Opportunities to Better Identify Potential 

Improper Payments, but Existing Controls Allow Potentially 

Disqualifying Work Activity to Remain Undetected 20

Conclusions 24

Recommendation for Executive Action 24

Agency Comments and Our Evaluation 25

Appendix I Debt Owed to SSA from Overpayment of DI 

Benefits Is Increasing 28

Appendix II Objectives, Scope, and Methodology 29

The NDNH Database 30

Wait Period Overpayments 32

Wait Period Overpayment Examples 34

Trial Work Period Overpayments 35

Trial Work Period Overpayment Examples 39

Data Reliability Assessments 39

Appendix III Monthly Earnings That Indicate a Trial Work Period or 

Substantial Gainful Activity 41

Appendix IV Comments from the Social Security Administration 43

Tables

Table 1: Monthly Earnings That Trigger a Trial Work Period, 

2001–2012 41

Table 2: Monthly Earnings That Demonstrate Substantial Gainful 

Activity (SGA), 2001–2012 42

Contents
Page ii GAO-13-635 Disability Insurance

Figures

Figure 1: Substantial Earnings in the Waiting Period May Result in 

Disability Insurance (DI) Overpayments 8

Figure 2: Substantial Earnings beyond the Trial Work Period and 

Grace Period Make Benefits Potentially Improper 9

Figure 3: Disability Insurance (DI) Beneficiaries Estimated to Have 

Received Potential Overpayments 12

Figure 4: Balance of Disability Insurance (DI) Overpayment Debt 

Detected by the Social Security Administration (SSA), 

Fiscal Years 2008-2012 28

Figure 5: The 15 Months from July 2009 to September 2010 Is the 

Period for Which GAO Had Both Disability Insurance Data 

and Earnings Data 37
Page iii GAO-13-635 Disability Insurance

Abbreviations

AERO Automatic Earnings Reappraisal Operation

CDR continuing disability review

DI Disability Insurance

enforcement operation Continuing Disability Review 

Enforcement Operation

MBR Master Beneficiary Record

NDNH National Directory of New Hires 

OCSE Office of Child Support Enforcement

POMS Program Operations Manual System

SGA substantial gainful activity

SSA Social Security Administration

SSI Supplemental Security Income

SSN Social Security Number

TWP trial work period

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Page 1 GAO-13-635 Disability Insurance

441 G St. N.W.

Washington, DC 20548

August 15, 2013

The Honorable Thomas R. Carper

Chairman

The Honorable Tom Coburn

Ranking Member

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Carl Levin

Chairman

Permanent Subcommittee on Investigations

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Claire McCaskill

Chairman

Subcommittee on Financial and Contracting Oversight

Committee on Homeland Security and Governmental Affairs

United States Senate

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

program is the nation’s largest cash assistance program for workers with 

disabilities. In fiscal year 2011, more than 10 million DI beneficiaries 

received cash benefits exceeding $128 billion, and the program is poised 

to grow further as the baby-boom generation ages.1

 1

The more than 10 million beneficiaries we refer to here include about 0.2 million spouses 

and about 1.9 million dependent children.

Total government 

spending on DI beneficiaries is substantially higher when including the 

costs of Medicare benefits, which cost about $80 billion in 2011 for DI 

beneficiaries. SSA administers the DI program and is responsible for 

establishing national standards for disability determinations, reviewing DI 

applications to verify work history and income rules, and periodically 

evaluating beneficiary impairments to determine whether beneficiaries 

remain entitled to benefits, among other things. SSA’s process for 

approving benefits is complex and involves an evaluation of, among other 

factors, medical evidence establishing a disabling condition, the 

availability of possibly suitable employment, and the severity and length 
Page 2 GAO-13-635 Disability Insurance

of disability. Cash benefits are payable monthly, as long as the worker 

remains eligible for benefits, until the worker reaches full retirement age 

or dies. DI benefits are financed by payroll taxes paid into the Federal 

Disability Insurance Trust Fund by covered workers and their employers, 

on the basis of each worker’s earnings history. The Social Security Board 

of Trustees projects that the DI trust fund will be exhausted in 2016 and 

notes that changes designed to improve the financial status of the DI 

program are needed soon.2

Individuals must meet certain statutory program requirements to receive 

DI benefits, including the completion of a 5-month waiting period prior to 

receiving benefits.3 According to SSA, the 5-month waiting period 

ensures that SSA does not pay benefits to persons who do not have longterm disabilities because this period is long enough to permit most 

temporary disabilities to be corrected or for individuals to show definite 

signs of probable recovery. During this 5-month waiting period, the 

individual cannot have earnings that exceed about $1,000 per month—a 

level of earnings called substantial gainful activity (SGA).4 If an individual 

has substantial earnings from work during any month of the waiting 

period, the individual is considered not disabled and therefore ineligible 

for DI benefits, and any payments that SSA makes to these beneficiaries 

could be improper.5

 2

See Social Security Administration and Medicare Boards of Trustees, Status of the Social 

Security and Medicare Programs: A Summary of the 2012 Annual Reports, accessed April 

2013,

Once approved for benefits, DI beneficiaries may 

return to work for a limited amount of time without affecting their benefits. 

However, beneficiaries who consistently have earnings above SGA after 

completing a trial work period, which may be up to 9 consecutive or 

http://www.ssa.gov/oact/trsum/.

3

42 U.S.C. § 423(a)(1) and (c)(2).

4

20 C.F.R. §§ 404.1571 and 404.1574(b)(2). The SGA level was $1,000 per month in 

2010 for beneficiaries with disabilities and $1,640 per month for blind beneficiaries. While 

the SGA amount for statutorily blind individuals has remained the same for fiscal years 

2009 through 2011, the SGA amount for nonblind individuals in 2009 was $980, and for 

2010 and 2011 was $1,000. See 75 Fed. Reg. 65696 (Oct. 26, 2010); 74 Fed. Reg. 55614 

(Oct. 28, 2009); and 73 Fed. Reg. 64651 (Oct. 30, 2008).

5

Throughout this report, we use the terms “substantial earnings from work” and 

“substantial earnings” to refer to SGA. According to SSA guidance, an unsuccessful work 

attempt during the waiting period will not preclude a finding of disability. For more 

information on what SSA considers an unsuccessful work attempt, see Social Security 

Administration, Program Operations Manual System (POMS), section DI 24005.001, 

accessed April 2013, https://secure.ssa.gov/poms.nsf/lnx/0424005001.
Page 3 GAO-13-635 Disability Insurance

nonconsecutive months, are generally no longer entitled to benefits, and 

any benefit payments they receive after a subsequent 3-month grace 

period could be improper. Medical and work-related overpayments 

detected by SSA in the DI program grew from about $860 million in fiscal 

year 2001 to about $1.4 billion in fiscal year 2010.6 The true extent of 

overpayments is currently unknown, but our prior work suggests that most 

overpayments are related to beneficiaries who worked while receiving 

benefits.7

This is the second in a series of reports that respond to your request that 

we examine employment-related databases to determine whether 

individuals are receiving SSA disability payments that were potentially 

improper. Our first report addressed overlapping disability and 

unemployment benefits.8

To determine the extent to which individuals received DI payments that 

were potentially improper due to work activity, we compared NDNH 

quarterly wage data with DI beneficiary files from the Master Beneficiary 

This report: (1) estimates the extent to which 

individuals received DI benefit payments that were potentially improper 

due to work activity performed during the 5-month waiting period or 

beyond the 9-month trial work period; and (2) assesses the extent to 

which SSA’s enforcement operation detects potentially disqualifying work 

activity during the waiting period. The exact number of individuals who 

received improper disability payments and the exact amount of improper 

payments made to those individuals cannot be determined without 

detailed case investigations by SSA. Thus, we refer to “benefit payments 

that were potentially improper” and “potential overpayments” throughout 

this report. As part of this work, we also provide examples of beneficiaries 

with work activity during the waiting period or beyond the trial work period 

to help illustrate the circumstances under which SSA made DI payments 

that were potentially improper to beneficiaries. We plan to assess the 

extent to which the National Directory of New Hires (NDNH) indicates 

potential overpayments in SSA’s Supplemental Security Income (SSI) 

program in future work, which will be available this year.

 6

For additional information on DI overpayments detected by SSA, see app. I.

7

GAO, Disability Insurance: SSA Can Improve Efforts to Detect, Prevent, and Recover 

Overpayments, GAO-11-724 (Washington, D.C.: July 27, 2011).

8

GAO, Income Security: Overlapping Disability and Unemployment Benefits Should be 

Evaluated for Potential Savings, GAO-12-764 (Washington, D.C.: July 31, 2012).
Page 4 GAO-13-635 Disability Insurance

Record (MBR) in order to identify individuals who were DI beneficiaries in 

December 2010 and who received potential overpayments due to work 

activity during the mandatory 5-month waiting period or beyond the trial 

work period.9 Because of timing differences in the NDNH and MBR data, 

we were not able to capture all earnings that may have resulted in 

improper payments to these individuals. As such, our analysis of DI 

beneficiaries whose work activity resulted in payments that were 

potentially improper is likely understated. The timing of the NDNH and 

MBR data we received is described in detail in appendix II. To identify 

potential overpayments and to develop data for estimates of potential 

overpayments in each population, we drew a random, generalizable 

sample of individuals from each of the populations described above and 

compared wage information from their employers to DI program 

information from SSA. We drew samples of 133 and 130 individuals, and 

received completed requests from employers for 98 individuals for each 

sample.10 Because our analysis of overpayments is limited to earnings 

data from the NDNH and DI payments from SSA, overpayments for each 

sample are estimated.11

We also developed detailed case-file information for a nongeneralizable 

selection of six individuals from our two statistical samples to illustrate the 

circumstances under which SSA made DI payments that were potentially 

 9

The MBR is an electronic record of all DI beneficiaries and contains information on 

beneficiaries’ entitlement status and benefit payments, among other information. The 

NDNH database contains quarterly wage data on individual employees, among other 

information.

10We sorted the two lists of cases randomly and initially sampled 100 from each 

population. Due to nonresponse, we selected supplemental samples until we achieved a 

sufficiently large sample size. The ultimate sample size depended on the particular 

response rates for each subpopulation.

11It is impossible to determine from earnings data alone the extent to which SSA made 

improper disability benefit payments to these individuals. To adequately assess an 

individual’s work status, a detailed evaluation of all the facts and circumstances should be 

conducted for all cases. This evaluation may include contacting the beneficiary and the 

beneficiary’s physician to gather information on certain impairment-related work expenses, 

such as transportation costs and attendant care services, which are not considered in our 

analysis. On the basis of an evaluation of all facts and circumstances surrounding a case, 

SSA can determine if the individual is entitled to continue to receive disability payments or 

have such payments suspended. SSA had identified and established overpayments for 

some of the individuals we reviewed at the time of our audit. However, SSA had not 

identified potentially disqualifying work activity for other individuals we reviewed at the 

time of our audit.
Page 5 GAO-13-635 Disability Insurance

improper. From the sample of individuals who received payments that 

were potentially improper due to work activity during the 5-month waiting

period, we randomly selected three beneficiaries from those who had 

substantial earnings during the waiting period and continued to have 

substantial earnings after their waiting period.12 From the sample of 

individuals who received payments that were potentially improper due to 

work activity beyond the trial work period, we randomly selected three 

beneficiaries from those who received potential overpayments for at least 

36 months (3 years). Because we selected a small number of individuals 

for further review, these examples cannot be generalized to the 

population of individuals receiving potential DI benefit overpayments. We 

also examined SSA’s mechanisms to detect potentially disqualifying work 

activity and compared them with Standards for Internal Control in the 

Federal Government.

13

To determine the reliability of the SSA disability records and NDNH 

quarterly wage records, we reviewed documentation related to these 

databases and interviewed officials responsible for compiling and 

maintaining relevant DI and NDNH data. In addition, we performed 

electronic testing to determine the validity of specific data elements in the 

databases that we used to perform our work. We also reviewed detailed 

wage data from employers and DI program data from SSA for the 

statistical samples of individuals selected as described above to confirm 

that quarterly wage data from the NDNH indicated that payments from the 

DI program were potentially improper. On the basis of our discussions 

with agency officials, our review of related documentation, and our own 

testing, we concluded that the data elements used for this report were 

sufficiently reliable for our purposes.

A detailed description of our scope and 

methodology is included in appendix II.

We conducted this performance audit from April 2012 to July 2013 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

 12Specifically, these three beneficiaries were randomly selected from those in our sample 

with SGA-level earnings during the waiting period and additional SGA earnings after the 

waiting period that were earned within 1 year of their alleged disability-onset date.

According to SSA regulations, this level of work activity would normally result in a denial of 

disability benefits. 

13GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).
Page 6 GAO-13-635 Disability Insurance

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

The DI program was established in 1956 to provide monthly cash benefits 

to individuals unable to work because of severe long-term disability.14

An individual is eligible to receive DI benefits if she or he has a medically 

determinable physical or mental impairment that (1) has lasted (or is 

expected to last) at least 1 year or is expected to result in death and (2) 

prevents the individual from engaging in substantial gainful activity, 

defined as work activity that involves significant physical or mental 

activities performed for pay or profit.

Cash benefits are payable monthly, as long as the worker remains eligible 

for benefits, until the worker reaches full retirement age or dies. In fiscal 

year 2011, more than 10 million beneficiaries received DI benefits 

exceeding $128 billion, and the program’s average monthly benefit was 

about $926.

15 For individuals whose impairment 

is anything other than blindness, earnings averaging over $1,000 a month 

for calendar year 2011 generally demonstrate substantial earnings from 

work. For blind individuals, earnings averaging over $1,640 a month for 

the year 2011 generally demonstrate substantial earnings for DI. The 

amount of earnings that generally demonstrates SGA can vary from year 

to year.16 For example, the SGA amount for individuals with disabilities 

other than blindness was $1,010 a month in 2012. Individuals with 

disabilities must also have a specified number of recent work credits 

under the Social Security program at the onset of medical impairment.17

 14Social Security Amendments of 1956, Pub. L. No. 84-880, § 103, 70 Stat. 807, 815-24.

In some circumstances, dependents of disability beneficiaries can qualify 

for benefits as well. Thus, a dependent may qualify on the basis of the 

work record of a deceased spouse or the work record of a parent who is 

1542 U.S.C. § 423 and 20 C.F.R. § 404.1572.

16SGA amounts generally change with changes in the national average wage index. For 

more information on earnings that demonstrate SGA from 2001 to 2012, see app. III.

17Specifically, eligible individuals must have worked 5 out of the last 10 years or 20 

quarters out of the last 40 quarters. 42 U.S.C. § 423(c)(1); 20 C.F.R. §§ 404.130, 404.132.

Background
Page 7 GAO-13-635 Disability Insurance

deceased, retired, or considered eligible for disability benefits, meaning 

one disability beneficiary can generate multiple monthly disability 

payments for dependents.

To help ensure that SSA does not pay benefits to persons who do not 

have long-term disabilities, a DI program statute requires individuals to 

serve a 5-month waiting period prior to receiving DI benefits.18 The 

waiting period begins in the first full month in which the individual has 

been under a disability and continues for the next 4 consecutive 

months.19 During this waiting period, individuals must have a medically 

determinable impairment that prevents the individual from earning SGAlevel wages throughout a period of 5 consecutive calendar months. As 

shown in figure 1, if an individual has substantial earnings from work 

during any month of the waiting period, the individual is considered to be 

not disabled and therefore ineligible for DI benefits, and any DI payments 

SSA makes are potentially improper.

 1842 U.S.C. § 423(a)(1) and (c)(2). According to SSA, the 5-month waiting period ensures 

that SSA does not pay benefits to persons who do not have long-term disabilities because 

this period is long enough to permit most temporary disabilities to be corrected or for 

individuals to show definite signs of probable recovery.

19The first month counted as part of the waiting period can be no more than 17 months 

before the month of application, and benefits can be applied retroactively for up to 12 

months. The waiting period does not apply to individuals who have been previous 

recipients of DI benefits in the 5 years prior to any current disability.
Page 8 GAO-13-635 Disability Insurance

Figure 1: Substantial Earnings in the Waiting Period May Result in Disability Insurance (DI) Overpayments 

After the 5-month waiting period, statutes and SSA regulations allow DI 

beneficiaries to return to work for a limited time without affecting their 

benefits. Specifically, during the trial work period, beneficiaries test their 

ability to work in as many as 9 months, not necessarily consecutive, while 

receiving benefits, no matter how high their earnings. After completing the 

trial work period, the extended period of eligibility begins. According to 

SSA regulations, the first time a beneficiary works above the SGA level in 

the extended period of eligibility, SSA will decide that the beneficiary no 

longer meets the requirements for disability due to work and that the 

disability ceased. However, SSA will continue to pay benefits for the 

month the disability ceased and the following 2 months, which SSA calls 

the grace period. Additionally, SSA pays benefits to beneficiaries in any 

month in which earnings are below SGA during the first 36 months of the 
Page 9 GAO-13-635 Disability Insurance

extended period of eligibility, the reentitlement period. Eligibility for 

benefits will not completely terminate until the beneficiary has substantial 

earnings after the 36-month reentitlement period of the extended period 

of eligibility. As shown in figure 2, SSA might make improper DI payments 

if it does not suspend payments to beneficiaries who have substantial 

earnings in a month beyond the trial work period and grace period.

Figure 2: Substantial Earnings beyond the Trial Work Period and Grace Period Make Benefits Potentially Improper
Page 10 GAO-13-635 Disability Insurance

The number of DI beneficiaries who return to work is unknown, and 

estimates of the extent to which DI beneficiaries work vary. For example, 

SSA reported that less than 1 percent of primary DI beneficiaries had 

benefits suspended because of substantial work in calendar year 2010.20

However, a longitudinal study published by SSA in 2011 shows that 6.5 

percent of DI beneficiaries whose first benefit payment was in 1996 went 

on to have their benefits suspended for work in at least 1 month of the 10 

years for which the study tracked work activity.21

To determine if beneficiaries are working above the SGA level, SSA 

conducts work-related continuing disability reviews (CDR).22 While work 

CDRs can be prompted by several events, most are generated by SSA’s 

enforcement operation.23 This process involves periodic data matches 

between SSA’s MBR database and Internal Revenue Service earnings 

data. The enforcement operation generates alerts for cases that exceed 

specified earnings thresholds,24 which are then forwarded to SSA’s 

processing centers and field offices for additional development by staff.25

 20Social Security Administration, Annual Statistical Report on the Social Security Disability 

Insurance Program, 2010, SSA Publication no. 13-11827 (August 2011).

Additional events that may trigger a work CDR include reports from state 

vocational-rehabilitation agencies, reports from other federal agencies, 

and anonymous tips. Finally, DI beneficiaries are required to report 

21Su Liu and David C. Stapleton, “Longitudinal Statistics on Work Activity and Use of 

Employment Supports for New Social Security Disability Insurance Beneficiaries,” Social 

Security Bulletin, 71 no. 3 (2011). 

2220 C.F.R. §§ 404.1589 – 1590.

23We use the term “work CDRs” to describe “full” work CDRs in which a case is fully 

developed and staff fill out specific forms to receive work credit for completing a work 

CDR, as well as instances in which SSA staff perform limited development of beneficiary 

earnings because they determine that a full work CDR is not necessary (an activity that 

SSA refers to as a “work CDR action”). SSA also conducts medical CDRs to periodically 

assess beneficiaries’ continuing medical eligibility for benefits. 

24SSA generally uses six times the monthly SGA amount, or $6,000 in 2010, as the 

annual earnings cutoff.

25In fiscal year 2010, the enforcement operation identified approximately 2 million records 

of which more than 531,000 were sent to SSA’s processing centers and field offices for 

review. The remaining records did not meet SSA’s criteria for conducting an enforcement 

work CDR. For more information on the results of the enforcement operation for fiscal 

years 2008 to 2010, see GAO-11-724. 
Page 11 GAO-13-635 Disability Insurance

increases to their earnings to SSA and may do so by visiting an SSA field 

office or calling the agency’s toll-free number.

On the basis of our analysis of SSA data on individuals who were DI 

beneficiaries as of December 2010 and earnings data from the NDNH, we 

estimate that SSA made $1.29 billion in DI benefit payments that were 

potentially improper to about 36,000 individuals as of January 2013. Our 

estimate for the amount of payments that were potentially improper has a 

margin of error of plus or minus $352 million, meaning the actual amount 

of payments that were potentially improper could be as low as $936 

million and as high as $1.64 billion with a 95 percent level of confidence.26

 26The numbers may not add due to rounding. Using a different methodology that includes 

additional causes of overpayments not considered in our analysis, SSA estimated its DI 

overpayments in fiscal year 2011 were $1.62 billion, or 1.27% of all DI benefits in that 

fiscal year.

Our estimate for the number of individuals has a margin of error of plus or 

minus 7,000 individuals, meaning the actual number of individuals to 

whom SSA made payments that were potentially improper could be as 

low as 29,000 and as high as 43,000 with a 95 percent level of 

confidence. As shown in figure 3, the estimated 36,000 DI beneficiaries 

receiving potential overpayments represent about 0.4 percent of all 

primary DI beneficiaries at that time. Our analysis identifies individuals 

who received DI benefits that were potentially improper due to work 

activity performed (1) during the 5-month waiting period, or (2) beyond the 

9-month trial work period and the grace period.

SSA Made $1.29 

Billion in Benefit 

Payments That Were 

Potentially Improper 

as of January 2013, 

Mostly as a Result of 

Work Activity during 

the 5-Month Waiting 

Period

SSA Made $1.29 Billion in 

DI Benefit Payments That 

Were Potentially Improper
Page 12 GAO-13-635 Disability Insurance

Figure 3: Disability Insurance (DI) Beneficiaries Estimated to Have Received Potential Overpayments 

It is important to note that it is not possible to determine from data 

analysis alone the extent to which SSA made improper disability benefit 

payments to these individuals. To adequately assess an individual’s work 

status, a detailed evaluation of all the facts and circumstances must be 

conducted for each beneficiary. This evaluation would include contacting 

the beneficiary and the beneficiary’s employer to gather information on 

certain impairment-related work expenses, such as transportation costs 

and attendant care services, which are not considered in our analysis. On 

the basis of this additional information, SSA can determine whether the 

individual is entitled to continue to receive disability benefits or have such 

payments suspended. As described below, SSA had identified and 

established overpayments for some of the individuals we reviewed at the 

time of our audit. However, SSA had not identified potentially disqualifying 

work activity for other individuals we reviewed at the time of our audit.
Page 13 GAO-13-635 Disability Insurance

We estimate that SSA made payments that were potentially improper to 

about 21,000 individuals who were DI beneficiaries in 2010 and who had 

substantial earnings from work during the 5-month waiting period, 

resulting in potential overpayments of $920 million as of January 2013.27

Our estimate for the amount of payments that were potentially improper 

due to work activity during the waiting period has a margin of error of plus 

or minus $348 million, meaning the actual amount of payments that were 

potentially improper due to work activity during the waiting period could 

be as low as $571 million and as high as $1.27 billion with a 95 percent 

level of confidence.28

In addition to our statistical sample, we reviewed detailed DI case-file 

information for a random selection of three beneficiaries from our sample 

who had substantial earnings during the waiting period and continued to 

have substantial earnings from work after the waiting period.

Our estimate for the number of individuals has a 

margin of error of plus or minus 7,000 individuals, meaning the actual 

number of individuals to whom SSA made payments that were potentially 

improper could be as low as 14,000 and as high as 28,000 with a 95 

percent level of confidence. The exact number of individuals who 

received improper disability payments and the exact amount of improper 

payments made to those individuals cannot be determined without 

detailed case investigations by SSA. See appendix II for more information 

on the statistical estimations of overpayments for these populations.

29

 27These individuals were DI beneficiaries in 2010, but the onset of their disabilities and 

their subsequent 5-month waiting periods were not necessarily in 2010. For example, the 

waiting periods for the three beneficiaries we randomly selected for further review 

occurred in 2009.

Although 

SSA regulations indicate that this level of work activity should result in a 

denial of a disability claim, all three individuals were approved for 

benefits. SSA officials told us they plan to conduct follow-up work on 

these cases based on the information we provided during this review. 

Because we selected a small number of individuals for further review, 

28The numbers may not add due to rounding.

29Specifically, these three beneficiaries were randomly selected from those in our sample 

with SGA-level earnings during the waiting period and additional SGA-level earnings after 

the waiting period that were earned within 1 year of their alleged disability onset date. 

According to SSA policy, when a beneficiary returns to work less than 1 year after onset it 

may indicate the 12-month duration requirement for disability was not met and thus the 

beneficiary’s disability claim must be denied.

Work Activity during the 

Waiting Period Indicates 

SSA Made $920 Million in 

Benefit Payments That 

Were Potentially Improper
Page 14 GAO-13-635 Disability Insurance

these examples cannot be projected to the population of individuals 

receiving potential DI benefit overpayments.

As mentioned earlier, individuals are required to serve a 5-month waiting 

period prior to receiving DI benefits to ensure that SSA does not pay 

benefits to persons who do not have long-term disabilities.30 Specifically, 

substantial earnings from work during the 5-month waiting period may 

indicate that individuals are not considered disabled and therefore are not 

entitled to DI benefits. Thus, if SSA discovers substantial earnings from 

work during the waiting period prior to adjudicating the disability claim, 

SSA will deny the disability claim. SSA may also reopen previously 

awarded disability claims by revising the decision to a denial of benefits 

after providing due process rights. Additionally, SSA’s policies allow it the 

option of considering a later disability-onset date rather than denying the 

disability claim if it discovers the SGA-level work activity after the SGA 

subsequently stops. According to SSA guidance, an unsuccessful work 

attempt during the waiting period will not preclude a finding of disability.31

 3042 U.S.C. § 423(a)(1) and (c)(2).

31For more information on what SSA considers an “unsuccessful work attempt,” see SSA, 

POMS section DI 24005.001.
Page 15 GAO-13-635 Disability Insurance

Waiting Period Example 1: Beneficiary Did Not Report All Earnings, SSA’s 

Enforcement Operation Did Not Generate Alert, and SSA Applied Trial Work Period 

Rather than Waiting Period Program Rules—Potential Overpayment of $90,000

The beneficiary filed for benefits in November 2009 while he had substantial earnings 

from working as a physician. He had substantial earnings from work in all 5 months of 

the waiting period, as much as $22,000 monthly, and continued to have substantial 

earnings from work in the month he started receiving benefits.

As mentioned, SSA’s policies allow it the option of considering a later disability-onset 

date rather than denying the disability claim when it discovers SGA-level earnings during 

the waiting period. According to this SSA guidance, work activity of 6 months or less can 

be considered an “unsuccessful work attempt” during the waiting period, and will not 

preclude a finding of disability. During his initial claims interview, the beneficiary told SSA 

that he worked for only 2 months during the waiting period, a period short enough to be 

considered an unsuccessful work attempt.

However, SSA did not verify the beneficiary’s wages with his employer and approved the 

individual for benefits beginning in January 2010. In contrast, the wages we confirmed 

with the beneficiary’s employer indicate that the beneficiary had earnings continuously 

above the SGA level for every month of the year that he applied for and was approved

for benefits, including all 5 months of the waiting period. Further, because these earnings 

were continuously above the SGA level for more than 6 months, SSA policy indicates 

that his work activity cannot be considered an unsuccessful work attempt. As such, this 

individual’s work activity indicates that he was not disabled, and therefore was ineligible 

for benefits.

Additionally, SSA’s enforcement operation did not generate an alert for his work activity 

during the waiting-period months in 2009 because his first benefit payment was in 

January 2010. According to SSA officials, the enforcement operation will only generate 

an earnings alert for a year in which a beneficiary receives a payment. In this example, 

because DI benefit payments began in 2010, and the waiting period was during the year 

prior to the first payment, no earnings alert was generated.

In 2011, SSA initiated a work-related continuing disability review (CDR) as a result of an 

earnings alert for work activity after the waiting period. As mentioned, SSA conducts 

CDRs to determine if beneficiaries are working above the SGA level. However, during 

the CDR, SSA program staff did not request and verify wages from the beneficiary’s 

employer, nor did staff apply program rules regarding work activity during the waiting 

period. Instead, the CDR considered the work activity under the trial work period rules 

and determined that benefits should continue. Because the beneficiary’s impairment did 

not prevent him from earning SGA-level wages during the waiting period and his SGA 

continued after the waiting period, SSA policies indicate that SSA should have denied 

the individual benefits when his case was adjudicated, or reopened the determination 

after adjudication and revised the claim to a denial of benefits, which would have 

resulted in an overpayment of all benefits previously paid. As such, we estimate that 

SSA made $90,000 in cash benefit payments that were potentially improper to this 

individual over a period more than 3 years. As of May 2013, SSA had not detected or 

assessed any overpayments for the beneficiary and continued to pay monthly DI benefits 

of about $2,500. SSA officials told us they plan to conduct follow-up work on this case on 

the basis of the information we provided. 
Page 16 GAO-13-635 Disability Insurance

Waiting Period Example 2: Beneficiary Did Not Report Earnings and SSA’s 

Enforcement Operation Did Not Generate Alert—Potential Overpayment of $21,000

The beneficiary began work in August 2009 and continued to work through January 

2010, the month that SSA began making DI benefit payments due to mental disorders. 

The beneficiary had substantial earnings from work during 3 months of her waiting period 

and continued to have SGA-level earnings during the month she started receiving 

benefits, but she did not report any wages to SSA as required by program regulations. 

No enforcement operation earnings alert was generated for her work activity during the 

waiting period because her waiting period occurred in 2009, but her first benefit payment 

was not until January 2010. Additionally, no enforcement operation earnings alert was 

generated for her earnings in 2010 because, SSA officials told us, her earnings were too 

low to generate an alert.32 SSA had not assessed any overpayments for the beneficiary 

and continued to pay monthly DI benefits as of May 2013. We identified about $21,000 in 

benefit payments that were potentially improper through our analysis of the beneficiary’s 

wage records. SSA officials told us they plan to conduct follow-up work on this case.

Waiting Period Example 3: SSA Did Not Follow Its Program Rules—Potential 

Overpayment of $25,000

The beneficiary began working in October 2004 and remained employed through at least 

June 2012. SSA approved the beneficiary for DI benefits starting in December 2009 for a 

malignant tumor. The beneficiary had substantial earnings from work during her waiting 

period as well as SGA-level earnings in 9 months of the first 12 months that SSA 

determined her impairment prevented her from having substantial earnings from work. 

When the beneficiary eventually self-reported earnings in 2011, SSA initiated a CDR that 

discovered substantial earnings from work during the waiting period. However, SSA staff 

did not consider this work in accordance with its own policies, and the CDR resulted in a 

determination that DI benefits should continue. Specifically, according to SSA, the 

discovery of SGA-level wages during the waiting period should have prompted SSA staff 

to initiate processes for determining whether benefits should have originally been denied 

or if the onset date should be changed to the date the SGA-level work stopped, but the 

SSA staff did not do so. On the basis of this individual’s substantial earnings from work 

during the waiting period, the revised disability determination may have resulted in a 

revised disability denial or revised date of disability onset. SSA ceased providing DI 

benefits to the beneficiary in April 2013 when the beneficiary died. Although SSA never 

assessed overpayments for the beneficiary, we identified about $25,000 in cash benefit 

payments that were potentially improper through our analysis of the beneficiary’s wage 

records. Because the beneficiary died, her estate, or the beneficiaries of her estate, 

would be responsible for repaying the overpayment. SSA officials told us they plan to 

conduct follow-up work on this case.

 32Generally, SSA’s enforcement operation does not generate alerts for annual earnings 

under six times the monthly SGA amount, or $6,000 in 2010.
Page 17 GAO-13-635 Disability Insurance

We estimate that SSA made potential overpayments to 15,500 individuals 

who were DI beneficiaries in 2010 and who worked beyond their trial work 

period, resulting in potential overpayments of $368 million as of January 

2013.33

In addition to our statistical sample, we reviewed detailed DI case-file 

information for a nongeneralizable selection of three beneficiaries from 

among those in our sample that we identified to have potential 

overpayments for at least 36 months (3 years) due to work activity 

beyond their trial work period. Our case file reviews for these three 

beneficiaries confirmed instances in which SSA made overpayments to 

beneficiaries with substantial earnings from work, as discussed later in 

this report. SSA officials told us they plan to conduct follow-up work on 

these cases on the basis of the information we provided during this 

review. Because we selected a small number of individuals for further 

review, these examples cannot be projected to the population of 

individuals receiving potential DI benefit overpayments.

Our estimate for the amount of payments that were potentially 

improper due to work activity beyond the trial work period has a margin of 

error of plus or minus $62 million, meaning the actual amount of 

payments that were potentially improper due to work activity beyond the 

trial work period could be as low as $306 million and as high as $430 

million, with a 95 percent level of confidence. Our estimate for the number 

of individuals has a margin of error of plus or minus 1,500 individuals, 

meaning the actual number of individuals to whom SSA made payments 

that were potentially improper could be as low as 14,000 and as high as 

17,000, with a 95 percent level of confidence. The exact number of 

individuals who received improper SSA disability payments cannot be 

determined without detailed case investigations by SSA. See appendix II 

for more information on the statistical estimations of overpayments for 

these populations.

As previously discussed, federal statutes and SSA regulations allow DI 

beneficiaries to work for a limited time without affecting their benefits. 

However, after completing the 9-month trial work period and entering the 

reentitlement period, beneficiaries who have substantial earnings from 

work beyond the 3-month grace period are generally no longer entitled to 

 33These individuals were beneficiaries in 2010, but their trial work periods did not 

necessarily begin and end in 2010. For example, the trial work periods for the three 

beneficiaries we randomly selected for further review occurred in various years, as 

described below.

Work Activity beyond the 

Trial Work Period 

Indicates SSA Made $368 

Million in Benefit 

Payments That Were 

Potentially Improper
Page 18 GAO-13-635 Disability Insurance

benefits. If SSA does not stop their benefits in a timely manner, SSA may 

overpay beneficiaries who are not entitled to benefits due to their work 

activity.

Trial Work Period Example 1: No Increased Scrutiny for Known Rule Violator—

Overpayment of $57,000

The individual filed for DI benefits on the basis of personality disorders and affective 

disorders in July 2006, and SSA approved his claim the following day. The day after he 

was approved for benefits, the beneficiary began working. At no point did the beneficiary 

report the new wages from his employment, as required by SSA regulations. SSA’s 

enforcement operation generated earnings alerts each year from 2008-2011, but SSA 

did not initiate a CDR until April 2011. Agency officials told us that SSA does not have 

any policies that dictate time limits for initiating a CDR on the basis of an earnings alert, 

nor stipulating that a CDR must be initiated if earnings alerts are generated for several 

consecutive years. As a result of the CDR in 2011, SSA suspended the beneficiary’s DI 

benefits in December 2011 and subsequently assessed an overpayment of more than 

$57,000 due to his work activity. SSA officials were unable to explain why a CDR was 

not performed until 2011, though they stated that limited resources and competing 

workloads may be factors that contributed to the timeliness with which the CDRs were 

initiated.

A month after SSA assessed the overpayment, while he continued to have substantial 

earnings from working for the same employer, the beneficiary applied to have his 

benefits reinstated, and fraudulently affirmed that he did not have substantial earnings 

from work. We found no evidence in SSA’s files that SSA had contacted the beneficiary’s 

employer to confirm his statement before approving his benefits. Thus, even though SSA 

had information documenting that the individual did not report earnings before, the 

agency approved the application and continued to pay DI benefits as of May 2013. 

Because the individual had SGA-level wages for the entire year prior to his application 

for reinstatement and for at least 2 months after SSA approved him for reinstated 

benefits, the cash benefit payments SSA made after reinstating this individual were 

potentially improper, though SSA had not established an overpayment for this work 

activity as of April 2013. To recover the prior outstanding overpayment, SSA is 

withholding $75 per month from the current monthly DI benefits that SSA may be 

improperly paying to the beneficiary. At $75 per month, it would take 63 years for SSA to 

recover the $57,000 overpayment, at which time the beneficiary would be well over 100 

years old.34 SSA officials told us they plan to conduct follow-up work on this case on the 

basis of the information we provided.

 34We previously reported that the recovery of DI overpayment can take decades. See 

GAO-11-724. 
Page 19 GAO-13-635 Disability Insurance

Trial Work Period Example 2: Earnings Alerts Did Not Result in Review for 5 

Years—Overpayment of $74,000

SSA approved the beneficiary for DI benefits in April 1998 for mental disorders. The 

beneficiary began working in October 2005 and remained employed as of August 2012. 

After he reported his earnings in October 2005, SSA completed a CDR and found that 

the beneficiary was within his trial work period. From 2007 to 2011, SSA’s enforcement 

operation generated earnings alerts for the beneficiary. Despite knowing the beneficiary 

began working in 2005 and receiving 5 additional years of earnings alerts, SSA did not 

perform another CDR until December 2011. SSA officials were unable to explain why a 

second CDR was not performed for more than 5 years when it had previously identified 

that the beneficiary had partially completed a trial work period. However, SSA officials 

told us that resource constraints may have delayed this CDR. As a result of the 2011 

CDR, SSA assessed over $56,000 in overpayments and ceased providing benefits to the 

beneficiary in June 2012. SSA also assessed a total of over $18,000 in additional 

overpayments for the beneficiary’s two child dependents. SSA approved a repayment 

plan of $200 per month for the $74,000 in overpayments. SSA officials told us they plan 

to conduct follow-up work on this case.

Trial Work Period Example 3: Known Work Activity Not Monitored—Overpayment 

of $25,000

SSA approved the beneficiary for DI benefits starting in June 2005 for mental disorders. 

The beneficiary began working in November 2007 and remained employed through at 

least August 2012. In May 2008, he provided SSA pay stubs for 2 months of earnings, 

which showed that he was not earning substantial wages. SSA’s enforcement operation 

generated earnings alerts in 2008 and 2009, and SSA completed a CDR in 2010 in 

which the agency determined that benefits should continue because he had not yet 

completed his trial work period. In the month following the completion of the CDR, SSA 

contacted the beneficiary to inform him that he had completed his trial work period. 

Despite knowing that the beneficiary had completed his trial work period, SSA did not 

complete a subsequent CDR for more than 2 years. SSA officials told us that resource 

constraints may have contributed to the delay in initiating a subsequent CDR. As a result 

of the CDR performed 2 years later, SSA assessed overpayments of $25,000 due to 

work activity and stopped paying benefits. As of April 2013, the beneficiary had not made 

any payments toward his overpayment debt. SSA officials told us they plan to conduct 

follow-up work on this case.
Page 20 GAO-13-635 Disability Insurance

We identified instances in which the timeliness of SSA’s process for 

identifying disqualifying work activity allowed DI overpayments to remain 

undetected and accrue; however, SSA is assessing opportunities to 

obtain more-timely earnings information and improve its work CDR 

process. Specifically, in the course of this review, we identified instances 

in which SSA did not obtain timely earnings information and did not act 

promptly when it did receive earnings alerts, which led to significant cash 

benefit overpayments. This is consistent with our prior work that found DI 

overpayments for beneficiaries who return to work may accrue over time 

because SSA lacks timely data on beneficiaries’ earnings and does not 

act promptly when it receives earnings alerts from its enforcement 

operation.35 During this review, SSA officials told us that limited resources 

and competing workloads may have constrained the agency’s ability to 

act promptly when it received earnings alerts or self-reported earnings for 

beneficiaries from our nongeneralizable examples described above. We 

also reported in April 2013 that budget decisions and the way SSA 

prioritizes competing demands, such as processing initial claims, 

contribute to challenges SSA faces in maintaining the integrity of the 

disability program.36

 35GAO-11-724.

36See GAO, Social Security Administration: Preliminary Observations on Key 

Management Challenges, GAO-13-545T (Washington, D.C.: Apr. 26, 2013).

SSA Is Assessing 

Opportunities to 

Better Identify 

Potential Improper 

Payments, but 

Existing Controls 

Allow Potentially 

Disqualifying Work 

Activity to Remain 

Undetected

SSA Is Assessing 

Opportunities to Improve

the Timeliness of DI 

Program-Integrity Efforts, 

but It Is Too Early to 

Assess What Effect These 

Initiatives May Have on DI 

Overpayments
Page 21 GAO-13-635 Disability Insurance

In 2004, we reported that SSA’s lack of timely earnings data on 

beneficiaries’ earnings and work activity impeded its ability to prevent and 

detect earnings-related overpayments. To enhance SSA’s ability to detect 

and prevent overpayments in the DI program, we recommended that SSA 

use more-timely earnings information in the NDNH in conducting 

program-integrity operations.37 Although SSA uses the NDNH to perform 

oversight of the SSI program, it does not use the NDNH to conduct 

oversight of the DI program. In 2009, SSA conducted a cost-effectiveness 

study on use of the NDNH, which estimated its return on investment 

would be about $1.40 for every $1 spent, or a 40 percent rate of return; 

however, SSA concluded in its 2009 study that this expected return on 

investment was low, and noted that a match with the NDNH would 

generate a large number of CDR alerts needing development that were 

not of high quality. In July 2011, we reported that due to overly 

pessimistic assumptions in SSA’s cost-effectiveness study, it is likely that 

the actual savings that result from SSA’s use of the NDNH could be much 

higher.38

SSA officials also stated that the agency has made improvements to its 

CDR process, but we were unable to determine how they might reduce 

improper payments due to beneficiaries’ work activity because these 

initiatives were still being tested at the time of our review. For example, in 

2010 SSA began a pilot to use what the agency refers to as a predictive 

model to prioritize enforcement operation earnings alerts, working cases 

likely to incur large work-related overpayments first. SSA officials told us 

the agency is planning to implement the model nationally in June 2013. 

Additionally, in response to a recommendation we made in a prior report, 

in 2012 SSA began testing a new process to use its model to identify and 

Further, it is not clear whether this cost-benefit analysis 

accounted for improper payments that would be prevented by identifying 

work activity during the 5-month waiting period. Thus, the real return on 

investment could be understated. SSA agreed with our assessment and 

in January 2013 said that it is currently reevaluating the costeffectiveness of using the NDNH for DI program-integrity initiatives and 

expects the cost-benefit analysis to be completed in the fourth quarter of 

fiscal year 2013.

 37GAO, Disability Insurance: SSA Should Strengthen Its Efforts to Detect and Prevent 

Overpayments, GAO-04-929 (Washington, D.C.: Sept. 10, 2004).

38GAO-11-724.
Page 22 GAO-13-635 Disability Insurance

delay benefit increases for beneficiaries with pending work CDRs.39

Because these initiatives were still being tested at the time of our review, 

we were unable to determine how they might reduce improper payments 

due to beneficiaries’ work activity. As such, it is too early to assess what 

effect these initiatives may have on the prevalence and size of DI 

overpayments.

We found that a limitation of SSA’s enforcement operation40 allows 

individuals with substantial earnings from work during the waiting period 

to be approved for DI benefits and allows resulting DI benefit payments 

that were potentially improper to remain undetected by SSA.41

 39In a 2010 report, we recommended that SSA evaluate the feasibility of incorporating the 

twice-annual Automatic Earnings Reappraisal Operation (AERO) process in the agency’s 

work CDR process. The AERO process provides a systematic recomputation of benefits 

for DI beneficiaries who continue to work after entitlement. As such, the AERO process 

may result in the release of higher benefits that SSA later determines are not payable as a 

result of a work CDR. As of April 2013, SSA does not use AERO to identify beneficiaries 

who work. GAO, Social Security Administration: Cases of Federal Employees and 

Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA 

Disability Payments, 

Specifically, we found that SSA’s enforcement operation will not generate 

an alert for earnings during the waiting period if the earnings occur in a 

year when the beneficiary does not receive a benefit payment. For 

example, if a beneficiary receives her or his first benefit payment in 

January 2013, the enforcement operation will not generate an earnings 

alert for wages earned during the waiting-period months occurring in the 

prior year, which would be from August to December 2012. As a result, 

for any beneficiary whose first month of entitlement is January to May, the 

GAO-10-444 (Washington, D.C.: June 25, 2010).

40As mentioned, SSA’s enforcement operation generates alerts for cases that exceed 

specified earnings thresholds. The enforcement operation alerts are then forwarded to 

processing centers for additional development by SSA staff in work CDRs. Work CDRs 

determine if beneficiaries are working above the SGA level.

41In our case studies, we also found that SSA’s reliance on beneficiaries to self-report 

increases in earnings inhibited its detection of potential DI overpayments due to work 

activity during the waiting period. Specifically, two of the three beneficiaries we examined 

did not report changes to their work activity during the waiting period, as required by SSA 

regulations. The third beneficiary we examined eventually reported her increased earnings 

to SSA, but SSA did not review these earnings in accordance with its own policies, and as 

a result, did not detect and establish an overpayment for this work activity. However, 

because we identified these deficiencies in our three nongeneralizable examples, and we 

were unable to establish the extent that these weaknesses are systemic, we are not 

making recommendations related to these issues.

SSA Can Improve Its 

Ability to Detect 

Potentially Disqualifying 

Work Activity
Page 23 GAO-13-635 Disability Insurance

enforcement operation does not generate an earnings alert for at least 1 

month of the waiting period. In two of the three examples we randomly 

selected from our sample of beneficiaries with work activity during the 

waiting period, SSA’s enforcement operation did not generate alerts for 

SGA-level earnings during the waiting period because their waiting 

periods occurred in the year prior to their first benefit payment. These 

individuals were approved for benefits despite disqualifying work activity, 

and SSA had not detected any overpayments for these individuals at the 

time of our audit. For the third beneficiary we reviewed, SSA’s 

enforcement operation generated an alert for earnings during the waiting 

period because the individual also received benefit payments in that year. 

However, this alert was generated more than 1 year after the work activity 

during the waiting period occurred, and in the resulting work CDR, SSA 

did not apply its own waiting period program rules to the work activity. 

Specifically, SSA approved the individual for benefits despite disqualifying 

work activity and did not detect and establish overpayments for this work 

activity when it later became aware of the work activity.

Standards for Internal Control in the Federal Government states that 

internal controls should generally be designed to assure that ongoing 

monitoring occurs in the course of normal operations.42 SSA officials 

acknowledged that the systemic limitation to their enforcement operation 

allows potentially disqualifying work activity to remain undetected, but 

SSA expressed concern that modifying its existing enforcement operation 

may be costly. However, SSA has not assessed either the costs of such a 

modification or the additional program savings it might realize should 

such a change be implemented. Such an analysis would assist SSA in 

making an informed decision regarding the costs and benefits of 

modifying its existing enforcement operation. To the extent that such an 

analysis determines modifying its existing enforcement operation is cost 

effective and feasible, establishing a mechanism to identify work activity 

performed during all months of the waiting period, including those that 

occur in a year when beneficiaries were not paid, may help provide SSA 

greater assurance that DI beneficiaries are eligible to receive benefits.

 42GAO/AIMD-00-21.3.1.
Page 24 GAO-13-635 Disability Insurance

The DI program provides an important safety net for disabled 

beneficiaries. However, during a time of growing concerns about the 

solvency of the DI trust fund, it is important that SSA take every 

opportunity to ensure that only eligible beneficiaries receive payments 

under this program and that additional actions are taken to improve the 

financial status of the program. Without reliable and timely earnings 

information on the work activity of individuals applying for DI benefits, 

SSA risks making overpayments to individuals whose work activity 

indicates they are not disabled and therefore ineligible for disability 

benefits. While we cannot generalize the examples we found, SSA’s 

inability to identify work activity during the waiting period may result in 

overpayments to beneficiaries who are ineligible for benefits. Assessing 

the costs and savings associated with establishing a mechanism to 

identify work activity during all months of the waiting period would help 

SSA to determine whether establishing such a mechanism would be costeffective and feasible. To the extent that it is determined to be costeffective and feasible, implementing a mechanism to identify work activity 

performed during all months of the waiting period, including those that 

occur in a year when benefits were not paid, may help provide SSA 

greater assurance that DI beneficiaries are eligible to receive benefits.

To improve SSA’s ability to detect and prevent potential DI cash benefit 

overpayments due to work activity during the 5-month waiting period, we 

recommend that the Commissioner of Social Security take the following 

action:

• assess the costs and feasibility of establishing a mechanism to detect 

potentially disqualifying earnings during all months of the waiting 

period, including those months of earnings that the agency’s 

enforcement operation does not currently detect and implement this 

mechanism, to the extent that an analysis determines it is costeffective and feasible.

Conclusions

Recommendation for 

Executive Action
Page 25 GAO-13-635 Disability Insurance

We provided a draft of this report to the Office of the Commissioner of 

SSA. In its written comments, SSA concurred with our recommendation 

and stated that it would conduct the recommended analysis. In addition, 

SSA expressed some concerns about our methodology for estimating 

potential improper payments due to beneficiaries’ work activity, which are 

summarized below. The agency also provided general and technical 

comments, which have been incorporated into the report, as appropriate. 

SSA’s comments are reproduced in full in appendix IV. 

In commenting on our recommendation to assess the costs and feasibility 

of establishing a mechanism to detect potentially disqualifying earnings 

during all months of the waiting period and to implement the mechanism, 

to the extent that it is cost-effective and feasible, SSA requested the data 

we gathered as part of this study to help the agency assess the costs and 

feasibility of establishing such a mechanism. At SSA’s request, we will 

provide SSA the population of individuals with earnings during the 5-

month waiting period that we identified from our match of 2010 NDNH 

earnings data and SSA’s 2010 DI program data. During the course of this 

audit, we also provided SSA with the SSNs of the individuals in our two

random samples. These data would allow SSA to perform the 

recommended analysis using the NDNH wage data, which we obtained 

from SSA. We note that SSA’s assessment would benefit from using the 

most-recently available wage data, such as 2013 data that are directly 

available to SSA from the NDNH.

In addition to this data request, SSA raised several concerns about our 

methodology and asserted that our inability to replicate the process it 

uses to make SGA determinations may lead to substantial overstatement 

of our estimate of potentially improper payments. First, SSA noted that 

our review does not consider program features, such as unsuccessful 

work attempts and Impairment Related Work Expenses (IRWE), or 

whether the work involved subsidies or special conditions. As mentioned 

in the report, SSA’s process for determining SGA and its policies for 

determining whether individuals remain entitled to benefits despite 

potentially disqualifying work activity involve a consideration of all the 

facts and circumstances surrounding a case, including medical data that 

doctors and hospitals are not required to share with GAO for purposes of 

this audit. As such, our objective was to estimate the extent to which 

individuals received DI benefit payments that were potentially improper 

due to their work activity. To do this, we used wage data to identify two 

populations of individuals with earnings beyond program limits; we then 

drew a random, generalizable sample of individuals from each population 

and compared wage information from their employers to DI program 

information from SSA to develop estimates of potential overpayments in 

Agency Comments 

and Our Evaluation
Page 26 GAO-13-635 Disability Insurance

each population. Because our analysis of potential overpayments is 

limited to earnings data from the NDNH and DI payments from SSA, 

potential overpayments for each sample are estimated. Thus, we 

continue to believe that the methodology we applied using the data we 

were able to access led us to valid estimates of potentially improper 

payments due to beneficiaries’ work activity.

Second, SSA noted that we assume that every payment made after the 5-

month waiting period is likely to be an improper payment instead of 

reestablishing the disability onset date, as its policy allows in some 

instances. However, our method of calculating potential overpayments is 

consistent with current DI program policies and interviews with SSA 

officials who stated that individuals who perform substantial gainful 

activity during the waiting period are not disabled and therefore not 

entitled to benefits; thus, all DI payments made to those individuals are 

potentially improper payments. Further, determining which individuals in 

our samples, if any, should have their onset date reestablished despite 

disqualifying work activity in the waiting period was not reasonably

possible because making such a determination would involve a 

consideration of medical data that doctors and hospitals were not 

required to share with GAO for purposes of this audit.

Third, SSA stated that payment for medical leave may have been 

included in some of the payroll data we used for our analysis and 

suggested that this may have led to a substantial overstatement of 

estimated improper payments. However, our calculation of earned income 

excludes material payments for medical leave, as described in detail in 

appendix II. Thus, we do not expect that these payments or the other 

concerns SSA raises in its letter led to a substantial overstatement of 

potential overpayments, as SSA suggested.

Finally, SSA noted that improving payment accuracy is critical to 

preserving the public's trust in the DI program and that available 

resources may affect SSA’s ability to increase its payment accuracy. We 

recognize SSA’s ongoing efforts to improve the program and that federal 

resources are currently constrained. However, without making changes to 

its existing processes for identifying beneficiaries’ work activity, to the 

extent that the benefits exceed the costs, SSA may remain unable to 

detect work activity in a timely manner, and SSA may continue to make 

improper payments to individuals whose work activity indicates they are 

not entitled to benefits. 
Page 27 GAO-13-635 Disability Insurance

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Commissioner of 

Social Security and other interested parties. In addition, the report will be 

available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have questions about this report, please contact me at 

(202) 512-6722 or lords@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report.

Stephen M. Lord

Director, Forensic Audits and Investigative Service
Appendix I: Debt Owed to SSA from 

Overpayment of DI Benefits Is Increasing

Page 28 GAO-13-635 Disability Insurance

As shown in figure 4 below, in fiscal year 2010, the total amount owed to 

the Social Security Administration (SSA) for Disability Insurance (DI)

overpayments was $5.4 billion. This debt has increased through fiscal 

year 2012, as individuals owed over $6 billion in overpayments of DI 

benefits.

Figure 4: Balance of Disability Insurance (DI) Overpayment Debt Detected by the 

Social Security Administration (SSA), Fiscal Years 2008-2012

Appendix I: Debt Owed to SSA from 

Overpayment of DI Benefits Is Increasing
Appendix II: Objectives, Scope, and 

Methodology

Page 29 GAO-13-635 Disability Insurance

This report (1) estimates the extent to which individuals received disability 

insurance (DI) benefit payments that were potentially improper due to 

work activity performed during the 5-month waiting period or beyond the 

9-month trial work period; and (2) assesses the extent to which the Social 

Security Administration’s (SSA) enforcement operation detects potentially 

disqualifying work activity during the waiting period. The exact number of 

individuals who received improper disability payments and the exact 

amount of improper payments made to those individuals cannot be 

determined without detailed case investigations by SSA. Thus, we refer to 

“benefit payments that were potentially improper” and “potential 

overpayments” throughout this report. As part of this work, we also 

provide examples of beneficiaries with work activity during the waiting 

period or beyond the trial work period to help illustrate the circumstances 

under which SSA made DI payments that were potentially improper to 

beneficiaries. We plan to assess the extent to which the National 

Directory of New Hires (NDNH) indicates potential overpayments in 

SSA’s Supplemental Security Income (SSI) program in future work, which 

will be available this year.

To determine the extent to which the NDNH provides evidence that 

individuals received DI benefit payments that were potentially improper 

due to work activity, we matched the NDNH quarterly wage data with our 

extract of SSA’s Master Beneficiary Record (MBR) as of December 2010. 

To ensure the best quality matches, we matched only against Social 

Security Numbers (SSN) that the NDNH categorizes as “verified” through 

the SSA’s Enumeration Verification System process.1

 1

The NDNH system posts quarterly wage records that, among other tests, can be verified 

through SSA’s Enumeration Verification System, which verifies identity information, such 

as the name, date of birth, and SSN.

Thus, we did not 

match against SSNs that the NDNH categorizes as “unverified” or “nonverifiable.” The match process identified two populations with potential 

overpayments due to work activity. The first population consisted of 

individuals who received potential overpayments due to substantial 

gainful activity (SGA) level earnings during the 5-month waiting period. 

The details of this match are described in the section below titled “Wait 

Period Overpayments.” The second overpayment population consisted of 

individuals who received potential overpayments due to SGA-level 

Appendix II: Objectives, Scope, and 

Methodology
Appendix II: Objectives, Scope, and 

Methodology

Page 30 GAO-13-635 Disability Insurance

earnings beyond the trial work period.2 The details of this match are 

described in the section below titled “Trial Work Period Overpayments.”

Sections 452(a)(9) and 453(a)(1) of the Social Security Act required the 

Secretary of Health and Human Services to establish and maintain the 

Federal Parent Locator Service, which includes the NDNH database.3

The NDNH database contains employment data on newly hired 

employees (W4), quarterly wage (QW) data on individual employees, and 

unemployment insurance (UI) data. The federal Office of Child Support 

Enforcement (OCSE) matches case information from state child support 

enforcement agencies against the NDNH and returns information on the 

case to the appropriate state or states. NDNH data are deleted after 24 

months, as required by Section 453(i) of the Social Security Act. The data 

reported to OCSE for the NDNH come from several sources. Employers 

report W4 data to the State Directories of New Hires, which then report 

them to OCSE. UI data originate with the State Workforce Agencies, 

which then send data to the State Directories of New Hires, which send 

data to OCSE. The quarterly wage data are reported by employers to the 

State Workforce Agencies for their state, which in turn reports them to the 

State Directories of New Hires (sometimes colocated with the State 

Workforce Agencies), which then reports the information to OCSE. 

Federal agency W4 and QW data are reported directly to OCSE.

The timing and nature of NDNH earnings data we received present 

limitations to the data’s capacity to identify SGA in accordance with SSA’s 

complex program rules. First, the quarterly wage amounts on the NDNH 

represent 3 months of earnings; however, the statute for evaluating SGAlevel earnings requires SSA to use monthly earnings amounts. To 

facilitate our analysis, we calculated monthly earnings for each month in a 

quarter by dividing the quarterly wage amount in the NDNH by 3. For 

example, if the NDNH reported quarterly earnings of $3,000 in the first 

quarter of 2010, we calculated the monthly earnings to be $1,000 for 

 2

The number of individuals appearing in both populations was 297.

3

The Federal Parent Locator Service is a computerized national location network that 

provides address and SSN information to state and local child-support agencies for the 

purpose of locating parents to establish or enforce child support orders and to assist 

authorized persons in resolving parental kidnapping and child-custody cases.

The NDNH Database

Limitations to Using 

NDNH Data to Determine 

SGA
Appendix II: Objectives, Scope, and 

Methodology

Page 31 GAO-13-635 Disability Insurance

January, February, and March of 2010. This monthly computed earnings 

amount could differ from the actual monthly earnings. For instance, using 

the previous example, the actual monthly earnings in January 2010 could 

be $3,000, and actual earnings in February or March could be $0. 

Second, when SSA evaluates earnings to determine SGA for DI 

beneficiaries, SSA counts earnings when they are earned, not paid; 

however, amounts of earnings on the NDNH for a particular quarter could 

be paid in that quarter, but earned in prior quarters. In addition to these 

timing limitations, the NDNH quarterly earnings data may contain 

payments not related to work activity, such as paid time off, long-term 

disability payments, or posttermination compensation; however, SSA’s 

assessment of SGA generally involves doing significant physical or 

mental activities, rather than receiving payments not related to work.

To account for these limitations, we drew a simple random sample from 

each of the potential overpayment populations and contacted the 

employers that reported the earnings to determine the exact timing, 

amount, and nature of the earnings for the beneficiaries in our sample.4

As mentioned, it is impossible to determine from reported earnings alone 

the extent to which SSA made improper disability benefit payments to 

these individuals. To adequately assess an individual’s work status, a 

detailed evaluation of all the facts and circumstances should be 

conducted for all cases. This evaluation may necessitate contacting the 

beneficiary, the beneficiary’s employer, and the beneficiaries’ physician to 

evaluate the nature of the work performed. This evaluation may also 

consider certain impairment-related work expenses, which were not 

considered in our analysis.

With these simple random samples, each member of the study 

populations had a nonzero probability of being included, and that 

probability could be computed for any member. Each sample element 

was subsequently weighted in the analysis to account statistically for all 

the members of the population, including those who were not selected. 

Additional details on our sample work are described in the “Wait Period 

Overpayments” and “Trial Work Period Overpayments” sections below.

5

 4

To identify the employers, we used the federal and state employer identification number 

on the corresponding NDNH record.

On the basis of this comprehensive 

5

Impairment-related work expenses include items such as transportation costs and 

attendant care services.
Appendix II: Objectives, Scope, and 

Methodology

Page 32 GAO-13-635 Disability Insurance

evaluation of all facts and circumstances surrounding a case, SSA can 

determine whether the individual is entitled to continue to receive 

disability payments or have such payments suspended.

Our analysis of the NDNH match file identified individuals who were in 

current pay status in the DI program as of December 2010 and had 

computed monthly earnings that exceeded the corresponding monthly 

SGA threshold for any of the 5 months prior to the individual’s DI date of 

entitlement to disability.6

1. monthly computed earnings were greater than the corresponding SGA 

threshold during any month of the individual’s 5-month waiting 

period,

We included individuals who received potential 

overpayments due to work activity during the waiting period on the basis 

of the following criteria:

7

2. DI payment records on the MBR showed that DI benefits were paid to 

the individual during any of the 36 months for which we had DI 

payment data from the MBR.

and

8

Thus, to be included in our Wait Period overpayment population, 

individuals had to be in current pay status as of December 2010 and have 

at least 1 month of potential overpayments as defined by the criteria 

above. Our analysis determined there were 83,179 individuals meeting 

these potential-overpayment criteria. Because SGA-level earnings during 

the waiting period would result in a denial of eligibility for DI benefits, we 

considered all the benefits paid to the individual as potential 

overpayments.

 6

The date of entitlement is the first month for which a beneficiary is entitled to DI benefit 

payments and is the first full calendar month after the 5-month waiting period. As 

mentioned, we calculated monthly computed earnings by dividing the NDNH quarterly 

earnings by 3.

7

Our analysis accounts for the higher SGA amounts for individuals whose disability is 

blindness. The monthly earnings amounts that demonstrate SGA are described in greater 

detail in app. III.

8

This analysis used DI payment data from the MBR covering the 36 months from 

November 2007 through October 2010.

Wait Period 

Overpayments
Appendix II: Objectives, Scope, and 

Methodology

Page 33 GAO-13-635 Disability Insurance

Next, we drew a simple random sample of 133 individuals from the Wait 

Period overpayment population and contacted the employers to verify the 

timing and nature of the wages paid to the individuals. We received 

completed requests from employers for 98 individuals for a response rate 

of 75 percent.9

Using the earnings data employers provided, we calculated monthly 

earned income for each sample item and identified whether the 

beneficiaries’ monthly earned income exceeded SGA during any of the 5 

months of their waiting period. Because employers use different payroll 

cycles and provided different levels of detail in their responses, we 

adhered to the following guidelines to standardize our calculation of 

monthly earned income:

Nonresponses included sample items whose employers 

we could not locate, employers who were no longer in business, and 

employers who refused to cooperate with our requests. We asked 

employers who provided earnings data to identify payments that were not 

related to work activity, such as paid time off, extended sick leave, or 

posttermination compensation. Many employers provided payroll reports 

indicating hours and payments by payment category, such as total 

payments for hours in regular work, hours in overtime work, and hours of 

vacation time.

1. In consideration of SSA guidance regarding the timing of payments, 

we calculated monthly earned income according to the period in which 

payments were earned rather than when they were paid. However, if 

an employer’s payroll reports indicated only the dates when payments 

were issued, we calculated monthly earned income according to those 

dates.

2. In consideration of SSA guidance regarding the nature of payments, 

our calculation of monthly earned income excludes payments not 

related to work activity, such as payments for paid time off, vacation 

pay, and extended sick leave, if those payments covered the entire 

pay period, as defined by the employer. Thus, payments not related to 

 9

The method we used to calculate the response rate, The American Association for Public 

Opinion Research Response Rate 3, uses a calculation that includes an estimate of the 

proportion of the sample that is eligible to complete the survey among those whose 

eligibility for the survey is unknown. The estimate is derived using a formula that includes 

the number of respondents interviewed, the number of respondents known to be eligible 

that were not interviewed, and the number of respondents contacted that were determined 

to be ineligible.
Appendix II: Objectives, Scope, and 

Methodology

Page 34 GAO-13-635 Disability Insurance

work activity that were episodic, such as sick pay or vacation pay 

received during a pay period when the individual also performed work, 

are included in our calculation of monthly earned income.

We then obtained additional DI program data on the MBR to estimate 

total program overpayments to-date for our sample items.10 Because we 

followed a probability procedure based on random selections, our sample 

is only one of a large number of samples that we might have drawn. 

Since each sample could have provided different estimates, we express 

our confidence in the precision of our particular sample’s results as a 95 

percent confidence interval.

To provide examples of the circumstances under which SSA made 

potential overpayments to individuals with work activity during the 5-

month waiting period, we randomly selected three beneficiaries from our 

waiting period sample who were among those that met the following 

criteria:

1. the individual’s employer reported that the individual received SGAlevel earnings during the 5-month waiting period, and

2. the individual’s employer reported additional SGA-level earnings that 

were earned after the waiting period and within 1 year of their date of 

disability onset.

According to statutes and SSA regulations, when individuals have SGAlevel work activity during the waiting period, this normally means they will 

be considered not disabled and therefore not eligible for benefits. For 

these three individuals, we obtained detailed DI case-file information from 

SSA to determine the facts and circumstances surrounding their potential 

overpayments. Because we selected a small number of individuals for 

further investigation, the results cannot be projected to the population of 

individuals receiving DI overpayments due to SGA in the 5-month waiting 

period.

 10We received an additional extract of MBR data as of January 2013 for the individuals in 

our sample.

Wait Period 

Overpayment 

Examples
Appendix II: Objectives, Scope, and 

Methodology

Page 35 GAO-13-635 Disability Insurance

Our analysis of the NDNH match file identified individuals who were in 

current pay status in the DI program as of December 2010 and who had 

SGA-level earnings after the completion of their trial work period (TWP) 

and 3 grace period months. We determined a month to be a TWP month 

if the monthly computed earnings after the date of entitlement was greater 

than the TWP threshold.11

1. monthly computed earnings after the 3 month grace period were 

greater than the corresponding SGA threshold,

After we identified 9 TWP months, we 

identified 3 grace period months where monthly computed earnings were 

greater than the corresponding SGA threshold. Next, we identified 

potential overpayment months that met the following criteria:

12

2. DI payment records on the MBR showed that DI benefits were both 

due and paid for that month.

and

13

Thus, to be included in our TWP overpayment population, beneficiaries 

had to be in current pay status as of December 2010 and have at least 1 

month of potential overpayments as defined by the criteria above. Our 

analysis determined there were 19,208 individuals that met these 

overpayment criteria.

Our TWP overpayment population understates the number of individuals 

with potential overpayments beyond their trial work period for several 

reasons. First, because we were given limited access to the NDNH, our 

analysis is generally limited to the 15-month period from July 2009 to 

September 2010, which is the period for which we were able to capture 

both DI payment records on the MBR and earnings data on the NDNH. 

As a result, any individuals with material work activity outside these 15 

 11In accordance with 20 CFR § 404.1592(e), the TWP cannot begin before the month in 

which a beneficiary files an application for benefits. Thus, if the beneficiary’s DI filing date 

was later than the date of entitlement, we considered the TWP to begin in the same month 

as the DI filing date. Our analysis also verified that the 9 TWP months did not span more 

than 60 consecutive months. As mentioned, we calculated monthly computed earnings by 

dividing the NDNH quarterly earnings by 3.

12Our analysis accounts for the higher SGA amounts for individuals whose disability is 

blindness. The monthly earnings amounts that demonstrate SGA are described in greater 

detail in app. III.

13SSA may hold payments to beneficiaries for a month under certain circumstances, such 

as when a payment address is in question. In these instances, the MBR may indicate 

benefits due, but not paid for that month.

Trial Work Period 

Overpayments
Appendix II: Objectives, Scope, and 

Methodology

Page 36 GAO-13-635 Disability Insurance

months may not be included in our TWP overpayment population. For 

example, if NDNH earnings data indicated the beneficiary completed all 9 

TWP months and 3 grace period months from October 2009 to 

September 2010 (i.e., 12 months), but the next month of SGA-level 

earnings occurred in October 2010, which is outside our 15-month time 

frame, the beneficiary was not included in our TWP overpayment 

population. Figure 5 below illustrates the 15 months from July 2009 to 

September 2010 for which our analysis captured both DI payment records 

on the MBR and earnings data on the NDNH.14 Second, because our 

calculation of potential overpayment months includes only months where 

DI payment records on the MBR showed that DI benefits were both due 

and paid for that month, our TWP overpayment population does not 

include individuals whose only months of SGA beyond the TWP occurred 

in months where benefits were due, but not paid. Similarly, our TWP 

overpayment population does not include individuals whose only months 

of SGA beyond the TWP occurred in months where benefits were paid, 

but not due.

 14The NDNH maintains data only from the most-recently reported 24 months.
Appendix II: Objectives, Scope, and 

Methodology

Page 37 GAO-13-635 Disability Insurance

Figure 5: The 15 Months from July 2009 to September 2010 Is the Period for Which GAO Had Both Disability Insurance Data 

and Earnings Data

Next, we drew a simple random sample of 130 individuals from the TWP 

overpayment population and contacted the employers to verify the wages 

paid to the individuals. We completed requests from employers for 98 

individuals for a response rate of 76 percent.15

 15The method we used to calculate the response rate, The American Association for 

Public Opinion Research Response Rate 3, uses a calculation that includes an estimate of 

the proportion of the sample that is eligible to complete the survey among those whose 

eligibility for the survey is unknown. The estimate is derived using a formula that includes 

the number of respondents interviewed, the number of respondents known to be eligible 

that were not interviewed, and the number of respondents contacted that were determined 

to be ineligible.

Nonresponses included 

sample items whose employers we could not locate, employers who were 

no longer in business, and employers who refused to cooperate with our 

requests. We asked employers who provided earnings data to identify 

payments that were not related to work activity, such as paid time off, 

extended sick leave, or posttermination compensation. Many employers 

provided payroll reports indicating hours and payments by payment 
Appendix II: Objectives, Scope, and 

Methodology

Page 38 GAO-13-635 Disability Insurance

category, such as total payments for hours in regular work, hours in 

overtime work, and hours of vacation time.

Using the earnings data employers provided, we calculated monthly 

earned income for each sample item and identified whether the 

beneficiaries’ monthly earned income exceeded SGA during any month of 

the extended period of eligibility. Because employers use different payroll 

cycles and provided different levels of detail in their responses, we 

adhered to the following guidelines to standardize our calculation of 

monthly earned income:

1. In consideration of SSA guidance regarding the timing of payments, 

we calculated monthly earned income according to the period in which 

payments were earned rather than when they were paid. However, if 

an employer’s payroll reports indicated only the dates when payments 

were issued, we calculated monthly earned income according to those 

dates.

2. In consideration of SSA guidance regarding the nature of payments, 

our calculation of monthly earned income excludes payments not 

related to work activity, such as payments for paid time off, vacation 

pay, and extended sick leave, if those payments covered the entire 

pay period, as defined by the employer. Thus, payments not related to 

work activity that were episodic, such as sick pay or vacation pay 

received during a pay period when the individual also performed work, 

are included in our calculation of monthly earned income.

We then obtained additional DI program data on the MBR to estimate 

total program overpayments to-date for our sample items.16 Because we

followed a probability procedure based on random selections, our sample 

is only one of a large number of samples that we might have drawn. 

Since each sample could have provided different estimates, we express 

our confidence in the precision of our particular sample’s results as a 95 

percent confidence interval.

 16We received an additional extract of MBR data as of January 2013 for the individuals in 

our sample.
Appendix II: Objectives, Scope, and 

Methodology

Page 39 GAO-13-635 Disability Insurance

To provide examples of the circumstances under which SSA made 

potential overpayments to individuals with work activity beyond their trial 

work period, we randomly selected three beneficiaries from our trial work 

period sample who were among those beneficiaries receiving potential 

overpayments for at least 36 months (3 years). For these three 

individuals, we obtained detailed DI case-file information from SSA to 

determine the facts and circumstances surrounding their potential 

overpayments. Because we selected a small number of individuals for 

further investigation, the results cannot be projected to the population of 

individuals receiving DI overpayments due to SGA beyond the trial work 

period.

To determine the reliability of the SSA disability records and NDNH 

quarterly wage records, we reviewed documentation related to these 

databases and interviewed officials responsible for compiling and 

maintaining relevant DI and NDNH data. In addition, we performed 

electronic testing to determine the validity of specific data elements in the 

databases that we used to perform our work. We also reviewed detailed 

wage data from employers and DI program data from SSA for the 

statistical samples of individuals selected as described above to confirm 

that quarterly wage data from the NDNH indicated payments that were 

potentially improper from the DI program. On the basis of our discussions 

with agency officials and our own testing, we concluded that the data 

elements used for this report were sufficiently reliable for our purposes.

To assess the extent to which SSA’s enforcement operation detects 

potentially disqualifying work activity during the waiting period, we 

interviewed officials from SSA regarding the agency’s internal controls for 

detecting and preventing overpayments due to work activity. We 

interviewed agency officials from SSA’s policy offices to confirm our 

interpretations of SSA regulations and policies regarding work activity 

during the waiting period and beyond the trial work period. We also 

interviewed officials from SSA’s operations offices to confirm the actions 

SSA took while reviewing the work activity for our nongeneralizable 

examples. We also examined SSA’s mechanisms to detect potentially 

Trial Work Period 

Overpayment 

Examples

Data Reliability 

Assessments
Appendix II: Objectives, Scope, and 

Methodology

Page 40 GAO-13-635 Disability Insurance

disqualifying work activity and compared them with Standards for Internal 

Control in the Federal Government.17

We conducted this performance audit from April 2012 to July 2013 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our objectives.

 17GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).
Appendix III: Monthly Earnings That Indicate a 

Trial Work Period or Substantial Gainful 

Activity

Page 41 GAO-13-635 Disability Insurance

To be eligible for disability benefits, a person must be unable to engage in 

substantial gainful activity (SGA). A person who is earning more than a 

certain monthly amount (net of impairment-related work expenses) is 

ordinarily considered to be engaging in SGA. During a trial work period, a 

beneficiary receiving Social Security disability benefits may test her or his 

ability to work and still be considered disabled. The Social Security 

Administration (SSA) does not consider services performed during the 

trial work period as showing that the disability has ended until services 

have been performed in at least 9 months (not necessarily consecutive) in 

a rolling 60-month period and 1 additional month, at an SGA-level, after 

the trial work period has ended. Table 1 shows the amount of monthly 

earnings that trigger a trial work period month for calendar years 2001–

2012.

Table 1: Monthly Earnings That Trigger a Trial Work Period, 2001–2012

Year Monthly earnings

2001 $530

2002 560

2003 570

2004 580

2005 590

2006 620

2007 640

2008 670

2009 700

2010 720

2011 720

2012 720

Source: SSA.

The amount of monthly earnings considered as SGA depends on whether 

a person’s disability is for blindness or some other condition. The Social 

Security Act specifies a higher SGA amount for statutorily blind 

individuals and a lower SGA amount for nonblind individuals. Both SGA 

amounts generally change with changes in the national average wage 

index. Table 2 shows the amount of monthly earnings that ordinarily 

demonstrate SGA for calendar years 2001–2012.

Appendix III: Monthly Earnings That Indicate 

a Trial Work Period or Substantial Gainful 

Activity
Appendix III: Monthly Earnings That Indicate a 

Trial Work Period or Substantial Gainful 

Activity

Page 42 GAO-13-635 Disability Insurance

Table 2: Monthly Earnings That Demonstrate Substantial Gainful Activity (SGA), 2001–2012

Year Blind Nonblind

2001 $1,240 $740

2002 1,300 780

2003 1,330 800

2004 1,350 810

2005 1,380 830

2006 1,450 860

2007 1,500 900

2008 1,570 940

2009 1,640 980

2010 1,640 1,000

2011 1,640 1,000

2012 1,690 1,010

Source: SSA.
Appendix IV: Comments from the Social 

Security Administration

Page 43 GAO-13-635 Disability Insurance

Appendix IV: Comments from the Social 

Security Administration
Appendix IV: Comments from the Social 

Security Administration

Page 44 GAO-13-635 Disability Insurance
Appendix IV: Comments from the Social 

Security Administration

Page 45 GAO-13-635 Disability Insurance
Appendix IV: Comments from the Social 

Security Administration

(192398) Page 46 GAO-13-635 Disability Insurance
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