Supplemental Security Income: Wages Reported for Recipients Show Indications of Possible SSN Misuse
Published: 2014-07-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In fiscal year 2012, SSA estimated it paid over $53.4 billion to SSI recipients, of which 8.1 percent, or $4.3 billion, SSA estimated to have been improper payments. The SSI program pays benefits to the aged, blind or disabled adults and children with limited income and resources.
GAO was asked to analyze potentially improper SSA disability payments. This report identifies potential SSI overpayments and indicators of possible SSN misuse. SSA provided GAO with a onetime file extract of SSI recipients as of December 2010 and the matching income from both the quarterly wage and unemployment insurance components of the NDNH database that included fiscal year 2010. GAO compared the SSI benefit and NDNH income data to identify potential overpayments. GAO randomly selected five individuals for case-file review. These cases cannot be projected to the overpayment population but provide illustrative examples of possible SSN misuse.
section_title: What GAO Found
paragraphs: GAO's analysis of wages reported in the National Directory of New Hires (NDNH) initially showed that the Social Security Administration (SSA) made $19 million in potential overpayments to 10,187 recipients through its Supplemental Security Income (SSI) program in fiscal year 2010. Using a different methodology that includes additional causes of overpayments not considered in GAO's analysis, SSA estimated it made $3.3 billion in SSI overpayments in fiscal year 2010. The majority (70 percent) of the estimated overpayment amount GAO identified showed indications of possible Social Security number (SSN) misuse, such as employers reporting wages for recipients in multiple locations during the same quarter. For example, GAO determined that wages for 2,399 SSI recipients were reported solely by employers outside the recipient's state of residence. As the figure below shows, one individual in California had wages reported from 11 different employers in seven other states during the same quarter of calendar year 2010. This suggests that multiple individuals may be using the SSI recipient's SSN and name for work. The exact number of individuals who received overpayments and the exact amount of overpayments made to those individuals cannot be determined without detailed case investigations by SSA. GAO analyzed five recipient cases and provided the results to SSA.
GAO analyzed employers with wages for SSI recipients from outside the recipient's state and found nine employers who reported wages for 15 or more SSI recipients during the same quarter who lived in different states from the employer's location. For example, a plant located in one state reported wages for 22 SSI recipients who lived in six other states, indicating possible SSN misuse. SSA has previously reported that privacy and disclosure issues have limited its ability to routinely share information with the Department of Homeland Security (DHS), which is responsible for enforcing employer compliance with immigration laws through its work-site enforcement strategy. Reviewing SSI wages at a summary level can provide information on certain employers that have high incidences of inaccurate wage reports. The ability to share information regarding potential unauthorized employment could enhance SSA's ability to address SSN misuse and help DHS better target its work-site enforcement efforts.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Acting Commissioner of Social Security work with the Secretary of Homeland Security to identify the data useful to DHS's work-site enforcement strategy and seek legislative authority to obtain such information, as appropriate. DHS agreed with GAO's recommendation and SSA agreed to the intent of the recommendation, but did not agree to seek legislative authority. GAO still believes this recommendation is valid as discussed in the report to help the federal government better utilize the complementary sources of data available at SSA.

section_title: Letter
paragraphs: The Supplemental Security Income (SSI) program, which is administered  by the Social Security Administration (SSA), provides cash assistance to  financially needy individuals who are aged, blind, or disabled. The SSI  program is currently 1 of the 13 programs designated by the Office of  Management and Budget (OMB) as being “high-error” programs for  improper payments. In this regard, during fiscal year 2012, SSA  estimated it paid over $53.4 billion to SSI recipients, of which 8.1 percent,  or $4.3 billion, SSA estimated to have been improper payments  (overpayments and underpayments). Furthermore, SSA attributed 59  percent of SSI improper payments in fiscal year 2012 to verification and  administration errors—such as the detection of unreported financial  accounts and wages—among other things. Individuals are not eligible for  SSI payments for any period during which they have income or resources  that exceed the allowable amounts established under the Social Security  Act, which also requires SSA to verify information on income and  resources to ensure that payments are correct and are only provided to   The accuracy of earnings information is important  eligible individuals.since earnings affect a recipient’s SSI eligibility and payment amount.
Our prior work has found that weaknesses in SSA’s process for reviewing  recipients’ work activity have hindered the agency’s ability to identify and  review recipient income, which affects eligibility for disability benefits.  This report is the third in a series that responds to your request to  examine employment-related databases and analyze potentially improper  SSA disability payments. Accordingly, this report compares SSA data with  income reported in the National Directory of New Hires (NDNH) to identify  potential SSI overpayments and indicators of possible Social Security  number (SSN) misuse.SSI overpayments and the exact amount of overpayments made to those  individuals cannot be determined without detailed case investigations by  SSA. Hence, we refer to “potential overpayments” throughout this report.
The exact number of individuals who received  For our prior work, SSA provided us with a one-time file extract containing  SSI recipients as of December 2010 and the matching income information  from both the quarterly wage and unemployment insurance components  of the NDNH database that included fiscal year 2010.  Since this extract  is the most-recent NDNH data available to us, our analysis of SSI  beneficiaries with income in the NDNH is limited to fiscal year 2010. To  determine the subset of recipients who received potential overpayments  during fiscal year 2010, we identified individuals who received SSI  benefits in fiscal year 2010 and who also had records in the NDNH  indicating the receipt of wages or unemployment insurance in the  corresponding quarter of fiscal year 2010. For each individual, we  compared the amount of all income in the NDNH to the maximum  allowable income as specified by SSA and compared this amount to the  monthly SSI benefit amounts in SSA’s files to determine the total amount  of overpayment. Through comparison of these benefit amounts and  income, we were able to identify potential SSI overpayments.
GAO-11-724 and GAO-13-635.
In addition to our overall analysis, we randomly selected five individuals  for additional review of detailed SSI case-file information from a  population of individuals who were reported as receiving wages from four  or more states other than the state of residence on their SSA record  during the same quarter. Because we selected a small number of  individuals for further analysis, the result of these five cases cannot be  projected to the entire population of individuals. To develop the five  cases, we reviewed relevant SSA case-file documents and interviewed  SSI program officials.
To determine the reliability of the SSA disability records and NDNH data,  we reviewed documentation related to these databases and interviewed  officials responsible for compiling and maintaining relevant SSI 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 SSA case files for the  nongeneralizable selection of five individuals selected for additional  analysis to corroborate the NDNH and SSA data. 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. See appendix I for more  information on our objective, scope, and methodology.
We conducted this performance audit from April 2013 to July 2014 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 audit objective.
subsections: section_title: Background
paragraphs: The SSI program pays benefits to the aged, blind or disabled adults, and  children who have limited income and resources. To determine whether  an SSI applicant is financially eligible, SSA is to perform an initial  determination at the time of application, and to conduct periodic reviews  to determine whether the recipient remains eligible. SSI recipients are  required to report events that may affect their financial eligibility for  benefits, including changes in income, resources, marital status, and  living arrangements. SSI generally reduces the monthly benefit by $1 for  every $2 of monthly earnings after the first $85.
SSA matches computerized data from other federal and state agencies to  help verify that the recipients’ case information is correct. SSA accesses  the NDNH by means of routine file matches to verify eligibility and  payment amounts under the SSI program.  During SSA’s income- verification process, SSA systems generate an alert when a match  between the SSA record and the verified quarterly wage file shows there  are significant overreported or underreported wages. SSA uses  established criteria, such as tolerances, to generate the alerts and post  them to the recipient’s record for future review and development by field- office staff to determine whether the discrepancies affect SSI benefits.
The NDNH database, administered by the Department of Health and  Human Services, contains employment data on newly hired employees  (form W-4), quarterly wage data on individual employees, and  unemployment insurance data. In order to verify the accuracy of data in  the NDNH, the department transmits the NDNH data to SSA to verify the  accuracy of the SSN and its related name against information in the SSA  database. When the NDNH receives notification that the SSN is verified,  the system then adds the data to the NDNH database. If the SSN is not  verified it is either rejected or posted to separate files within the NDNH.
GAO and the SSA Office of the Inspector General (OIG) have previously  identified patterns of errors and irregularities in wage reporting, including  SSN misuse. For example, in January 2001 the SSA OIG reported that  employers in the agriculture industry submit thousands of wage items for  which the employee’s name or SSN does not match SSA records. April 2005, the SSA OIG also identified the top 100 employers in each of  the service, restaurant, and agriculture industries that contribute the most  reporting irregularities. Several of the employers and industry  associations that spoke with the SSA OIG for its April 2005 report stated  that unauthorized noncitizens contribute to SSN misuse. In 2005, we  reported that employers in certain industry categories are more likely than  others to submit reports with invalid worker identity information. Some  employers exhibit a pattern of errors year after year, such as using one  SSN for more than one worker in multiple tax years.
Social Security Administration, Office of the Inspector General, Obstacles to Reducing  Social Security Number Misuse in the Agriculture Industry, A-08-99-41004 (Jan. 22,  2001). posted to the true number holder’s account. According to SSA policy, if  earnings are identified that do not belong to the number holder, the  individual may submit a signed statement “disclaiming” the wages as his  or her own and have the earnings removed from his or her Master  Earnings File.
section_title: Potential Overpayments to SSI Recipients in Fiscal Year 2010 Show Indications of Possible SSN Misuse
paragraphs: According to SSA, in 2010, the SSI program made a total of $44.6 billion  in payments to 8.9 million recipients. Our analysis of income reported in  the NDNH initially showed that SSA made $19 million in potential SSI  overpayments to 10,187 SSI recipients in fiscal year 2010, but  approximately 70 percent of the total overpayment amount showed  indications of possible SSN misuse, such as individuals with wages  reported from employers in multiple states during the same quarter, so we  were unable to determine whether the recipients actually received SSI  overpayments. We also found employers with high incidences of inaccurate wage reports and identified information that could be shared  with the Department of Homeland Security (DHS) to help address  possible SSN misuse.
subsections: section_title: Analysis of 2010 Data Identified Potential Overpayments and Possible SSN Misuse
paragraphs: Based on comparisons of SSI beneficiary records with quarterly wage  and unemployment records included in the NDNH, we initially estimated  that SSA made $19 million in potential SSI overpayments to 10,187 SSI  recipients in fiscal year 2010. Using a different methodology that includes  additional causes of overpayments not considered in GAO’s analysis,  SSA estimated to have made $3.3 billion in SSI overpayments in fiscal  year 2010. SSA also considers other causes of overpayments such as pensions; resources such as real estate, bank accounts, cash, stocks,  and bonds; and living arrangements. The 10,187 recipients we identified  received a monthly SSI payment when, based on our analysis, they were  potentially not entitled to any benefits. All of these individuals appeared to  receive income in fiscal year 2010 above the maximum SSI program  threshold—$1,433 per month—while also receiving SSI payments.  However, as discussed below, we found indications of some possible  SSN misuse and were therefore unable to determine the extent to which  SSI overpayments were due to income earned by the recipient and  reported in the NDNH.
As shown in figure 1 below, more than 40 percent of our identified  population of 10,187 SSI recipients (4,228 SSI recipients) and about 70  percent of our original overpayment estimate ($13.2 million) showed  indications of possible SSN misuse.
During our analysis, we identified instances in which SSI recipients were  reported as having received wages by employers from different states  than what was reported as their state of residence on their SSA record.  We conducted additional analysis of our potential overpayment population  to determine the extent to which such out-of-state wages occurred. We  determined that for our potential overpayment population of 10,187  recipients, wages for 2,399 SSI recipients were reported solely by  employers located outside the recipient’s state of residence. Of those  2,399 individuals, 21 were reported as receiving wages by employers  from four or more different states than what was reported as their state of  residence on their SSA records during the same quarter. We randomly  selected 5 recipients from this group of 21 for additional review of detailed  SSI case-file information.
Our case-file reviews for these five recipients are nongeneralizable (i.e.,  cannot be projected to the entire population of individuals) but identify  possible instances of SSN misuse. For each of the five cases, wages  reported in the NDNH triggered alerts to SSI caseworkers for follow-up.  However, all five of the recipients had evidence in their case files of  wages being disclaimed. Under SSA’s procedures for disclaiming wages,  recipients can provide SSA with a signed statement attesting that the  wages being reported for their SSN were not earned by them. One of the  recipients disclaimed wages as far back as 2004, and has repeatedly  disclaimed wages every year from 2009 to 2012. Once a recipient  disclaims wages, the SSI caseworker then is to take an additional step to  remove the disclaimed earnings from the Master Earnings File. According  to SSA, the agency had already referred four of the five recipients to  SSA’s OIG for further investigation. SSA OIG stated that it reviewed the  four cases, but the cases were subsequently closed due to insufficient  details that hindered its ability to make a determination as to which  individual was possibly misusing the SSN.
The five cases we reviewed also indicated possible SSN misuse. For  example, as shown in figure 2 below, one individual living in California  had wages reported in the NDNH from 11 different employers in seven  other states that were many miles away during the same quarter of  calendar year 2010. This suggests that multiple individuals may have  been using the SSI recipient’s SSN and name for work purposes. We  recognize there are instances when individuals could work for multiple  employers simultaneously. However, it is questionable that one person  could work for multiple employers simultaneously in different regions of  the country during the same quarter.
Of the 10,187 individuals we identified as having received potential SSI  overpayments, we also identified another 582 SSI recipients with wages  reported from employers both outside and within their home state during  the same quarter. Wages reported for the remaining portion of our  overpayment population were solely from employers inside their state.  However, this subset of recipients also showed indications of possible  misuse. A total of 1,247 in-state recipients had multiple employers report  wages during the same quarter. For example, we identified one individual  who, according to SSA’s records, lives in a border town in south Texas,  but had wages reported in the NDNH from four different employers during  the same quarter of calendar year 2010 located hundreds of miles away  in the Dallas / Fort Worth and Houston, Texas, areas.
We recognize that it is possible for individuals that live near a state border  to work in the neighboring state or for individuals to change their  employer within a 3-month quarter for which wages are reported.  However, without a detailed case-file review that includes contacting the  recipient to determine if reported wages should be disclaimed, it is  impossible to determine whether the wages reported by employers in  other states that are many miles away are attributable to a single SSI  recipient or to other individuals misusing the recipient’s SSN.
section_title: Certain Employers Had High Incidence of Questionable Wage Reporting
paragraphs: After determining the extent to which individuals had wages reported from  outside their state, we analyzed the employers that reported those wages.  As another sign of possible SSN misuse, our analysis identified nine  employers who reported wages for 15 or more SSI recipients during the  same quarter that, according to SSA’s records, lived in different states  from the employer’s location. For example, as shown in figure 3 below,  one meat plant with a single Indiana location reported wages for 22 SSI  recipients whose SSA records indicated that they lived in other states that  were many miles away: namely California, Louisiana, Massachusetts,  New York, Pennsylvania, and Texas. According to SSA’s records, none of  the SSI recipients we detected in the wages reported by this employer  actually lived in Indiana. This suggests that the Indiana plant workers may  have been improperly using the SSNs of SSI recipients living in other  states, or that the SSI recipients were actively working in other states  while claiming SSI.
section_title: SSA Could Better Share Information to Help Address SSN Misuse
paragraphs: According to an August 2013 SSA OIG report, SSA staff stated that some  employers hire unauthorized workers because they know SSA has no  legal authority to levy fines and penalties, and they are not concerned  about potential Internal Revenue Service sanctions. DHS is responsible  for granting aliens permission to work in the United States, and for  enforcing compliance of employers with immigration laws. Under the law,  employers who employ individuals who they know are not authorized to  work in the United States may face civil fines, or in some cases, criminal  penalties. The U.S. Immigration and Customs Enforcement, Homeland  Security Investigations (HSI), has a three-pronged approach to address  work-site enforcement: enforcement (criminal arrests of employers);  compliance (employment-eligibility verification inspections, civil fines, and  suspension and debarment); and outreach (education and training).  According to HSI officials, HSI prioritizes its work-site enforcement  investigations by focusing on the most-egregious violators, such as  employers that knowingly hire unauthorized workers, utilize unauthorized  workers as a business model, mistreat or exploit their workers, aid in the  smuggling of their alien workforce into the United States, or create false  identity documents or facilitate document fraud. HSI officials further stated  that the agency continues to prioritize the protection of our nation’s critical  infrastructures and key resource sectors and industries by ensuring that  unauthorized workers do not have access to sensitive facilities or  information. As part of the effort to target unauthorized employment, a law  was established allowing SSA to share data with DHS on noncitizens who  have earnings recorded under a nonwork SSN. Under certain  circumstances, SSA may assign nonwork SSNs to noncitizens who are in  the United States but are not authorized to work. Individuals earning  wages under a nonwork SSN represent potential noncitizens who are  working without DHS authorization. Furthermore, DHS officials stated that  if the data on possible SSN misuse we identified could be routinely  shared with them, similar to sharing the nonwork SSN data, it may assist  them in their enforcement efforts. For example, they stated that the data  on possible SSN misuse we identified may add to the depth of DHS  investigations by identifying indicators of potentially egregious employers  who knowingly hire unauthorized workers, and support DHS’s work-site  enforcement strategy efforts. Specifically, rather than identifying work  discrepancies on a case–by-case basis, DHS officials agreed that our  summary analysis may provide useful information on certain employers  that have a high incidence of reporting inaccurate wages, indicating  possible SSN misuse.
Although SSA is able to identify possible SSN misuse for SSI recipients  when alert notices are generated and wages are ultimately disclaimed by  the recipient, SSA has previously reported that privacy and disclosure  issues have limited its ability to combat SSN misuse. For instance,  according to SSA, data-sharing restrictions limit its ability to routinely  share information with DHS regarding employers who file large numbers  of wage statements with inaccurate SSNs. In 2001, SSA OIG  recommended that SSA reevaluate its application of existing laws or seek  legislative authority to remove barriers that would allow the agency to  share information regarding chronic problem employers who submit  duplicate or unassigned SSNs with DHS. At the time, SSA disagreed with  the recommendation, stating that it continued to provide appropriate  disclosure guidance within its existing authority. In addition, SSA stated in  its response to the SSA OIG’s 2001 report that there was no need for the  agency to reevaluate its disclosure policies or to seek legislation in this  area because SSA’s existing regulations authorized it to disclose  information for law-enforcement purposes, including requests for  investigation or prosecution purposes.
Similarly, in February 2005 we recommended that the Secretary of  Homeland Security take steps to determine how DHS can best use SSA- supplied data on potential illegal work activity and specific industries  associated most frequently with such activity to support its work-site  enforcement efforts. In its response to our 2005 report, DHS had stated that it was taking the necessary steps to determine the best use of SSA- provided listings of persons with earnings who lack work authorization. In  February 2006 we further concluded that coordination between DHS and  SSA to leverage usable and useful data is essential to ensure that limited  DHS work-site enforcement resources are targeted effectively. In 2005,  SSA OIG reiterated its support for the 2001 recommendation to seek  legislative authority that would allow SSA to share information regarding  employers who had the most reporting irregularities, such as invalid,  unassigned, and duplicate SSNs. In 2013, SSA OIG identified employers  who report wages with significant errors in the employee name and SSN  and also recommended that SSA continue working with DHS to develop a  coordinated strategy to reduce SSN misuse. In its written response to  the August 2013 SSA OIG report, SSA agreed with this recommendation  and stated it would continue to promote methods for employers to verify  employee names and SSNs that would result in fewer wage-reporting  irregularities. For example, DHS’s E-Verify is a free, largely voluntary,  Internet-based system that allows employers to verify the employment  eligibility of newly-hired employees with the SSA database and DHS  immigration databases. Currently, DHS estimates that 9 percent of  employers utilize E-Verify with approximately 1,600 additional employers  enrolling every week.
Both Congress and the executive branch have recognized the need for  improved collaboration across the federal government. In addition, in our  past work, we have concluded that collaboration is critical for achieving  meaningful results in efforts involving multiple federal agencies.  Following key practices for effective collaboration can help agencies  address a range of challenges, such as information sharing and  communication. One of these key practices is directly relevant to SSA’s  efforts to collaborate with DHS: establishing compatible policies,  procedures, and other means to enhance information sharing and  communication across agency boundaries. We previously identified tools  that can facilitate such collaboration between agencies, such as shared  databases and web portals. Establishing a negotiated data-sharing  arrangement could be beneficial for effective collaboration between SSA  and DHS.
As previously mentioned, a component of DHS’s work-site enforcement  strategy includes focusing on employers who knowingly hire unauthorized  workers. Our analysis provides important newly identified summary  information on employers that file high numbers of inaccurate wage  reports with valid and assigned SSNs that appear to be misused. Such  information could be used by DHS to target unauthorized employment in  support of its work-site enforcement efforts. In addition to providing  specific data in response to requests from law enforcement for particular  investigations, routine data-sharing capabilities that include employers  who have high incidences of inaccurate wage reports may augment  DHS’s existing work-site enforcement strategies by identifying potential  unauthorized employment.
section_title: Conclusions
paragraphs: Wages reported by employers in the NDNH for SSI recipients can be  used to identify recipient employment activity as well as the possible  misuse of SSNs. Our analysis shows that reviewing these discrepancies  between income reported by SSI recipients and income reported by  employers at a summary level can provide important information on  certain employers that have a high incidence of reporting inaccurate  wages for SSI recipients, indicating possible SSN misuse. This employer- level information could be useful to DHS as part of its work-site  enforcement strategy, which includes focusing on employers who  knowingly hire unauthorized workers. However, due to privacy and  disclosure laws, SSA is limited in its ability to share this employer-level  information with DHS. This leaves the federal government unable to  “connect the dots” using data it already has at its disposal. Hence,  additional actions could facilitate the sharing of this information. Obtaining  legislative authority to enable the sharing of information regarding  potential unauthorized employment, including about employers who file  high numbers of wage statements with potentially misused SSNs, could  enhance SSA’s ability to address SSN misuse and help DHS better target  its work-site enforcement efforts.
section_title: Recommendation for Executive Action
paragraphs: To help strengthen SSA’s efforts to monitor the SSI program, and pay  accurate SSI benefits, as well as to enhance DHS’s investigative efforts  on behalf of its work-site enforcement strategy, we recommend that the  Acting Commissioner of Social Security work with the Secretary of  Homeland Security to identify the specific data useful to DHS’s work-site  enforcement strategy, including the new summary information that we  identified on employers who file high numbers of wage reports with  potentially misused SSNs, along with the corresponding privacy and  disclosure restrictions, and seek legislative authority to allow the  Secretary to obtain such information, as appropriate.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of our report to the Secretary of Homeland Security  and the Acting Commissioner of Social Security for comment. We  adjusted the initial language of the recommendation based on a request  from SSA officials to allow the flexibility to coordinate with DHS and  identify specific data that would be useful to DHS’s work-site enforcement  strategy prior to seeking any new legislative authority. We received  written comments from both DHS and SSA, which are reproduced in  appendix II and III. SSA and DHS also provided technical comments,  which we have incorporated as appropriate.
In its written comments, DHS said that it concurred with the  recommendation and that HSI will work with SSA to identify information  that may be useful to DHS’s work-site enforcement efforts and establish a  formal point of contact for doing so, although DHS did not provide a time  frame for implementing the recommendation.  In its written comments,  SSA said it agreed with the intent of the recommendation but will not  pursue any legislative authority that may be required to share data not  already allowed under current law because it does not want to be a  conduit for sharing data between other agencies. GAO still believes that  appropriate legislative authority should be pursued as necessary to allow  DHS and SSA to more-effectively share information, and better “connect  the dots” with the data they already have at their disposal. Since SSI  program data converges with complementary data from the Department  of Health and Human Services and the Department of the Treasury, these  data would be useful in supporting DHS’s work-site enforcement efforts.  We continue to believe action is needed in response to our  recommendation because, with neither SSA nor DHS pursuing potentially  needed data-access authority, the information on potential SSN misuse  and on employers with a high incidence of questionable wage reporting  identified by GAO will remain unutilized.
We are sending copies of this report to appropriate congressional  committees, the Acting Commissioner of Social Security, the Secretary of  Homeland 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 any questions regarding this report, please  contact me at (202) 512-6722 or BagdoyanS@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report.
section_title: Appendix I: Objective, Scope, and Methodology
paragraphs: Both Congress and the executive branch have recognized the need for  improved collaboration across the federal government. In our past work,  we concluded that collaboration is critical when meaningful results that  the federal government seeks to achieve required the coordinated efforts  of more than one federal agency. This report examines potential  Supplemental Security Income (SSI) overpayments by comparing Social  Security Administration (SSA) data with income reported in the National  Directory of New Hires (NDNH) database and identifies indicators of  possible Social Security number (SSN) misuse.
For our prior work on SSA’s programs, SSA had provided us with a file  containing SSI recipients as of December 2010 and the matching income  information from both the quarterly wage and unemployment insurance  component of the NDNH database that included fiscal year 2010.  SSA  also provided us an updated extract of SSI recipients as of September  2013, which separated the state and federal portion of the SSI benefit  payment. We utilized the income reported in the NDNH and the federal  portion of the SSI benefit payment to determine the extent that individuals  potentially received SSI overpayments in fiscal year 2010. Since the file  containing SSI recipients and the corresponding NDNH data provided by  SSA is the most-recent NDNH data available to us, our analysis of SSI  beneficiaries with income in the NDNH is limited to fiscal year 2010.
Our earlier work focused on SSA’s Disability Insurance (DI) program, which is the  nation’s largest cash-assistance program for workers with disabilities.  See GAO,  Disability Insurance: Work Activity Indicates Certain Social Security Disability Insurance  Payments Were Potentially Improper, GAO-13-635 (Washington, D.C.: Aug. 15, 2013)  and Disability Insurance: SSA Can Improve Efforts to Detect, Prevent, and Recover  Overpayments, GAO-11-724 (Washington, D.C.: July 27, 2011). income data from the NDNH and SSI payments from SSA. The exact  number of individuals who received SSI overpayments and the exact  amount of overpayments made to those individuals cannot be determined  without detailed case investigations by SSA. Thus, we refer to “potential  overpayments” throughout this report.
We also reviewed detailed SSI case files for a nongeneralizable selection  of five individuals to illustrate potential cases of SSN misuse in overall  overpayment population. We randomly selected a sample of five  individuals from our population who were reported as receiving wages  from four or more different states other than the state of residence that  was reported on their SSA record. In order to be included in our sample,  individuals had to have wages reported from four or more separate states  during the same quarter. Because we selected a small number of  individuals for further analysis, the results of these five cases cannot be  projected to the entire population of individuals who received SSI  overpayments. To develop the cases, we reviewed relevant SSA case-file  documents and interviewed SSI program officials.
Of our population of SSI recipients that we identified who were reported  as receiving wages from a different state than the state of residence that  was reported on their SSA record during the same quarter, we analyzed  the Employer Identification Number (EIN) for their employers and found  nine employers who had 15 or more SSI recipients who lived out of state  working for that employer in the 2nd quarter of 2010. To avoid the  possibility that an employer might have locations in multiple states, we  researched each of the nine EINs in LexisNexis to determine the number  of states in which the employer had locations. Of the nine EINs, four were  not found in LexisNexis, and four had locations in multiple states. The  remaining one had locations in only one state. We selected this employer  as an example of an employer who reported wages for SSI recipients in  distant states during the same quarter.
To determine the reliability of the SSA disability records and NDNH data,  we reviewed documentation related to these databases and interviewed  officials responsible for compiling and maintaining relevant SSI 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 SSA case files for the  nongeneralizable selection of five individuals selected for additional  analysis to corroborate SSA data. 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.
We conducted this performance audit from April 2013 to July 2014 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 audit objective.
subsections: section_title: Limitations to Using NDNH Data
paragraphs: The timing and nature of NDNH income data we received present  limitations to the data’s capacity to identify overpayments in accordance  with SSA’s program rules. First, the quarterly amounts on the NDNH  represent 3 months of income; however, SSA calculates overpayments  based on monthly earnings amounts. To facilitate our analysis, we  calculated monthly income for each month in a quarter by dividing the  quarterly NDNH amount by three. For example, if the NDNH reported  quarterly income of $3,000 in the first quarter of 2010, we calculated the  monthly income to be $1,000 for January, February, and March of 2010.  This monthly computed income amount could differ from the actual  monthly income. For instance, using the previous example, the actual  monthly income in January 2010 could be $3,000, and actual income in  February or March could be $0. In addition, because we were limited to  SSI beneficiaries with income in the NDNH for fiscal year 2010, our  analysis may understate the extent of individuals receiving potential  overpayments due to possible SSN misuse.
section_title: SSI Overpayments
paragraphs: Our analysis of the NDNH match file identified individuals who received  SSI payments in fiscal year 2010 and had computed monthly income that  exceeded the corresponding monthly threshold for the program. To  calculate the potential SSI overpayments for each month, we compared  the income to the maximum benefit amounts as specified by SSA by  subtracting the total countable income from the 2010 monthly SSI benefit  rate of $674. SSI has program rules for the exclusion of a certain amount  of income in considering whether the monthly SSI benefit rate should be  reduced. As such, we took these exclusions into consideration to capture  the amount of exclusion used and the remaining exclusion amount.  Specifically, we calculated countable unearned income, countable earned  income, and the total countable income. Since this population included  individuals with indications of expenses incurred or income set aside that  are typically excluded from countable income when calculating the SSI   individuals with these types of expenses were also  benefit amount,excluded from our overall population. About 0.25 percent of the SSI  recipients in our population had any indication of exclusions to income  present.
section_title: Appendix II: Comments from the Department of Homeland Security
section_title: Appendix III: Comments from the Social Security Administration
subsections: section_title: GAO Comments
paragraphs: The following are GAO’s comments on the Social Security  Administration’s (SSA) letter dated July 3, 2014.  1.
In the report, we added a reference to SSA’s Fiscal Year 2011  Performance and Accountability Report as the source of the estimate.   Including SSA’s own estimate of Supplemental Security Income (SSI)  overpayments shows that overpayments are a recognized issue with  the program.    2.  As mentioned in the report, we recognize that it is possible for  individuals that live near a state border to work in the neighboring  state or for individuals to change their employer within a 3-month  quarter for which wages are reported. However, without a detailed  case-file review that includes contacting the recipient to determine if  reported wages should be disclaimed, it is impossible to determine  whether the wages reported by employers in other states that are  many miles away are attributable to a single SSI recipient or to other  individuals misusing the recipient’s Social Security number (SSN).   According to the Bureau of Labor Statistics, workers are reported in  the state of the physical location of their job.  Our report describes a  case where an SSI recipient that lives in California had wages  reported by 11 different employers in seven different states, none of  which bordered California, for the same 3-month period. We believe  this is an indication of potential SSN misuse.  3.  As mentioned in our report, the Department of Homeland Security  (DHS) stated that the data on possible SSN misuse we identified may  add to the depth of DHS investigations by identifying indicators of  potentially egregious employers who knowingly hire unauthorized  workers.  4.  We revised the report to clarify GAO had National Directory of New  Hires (NDNH) data that included fiscal year 2010.  5.  As mentioned in the report, we state that the exact number of  individuals who received SSI overpayments and the exact amount of  overpayments made to those individuals cannot be determined  without detailed case investigations by SSA.  Thus, we refer to  “potential overpayments” throughout this report.  In addition, the report  states that approximately 70 percent of the total overpayment amount  showed indications of possible SSN misuse, such as individuals with  wages reported from employers in multiple states during the same  quarter, so we were unable to determine whether the recipients  actually received SSI overpayments.  Additional limitations to our  methodology are described in detail in appendix I.      6.  We revised the footnote to address SSA’s specific comment.  7.  We added the footnote to address SSA’s specific comment.