United States General Accounting Office

GAO Report to Congressional Requesters

April 1996 SUPPLEMENTAL

SECURITY INCOME

Some Recipients

Transfer Valuable

Resources to Qualify

for Benefits

G O A

years

1921 - 1996

GAO/HEHS-96-79

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-266319 

April 30, 1996

The Honorable Nancy L. Johnson, 

Chairman, Subcommittee on Oversight

Committee on Ways and Means

House of Representatives

The Honorable E. Clay Shaw,

Chairman, Subcommittee on Human Resources

Committee on Ways and Means

House of Representatives

The Supplemental Security Income (SSI) program is the country’s largest

cash assistance program for the poor and one of the fastest-growing

entitlement programs. Program costs grew 20 percent annually from 1991

through 1994. In 1995, more than 6 million SSI recipients received nearly

$25 billion in federal and state benefits. Recent growth in the SSI program

and federal budgetary constraints have increased congressional interest in

ensuring that the SSI program focuses on individuals who have no

resources with which to meet their needs and that, to the extent possible,

individuals rely on their own resources before turning to the SSI program

for support.

Currently, the law does not prohibit people from transferring resources to

qualify for SSI benefits. In 1988, the Congress eliminated the SSI

transfer-of-resource restriction and amended but retained a similar

provision affecting Medicaid that prohibits resource transfers at less than

fair market value for those applying for Medicaid long-term care coverage.

This was done, according to Social Security Administration (SSA) officials

responsible for administering the SSI program, because the Congress

believed that elderly Americans with substantial financial means were

transferring their resources to qualify for costly long-term care under

Medicaid. These officials noted that because few SSI applicants were

reporting resource transfers and the provision was difficult to administer,

the SSI transfer-of-resource restriction was eliminated.

Because of your interest in this issue, you asked us to determine (1) how

many SSI recipients are reporting transfers of resources and the type and

value of resources being transferred and (2) what savings might be

realized if the Congress were to reinstate an SSI transfer-of-resource

restriction.

Page 1 GAO/HEHS-96-79 Transfer of Resources
B-266319 

To meet our objectives, we interviewed officials from SSA headquarters

and visited SSA field offices in the District of Columbia, Florida, and

Georgia. We also analyzed individual SSI recipients’ records to identify

reported transfers of nonexcludable resources, which should be

considered when determining eligibility, from 1988 to 1994 (see app. I for

more detail on our scope and methodology).

Results in Brief The 3,505 SSI recipients who transferred resources between 1990 and 1994

transferred cash, houses, land, and other items valued at an estimated

$74 million. Reported resource values were up to $800,000, with the largest

number of transfers in the $10,000 to $25,000 range. The total amount of

resources transferred, however, is likely to be larger than our estimate

because SSA is not required to verify the accuracy of resource transfer

information, which is self-reported by individuals. Furthermore, because

this information is self-reported, SSA is not likely to detect unreported

transfers.

Without a transfer-of-resource restriction, SSI recipients who transferred

resources to qualify for benefits would receive about $7.9 million in SSI

benefits in the 24 months after they transferred resources. Many of these

recipients could also have received Medicaid acute-care benefits at an

annual value of between $2,800 and $5,300 per recipient. Although

administrative costs may be associated with SSA’s implementing a

transfer-of-resource restriction, we estimate that from 1990 through

December 1995, $14.6 million in program expenditures could have been

saved with an SSI transfer-of-resource restriction similar to Medicaid’s

provision. In addition, an SSI transfer-of-resource restriction could increase

the public’s confidence in the program’s integrity by ensuring that

individuals use their own resources for self-support before receiving SSI.

Background SSI is an income assistance program for people who are aged, blind, or

disabled. It was authorized in 1972 and is administered by SSA. To be

eligible for SSI, individuals cannot have income greater than the maximum

benefit level (in 1995, $458 per month for an individual and $687 for a

couple if both spouses were eligible) or resources worth more than $2,000

($3,000 for a couple), subject to certain exclusions, such as a home that is

the primary residence.1

 In 31 states and the District of Columbia, SSI

1

The monthly SSI benefit is reduced depending upon recipients’ incomes, living arrangements, and

other sources of support, including Social Security benefits.

Page 2 GAO/HEHS-96-79 Transfer of Resources
B-266319 

recipients are automatically eligible for Medicaid2 without filing a separate

application for benefits with the state Medicaid agency. The remaining

states may require a separate application for Medicaid benefits or have

more restrictive definitions of disability and financial eligibility

requirements than SSI.

Beginning in 1981, individuals filing SSI claims were prohibited from

transferring resources for less than fair market value to qualify for SSI.

Under the provision prohibiting such transfers, SSI applicants or recipients

who got rid of resources to qualify for SSI had the uncompensated value of

those resources counted toward the resource limit for 24 months from the

date of transfer. As a result, such individuals were probably ineligible for

SSI benefits for 2 years after transferring resources, and, in many cases,

they were also ineligible for Medicaid for the same length of time.

In 1988, the Congress eliminated the SSI restriction for resource transfers

at less than fair market value, allowing individuals who dispose of

resources to qualify for benefits. The Congress, however, retained a

similar restriction for the transfer of resources by individuals applying for

Medicaid nursing home benefits. Under the current Medicaid provision,

applicants for Medicaid long-term care benefits who transfer resources at

less than fair market value within 3 years of application or within 3 years

of entering a nursing home are deemed to be temporarily ineligible for

such benefits.3

 Since information on resource transfers is relevant to the

Medicaid nursing home eligibility decision, the law requires SSA to ask SSI

applicants about resource transfers even though their answers do not

affect the determination of their SSI eligibility. SSA is also required to

provide this information to state Medicaid agencies.

A provision to reinstate a transfer-of-resource restriction for certain

transfers was included in welfare reform legislation passed by the 104th

Congress, which was subsequently vetoed by the President. SSA is

currently considering the merits of reinstating an SSI transfer-of-resource

restriction and may include such a proposal in its fiscal year 1997

legislative proposals.

2

Medicaid provides medical assistance to low-income aged, blind, or disabled individuals; members of

families with dependent children who receive benefits from the Aid to Families With Dependent

Children program; and certain other children and pregnant women.

3

The period of ineligibility is determined by dividing the value of the resource transferred by the

average monthly cost of nursing home care in the state where the person is applying for benefits. For

example, in a state where the average monthly cost of nursing home care is $3,000, an individual

transferring $15,000 from a bank account would be ineligible for 5 months.

Page 3 GAO/HEHS-96-79 Transfer of Resources
B-266319 

Recipients Are

Increasingly

Transferring

Resources Worth

Millions of Dollars

Since 1989, the number of SSI recipients reporting nonexcludable resource

transfers has substantially increased, from fewer than 500 in 1989 to

almost 2,800 in 1994. Between 1988 and 1994, 9,326 recipients reported

transferring resources. While the number of recipients reporting resource

transfers is relatively small compared with the total number of SSI

recipients, it represents a growing population receiving millions of dollars

in SSI benefits each year.

We analyzed data on those individuals for whom data were maintained

centrally in an automated database at SSA headquarters; this represented

about one-third of the 9,326 SSI recipients who reported resource transfers,

about 3,505 recipients (see app. I for more details).

We estimate that between 1990 and 1994 these recipients transferred cars,

homes, land, cash, and other resources worth over $74 million.4

 The

average value of transferred resources was about $21,000. This recipient

group of 3,505 does not include the more than 5,800 transfers documented

in nonautomated case files, nor does it include recipients who failed to

report resource transfers. Consequently, the total amount of resources

transferred is larger than our estimate.

Table 1: Distribution of Estimated

Values of Resources Transferred by

3,505 SSI Recipients Range of reported transfer value

Percent of

recipients

$0 5.5a

$1-999 11.2

$1,000-1,999 4.5

$2,000-4,999 14.9

$5,000-9,999 15.3

$10,000-24,999 19.9

$25,000-49,999 10.3

$50,000-99,999 6.9

$100,000-199,999 2.7

$200,000 + 1.4

Value not reported 7.4

Total 100

aAlthough these individuals reported transferring resources, they reported their value as $0.

4

This estimate excludes cases where recipients’ records we sampled indicated that the resources

transferred may have included homes that were primary residences and, therefore, were excludable

resources. According to SSA officials, other cases involving transfers of excludable resources may be

in our sample but they could not identify them because the information was not noted in the record.

Page 4 GAO/HEHS-96-79 Transfer of Resources
B-266319 

Although SSI benefits are for those with limited income and resources, the

resources recipients transferred were often of considerable value. These

individuals could receive millions of dollars in SSI benefits in the 24 months

after they transferred resources. For example, one individual transferred

an apartment complex valued at $800,000 to a nonrelative in May 1994. In

July 1994, this person applied for SSI and has subsequently received about

$6,800 in SSI payments. Another individual gave away about 380 acres of

land valued at $100,000 to a relative in September 1993. This person

applied for SSI in October 1993 and has received about $4,200 in SSI

payments.

In many cases individuals applying for SSI benefits reported having

transferred large amounts of cash. For example, one individual gave away

almost $38,000 in cash to a relative in July 1992 and applied for SSI in

August 1993. This person has received about $4,900 in SSI payments. In

another case, a person gave away $29,000 to a relative in September 1993

and applied for SSI in the same month. This person has received about

$4,300 in SSI payments.

Actual Extent of Resource

Transfers Is Unknown, and

the Value of Many

Transferred Resources Is

Unreported or

Underreported

Since repeal of the resource transfer restriction in 1988, 9,326 SSI recipients

reported transferring resources before applying for or while receiving SSI;

however, the actual number of people who did so is unknown. The extent

of resource transfers is unknown because field office claims

representatives accept self-reported information. If an applicant does not

report a transfer, SSA does not verify this information nor is it required to.

Consequently, instances in which individuals transfer resources but do not

report the transfer are not detected.

Moreover, we found cases in which questionable data were accepted by

the claims representatives. Although SSA requires an applicant to provide a

bill of sale or other documents to establish that the applicant no longer

owns the resource, it does not verify the value because resource transfers

do not affect the amount of SSI benefits an individual receives. As a result,

our estimate of $74.3 million in resource transfers from 1990 to 1994

probably understates the actual value of resources transferred. Some

recipients (5.5 percent) reported transferring resources such as homes and

other property but reported the value as $0. For example, one individual

gave a house and 72 acres of land to a relative and reported a market value

of $0. Moreover, 7.4 percent of recipients reported transferring resources

without reporting any value for the resources.

Page 5 GAO/HEHS-96-79 Transfer of Resources
B-266319 

In addition to those recipients reporting the value of their resources as $0,

other recipients apparently reported inaccurate market values of the

resources they transferred. For example, an individual gave away 4 acres

of land and reported the value as $10. Another individual gave away two

homes and reported the total value of the homes as $20.

Reinstating

Restriction Would

Reduce Program

Expenditures

Under the restriction in effect until 1988, resources transferred by

individuals were counted as a resource for 2 years after the date of the

transfer, making such individuals ineligible for SSI benefits until 24 months

elapsed. We estimate that the 3,505 recipients who reported transferring

resources between 1990 and 1994 would receive about $7.9 million in SSI

benefits during the 24 months following the date the resources were

transferred. Assuming that some individuals did not report such transfers,

the total amount of benefits paid is likely to be larger than our estimate,

which was based on the 3,505 cases.

Currently, the period of ineligibility for Medicaid long-term care is based

on the value of the resources transferred at less than fair market value.

That is, the period of ineligibility is calculated by dividing the

uncompensated value of the resource by the average monthly cost of

nursing home care in the state where the person lives. We estimate that

from 1990 through December 1995 about $14.6 million in SSI program

expenditures could have been saved if SSI had in place a transfer-ofresource restriction similar to Medicaid’s provision. For example, if an

individual gave away $25,000, under the previous SSI transfer-of-resource

restriction, the person would have been ineligible for SSI benefits for 2

years. However, basing the period of ineligibility on the uncompensated

value of the resource divided by the maximum SSI payment that can be

awarded would have resulted in about 4-1/2 years of ineligibility.

SSI Transfer-of-Resource

Restriction Could Also

Reduce Medicaid

Expenditures

Most of the 3,505 recipients who reported transferring resources were, like

most SSI recipients, eligible for Medicaid acute-care benefits. In 1994, aged

SSI recipients who received Medicaid benefits averaged about $2,800 in

benefits, and blind and disabled SSI recipients averaged about $5,300,

excluding nursing home and institutional care.5

An SSI transfer-of-resource restriction could possibly result in savings in

the Medicaid program. Some of the individuals denied SSI benefits would

not become eligible for Medicaid during the period in which they were

5

In this instance, disabled recipients aged 65 and over are counted with the disabled, not the aged.

Page 6 GAO/HEHS-96-79 Transfer of Resources
B-266319 

ineligible for SSI. We cannot estimate potential Medicaid savings because

some individuals denied SSI could possibly receive Medicaid by applying

for “medically needy” coverage directly to the state in which they live.

Reinstating Restriction

Would Result in Additional

SSA Administrative Costs

SSA estimated that it spent about $600,000 in fiscal year 1995 to obtain

transfer-of-resource information. However, virtually all of these costs were

related to explaining the provision and asking individuals about resource

transfers. SSA incurred little cost to verify the accuracy of reported

information.

If a restriction were reinstated, SSA would have to substantially expand the

effort required to verify the accuracy and completeness of transfer

information reported by individuals as well as detect unreported transfers.

This is important because individuals may be less likely to report transfers

if such transfers affect SSI eligibility. Verifying the accuracy of reported

transfer information would be less costly than detecting unreported

transfers. Although no data exist to estimate the potential costs of the

additional verification and detection requirements that SSA would have to

initiate, the costs could be significant.

Conclusions Eliminating the SSI transfer-of-resource restriction has increased SSI benefit

expenditures and program costs, which is especially troublesome

considering current budgetary constraints. The number of new recipients

reporting transfers of resources has increased dramatically since repeal of

the restriction. These individuals, who transferred resources that they

could have used for self-support, are instead receiving SSI benefits. In

addition, many of these individuals, by virtue of their admission to the SSI

program, have also become eligible for Medicaid acute-care benefits.

An SSI transfer-of-resource restriction similar to Medicaid’s restriction

could save millions in SSI program expenditures by delaying individuals’

date of eligibility for benefits. Such a restriction could also save an

unknown amount of Medicaid expenditures. If a restriction were

reinstated, SSA would have to considerably expand the steps it takes to

verify the value of transferred resources as well as develop mechanisms to

detect unreported transfers. This is especially important because

individuals might be less likely to report transfers once they affected SSI

eligibility. As a result, SSA would incur additional administrative expense in

implementing such procedures. However, these cost estimates are not

readily available and would have to be developed by SSA. Moreover, this

Page 7 GAO/HEHS-96-79 Transfer of Resources
B-266319 

use of SSA’s limited resources and the increased administrative costs

should be properly balanced with the benefits of bolstering the program’s

integrity by assuring the public that people may not rely on public services

when they can use their own resources and by guaranteeing that only

those who need SSI will receive it. SSA is considering whether to include

such a proposal in its fiscal year 1997 budget request.

Matter for

Congressional

Consideration

In light of the potential for reduced program expenditures and increased

program integrity, the Congress may wish to consider reinstating an SSI

transfer-of-resource restriction. The restriction could be calculated in a

way that takes into account the value of the resource transferred so that

individuals transferring more valuable resources would be ineligible for SSI

benefits for longer periods of time than those who transfer less valuable

resources.

Agency Comments

and Our Evaluation

SSA agreed with our findings and conclusions that reinstating a transfer-ofresource restriction would increase the SSI program’s integrity. SSA noted

that it is continuing to work with the Congress to include a provision

restoring an SSI transfer-of-resource restriction in welfare reform

legislation.

SSA also stated its concern that our excluding eight cases from our sample

significantly understates the number of cases with excludable resources.

We excluded cases on the basis of comments in individuals’ files indicating

that the resources transferred involved primary residences. Other cases

involving transfers of excludable resources may also exist, but SSA could

not identify which, if any, involved such resources, and we had no other

means to identify those cases. SSA acknowledged that identifying such

cases would be difficult since information on many of the transfers would

not have been noted in the case files.

The agency also made other technical comments, which we incorporated

throughout the report as appropriate. (See app. II.)

Page 8 GAO/HEHS-96-79 Transfer of Resources
B-266319 

We are sending copies of this report to the Commissioner of the Social

Security Administration and other interested parties. Copies also will be

available to others on request. If you or your staff have any questions

concerning this report, please call me on (202) 512-7215. Other GAO

contacts and staff acknowledgments are listed in appendix III.

Jane L. Ross

Director, Income Security Issues

Page 9 GAO/HEHS-96-79 Transfer of Resources
Contents

Letter 1

Appendix I 

Scope and

Methodology

12

Appendix II 

Comments From the

Social Security

Administration

14

Appendix III 

GAO Contacts and

Staff

Acknowledgments

16

Table Table 1: Distribution of Estimated Values of Resources

Transferred by 3,505 SSI Recipients

4

Abbreviations

MSSICS Modernized Supplemental Security Income Claims System

SSI Supplemental Security Income

SSA Social Security Administration

SSR Supplemental Security Record

Page 10 GAO/HEHS-96-79 Transfer of Resources
Page 11 GAO/HEHS-96-79 Transfer of Resources
Appendix I 

Scope and Methodology

Data on the nature and value of the resources transferred in over half of

the reported 9,326 transfers that occurred between 1988 and 1994 were not

readily available because the information was not centrally located or

contained in an automated database. This information was documented in

case files in field offices or other storage facilities. In 1990, however, SSA

began using an automated claims process, the Modernized Supplemental

Security Income Claims System (MSSICS), to collect and document

application information about SSI claimants. These data were centrally

located at SSA headquarters and contained relevant automated information

on 4,293 individuals who transferred resources. Of these individuals, 3,550

transferred their resources between 1990 and 1994 and received SSI

benefits; the other 743 were denied benefits.

From the 4,293 individuals, we selected a random sample of 750

individuals whose SSI applications were processed in MSSICS and obtained

their transfer-of-resource data. We subsequently found that, of these 750

individuals, only 631 had been determined eligible for SSI; the other 119

were denied benefits.

Under SSA operating guidance, field office claims representatives should

only collect transfer-of-resource information on countable resources, that

is, any assets that count toward the resource limit. The value of resources

such as a home that is the primary residence or one automobile is

excluded when calculating an individual’s resources. SSA officials

expressed concern that some of the homes transferred by SSI recipients

included in our sample were in fact primary residences. Because such

transfers would not have been penalized under the previous

transfer-of-resource restriction, SSA did not believe they should be

included in our sample. SSA, however, could not identify which, if any, of

the cases involved excludable resources.

In response to SSA’s concern, we reviewed our sample and on the basis of

comments noted in the cases determined that eight resource transfers may

have involved primary residences. We excluded those cases from our

sample. As a result, our revised sample size is 623. Although other cases

involving potential transfers of excludable resources may be in our

sample, comments indicating this were not noted in the individuals’

records, and we had no other available means to identify those cases.

We assumed that the proportion of the 3,550 recipients with automated

resource data in MSSICS who transferred resources other than primary

residences would be the same as the proportion of these individuals in our

Page 12 GAO/HEHS-96-79 Transfer of Resources
Appendix I 

Scope and Methodology

random sample, 98.73 percent. Thus, we based our estimates on a

population of about 3,505 recipients.

All of the sampling errors reported below have a confidence level of 95

percent. For estimates of the value of resources transferred when a value

was not reported by a recipient, we considered the value of that transfer to

be $0. Our estimate of the total value of resources that recipients reported

having transferred, $74.3 million, has a sampling error of plus or minus

$12.9 million. The estimate of the average value of transferred resources,

$21,000, has a sampling error of plus or minus $3,672. For the estimates of

proportions in column 2 of table 1, sampling errors do not exceed plus or

minus 3 percentage points. In addition, sampling errors associated with

estimates of benefits to be received ($7.9 million) and potential program

savings ($14.6 million) do not exceed plus or minus $1 million.

Since the principal source of our automated data, the Supplemental

Security Record (SSR), is subject to periodic SSA quality assurance reviews,

we did not independently examine the computer system controls for the

SSR. Except for the limitations noted, our review was done between May

and December 1995 in accordance with generally accepted government

auditing standards.

Page 13 GAO/HEHS-96-79 Transfer of Resources
Appendix II 

Comments From the Social Security

Administration

Page 14 GAO/HEHS-96-79 Transfer of Resources
Appendix II 

Comments From the Social Security

Administration

Page 15 GAO/HEHS-96-79 Transfer of Resources
Appendix III 

GAO Contacts and Staff Acknowledgments

GAO Contacts Christopher Crissman, Assistant Director, (202) 512-7051

George A. Scott, Evaluator-in-Charge, (202) 512-5932

Staff

Acknowledgments

In addition to those named above, the following individuals also made

important contributions to this report: Graham D. Rawsthorn, Evaluator;

Daniel A. Schwimer, Senior Attorney; Vanessa R. Taylor, Senior Evaluator

(Computer Science); Nancy L. Crothers, Communications Analyst; James

P. Wright, Assistant Director (Study Design and Data Analysis); and Joel I.

Grossman, Social Science Analyst.

(106801) Page 16 GAO/HEHS-96-79 Transfer of Resources
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