PASS Program: SSA Work Incentive for Disabled Beneficiaries Poorly Managed
Released: 1996-02-28T00:00:00

Letter

Introduction

The Social Security Administration’s (SSA) Disability Insurance (DI) and Supplemental Security Income (SSI) programs are the two largest federal programs providing cash and medical assistance to people with severe, long-term disabilities, at an annual cost of more than $100 billion. The DI program offers partial income replacement for disabled workers who have earned Social Security benefits. The SSI program provides federal and state cash assistance to people who are elderly, blind, or disabled, regardless of insured status, whose income and resources are below a specified amount. In the legislation authorizing the SSI and DI programs, the Congress articulated its aim to rehabilitate into productive activity as many disability benefit recipients as possible.

Consistent with this goal, the Congress has passed several work incentive provisions to reduce the risks of seeking employment for recipients, by safeguarding cash and medical benefits while a recipient tries to work. One such provision authorized the plan for achieving self-support (PASS) program as part of the SSI program in 1972. In explaining this provision, the pertinent House Report stated that the Ways and Means Committee wanted to “provide every encouragement and opportunity” for participants to work.

The DI and SSI Programs

The DI program, authorized in 1956, provides cash and medical benefits to workers under age 65 who become disabled and cannot continue working, as well as to their dependents. The DI program is funded through Federal Insurance Contribution Act taxes paid into a trust fund by employers and workers. In 1994, 3.3 million people with disabilities were enrolled in DI and received, on average, cash benefits of about $660 a month.

The SSI program was authorized in 1972 under title XVI of the Social Security Act as a means-tested income assistance program for people who are elderly, blind, or disabled. Unlike DI beneficiaries, SSI recipients do not need to have a work history to qualify for benefits, but need only have low income and limited assets. General government revenues provide the federal funding for the SSI program, while some states supplement federal payments with their own funds. SSI disabled beneficiaries receive an average monthly cash benefit of about $380 (beneficiaries in the 43 states that provide a monthly supplement received, on average, an additional $110 in 1993) and immediate Medicaid eligibility in most states. In 1994, 2.3 million blind and disabled adults under age 65 and 893,000 children were enrolled in SSI. Individuals who are insured under Social Security, but fall below SSI’s income and resource eligibility threshold, can qualify for both DI and SSI benefits. An additional 671,000 people under age 65, called concurrent beneficiaries, were enrolled in both programs in 1994.

To be considered disabled under either program, a person must be unable to engage in substantial gainful activity (SGA) because of a medically determinable physical or mental impairment that is expected to last not less than 12 months or result in death. The severity of the impairment must prevent the applicant not only from doing his or her previous work, if any, but also from engaging in any other kind of substantial work in the national economy, considering his or her age, education, and work experience. The process used to determine eligibility for benefits is the same for both programs.

PASS Program Structure and Participants

In establishing the SSI and DI programs, the Congress considered it very important that disabled persons be helped to return to self-supporting employment wherever possible. To this end, over the years the Congress has enacted numerous work incentive provisions in both the SSI and DI programs to encourage more people to work their way off the disability rolls. These include the PASS program and extended eligibility for Medicare benefits to working DI beneficiaries. During a beneficiary’s work attempt, these work incentive provisions allow varying degrees of safeguards for cash and medical benefits, as well as program eligibility. However, despite the Congress’ aim to return the maximum number of DI and SSI beneficiaries to work, few beneficiaries have actually done so. Only 1 in every 500 DI beneficiaries is terminated from the rolls because he or she has returned to work. While SSA has no comparable measures for the SSI population, we recently reported that this population’s return-to-work rate is similarly low.

The PASS program was established by the Congress as part of the SSI program to assist disability benefit recipients with beginning or returning to work. The PASS program is administered by staff in the approximately 1,300 SSA field offices nationwide, based on policy and regulations developed by SSA headquarters staff in the Office of Program Benefits Policy. The Program Operations Manual System (POMS) is the primary policy guidance to staff on the PASS program. Work incentive staff in SSA’s 10 regional offices provide additional guidance and oversight to field office staff. In December 1994, about 10,300 individuals participated in the PASS program and had active PASSes.

In commenting on the PASS provision, the pertinent House Report stated that it should be “liberally construed,” and SSA headquarters has chosen to place few constraints on the program in regulations or in the POMS. For example, there is no required application format and no limit on the number of approved plans an individual can have in a lifetime. PASSes are written plans, developed specifically for an individual, that identify a work goal and the items and services needed to achieve that goal. (For a sample plan format, see app. I.) To purchase these items and services, PASS program participants may use any non-SSI income or resources they have—for example, DI benefits or wages from a job. Anyone can write a PASS—the disability benefit recipient, an SSA staff member, a vocational rehabilitation professional, staff from another agency, or a relative or friend; no vocational rehabilitation expertise is required.

Normally, any additional income or resources would reduce the amount of the SSI payment, but SSA disregards the income and resources included in a PASS when determining income available to the SSI recipient. Consequently, excluding income and resources to pursue a work goal under a PASS can result in additional monthly SSI cash payments. For example, an SSI recipient earning $300 a month in a part-time job is normally eligible for about $350 in SSI benefits, if he or she is single and lives alone. However, using a PASS, this individual could use these earnings to pay for classes and transportation to school to become an accountant and receive the maximum 1995 federal benefit of $458 each month.

As currently implemented, the PASS program can also be used to establish eligibility for SSI by disabled individuals whose incomes or resources would otherwise exceed program eligibility limits. If a DI beneficiary who receives $620 a month in benefits, for example, can set $300 of this income aside under a PASS to pursue a work goal, he or she becomes eligible for SSI payments because his or her countable income is less than the federal SSI eligibility rate. Eligibility for SSI usually brings eligibility for other means-tested benefits, including Medicaid and food stamps.

PASSes are submitted to staff in one of the SSA field offices for review. These staff approve or deny plans on the basis of the work goal’s feasibility and adjust SSI payment levels for approved plans. Work goals must be stated in terms of specific job titles or professions. For example, education can be part of a plan but cannot be a goal in itself. As long as applicants specify a different work goal in each PASS, there is also no limit placed on the number of plans one individual can have, although only one plan can be active at a time and each PASS is limited to a maximum of 48 months. However, interim guidelines issued in January 1995, in response to a mandate in the Social Security Independence and Program Improvement Act of 1994, allow additional 6-month extensions to ongoing plans.

In December 1994, PASS participants represented only about three-tenths of 1 percent of the working-age disabled SSI population. The number of PASSes varies by state, with clusters in areas where outreach by professional PASS preparers and service providers has been greatest. As a result, knowledge of and experience with the PASS program varies greatly among field offices and staff. Some offices have no active PASSes, while administering the PASS program constitutes a significant workload in others. Compared with other SSI recipients, PASS program participants are generally younger and more often men. In addition, PASS program participants are more likely to have mental illness as their disabling condition. For a more detailed description of the demographics of program participants, see appendix II.

The PASS program is unique among all DI and SSI work incentives because it is available to disabled individuals who are not already working. Specifically, the PASS provision allows participants to exclude unearned, as well as earned, income for consideration in determining benefit amount. All other work incentive protections, such as extended eligibility for health and cash benefits for working recipients, apply to earned income only. Furthermore, while SSI and DI beneficiaries who work can use the impairment-related work expense provision to deduct from their gross wages the cost of items and services needed to work, only half these costs are offset by increased SSI benefits. In contrast, PASS expenses are deducted after all other exclusions when determining an individual’s countable income, and therefore fully subsidized by additional SSI cash payments, up to the maximum benefit amount.

Objectives, Scope, and Methodology

House Conference Report 103-670, accompanying the Social Security Independence and Program Improvement Act of 1994 (P.L. 103-296), asked that we review SSA’s PASS program. Specifically, we were asked to provide data for the last 5 years, to the extent possible, on (1) the number and characteristics of individuals who have applied for a plan, (2) the number and characteristics of those whose plans have been approved, (3) the kinds of plans that have been approved and their duration, (4) the success of individuals in fulfilling their plans, and (5) the extent to which individuals who have completed a PASS have become economically self-sufficient. We were also asked to study whether improvements can or should be made to the PASS program, including the process used to approve plans. Because SSA’s Office of Program Integrity Review was already tracking PASS program participants’ compliance with their plans and the outcome of PASS program participation, we focused our efforts on PASS program management and internal controls.

To analyze PASS program implementation and determine what changes and improvements were needed, we reviewed PASS guidance, legislation, and regulations. We also interviewed Social Security headquarters staff responsible for the program and monitored an SSA work group charged with considering PASS program policy changes. In addition, we met with staff in 19 SSA field offices, located in California, Colorado, Maine, Massachusetts, Michigan, Vermont, and Wisconsin, that had high numbers of active PASSes to discuss their experience with the work incentive. (For a list of locations visited, see app. III.) In these same states, we met with 38 individuals, representing 32 different organizations, who prepare PASSes for disability benefit recipients. In addition, we spoke with the PASS program liaison in each of the 10 SSA regional offices to learn about program trends nationwide.

To determine the numbers and characteristics of PASSes and program participants, we analyzed an extract of the Supplemental Security Record (SSR), the main database of SSI participants. We also used data from the SSR, the Master Beneficiary Record (MBR) of DI beneficiaries, and SSA’s Master Earnings File maintained for all workers to assess the current earnings and benefit status of former PASS participants. We were unable to evaluate program impact, because most program participation has been recent, and SSA has only 4 years of historical data on the PASS program, which includes no data on the outcomes of program participation. In addition, individuals self-select into the PASS program, and may already be different from other SSI and DI beneficiaries in ways that would affect their future employment and earnings. Finally, we reviewed 380 randomly selected PASS files in 17 field offices to gather additional data about PASSes, including the types of work goals and proposed purchases. We did not, however, verify that specific program participants complied with the goals and activities specified in their PASSes. For more information about our methodology, see appendix IV.

We did our work between January and November 1995 in accordance with generally accepted government auditing standards.

PASS Program Reflects Management Inattention

SSA has not translated the PASS program’s goals of providing opportunities for participants to work into a well-defined program structure with specific objectives. Confusion about program objectives has resulted in different and sometimes conflicting PASS approvals and denials across field offices. In addition, SSA field office staff find it difficult to approve or deny PASSes because SSA headquarters has not developed clear criteria for evaluating PASSes. Most field office staff do not have expertise or training in evaluating work opportunities for people with disabilities, whose needs are extremely diverse. Reflecting this diversity, the PASSes we reviewed encompassed a wide array of work goals, from janitorial work to professional positions, and included expenditures ranging from business cards to new cars. Finally, the PASS program includes primarily DI beneficiaries, many of whom use the PASS program to gain eligibility for federal SSI payments.

Because SSA has not developed measures to evaluate how well the PASS program is helping participants become or stay employed, the agency lacks adequate management data on PASS use. For this reason, we could not accurately measure PASS program impact. We did find that many former PASS participants are earning enough income to at least reduce their SSI payments, compared with other SSI recipients, although many had worked prior to participating in the PASS program. Few, however, have earned enough to end SSI payments. In addition, nearly all concurrent beneficiaries continue to receive DI benefits after their plans end, even if they leave the SSI program, limiting the potential federal savings stemming from the PASS program.

PASS Goals and Expenditures Vary

The 380 PASSes we reviewed encompassed a wide variety of goals, including increasing hours and responsibilities at a current job, seeking a new job, or pursuing education as a step toward work. (See fig. 2.1.) About one-third of plans had education as a major component, although the level of education desired ranged from attending culinary school to pursuing a Ph.D. in philosophy. Another one-third of PASS program applicants were seeking new jobs, while about 10 percent proposed to maintain or increase their hours or responsibilities at a current job. For those individuals proposing specific occupational goals, the demands of these jobs, as well as their likely income, were highly variable. We found that many PASSes were written to help applicants achieve low-skill, low-wage service jobs, such as janitorial work, product assembly, or employment in fast-food restaurants; however, we also saw plans written to help participants become psychotherapists, computer programmers, engineers, and college professors. Some program participants’ goals were more unusual, involving self-employment in music, arts, and crafts. Self-employment was the goal in 15 percent of the PASSes we reviewed, including small businesses in tailoring, tree stump removal, and window washing. In addition, some PASS program participants were approved to support themselves as professional PASS preparers, writing plans for other disability benefit recipients for a fee. (See app. V for a sample of occupational goals listed on the approved PASSes we reviewed.)

The proposed purchases listed on PASSes varied, as did their cost. Automobiles (new and used vehicles as well as insurance, maintenance, and modification costs), tuition, and computers were common items in PASS budgets. More than 80 percent of the plans we reviewed included at least one of these items. Costs for these items ranged from a $41,000 wheelchair-modified van or thousands of dollars in highly specialized computer equipment to a $19 monthly bus pass. SSA has placed no absolute limits on the types or costs of items that PASSes can be used to purchase as long as they are necessary to achieve the work goal and reasonably priced. The wide range of approved purchases we saw included photographic film, cellular telephone service, business advertising, professional attire, job coaching, and school supplies.

The total budget also ranged considerably in the PASSes we reviewed, depending on the amount of the income excluded and the plan’s time length. The average monthly exclusion for all PASSes in December 1994 was $400, although some individuals were excluding more than $1,000 a month. Total costs associated with a single PASS could be significant; for example, one plan had a budget of $67,233 for an individual to return to work as a radiological technologist, which included items such as a standing wheelchair, a modified van and insurance, a track lift system, and a computer. Field staff in at least eight of the offices we visited raised concerns about PASS applications in which proposed purchases were exactly equal to total excludable income. Several PASS preparers confirmed that they develop budgets based on the maximum excludable income, regardless of the occupational goal.

We were not able to determine the average time length of PASSes, because extensions and end-dates were not always documented in the files we reviewed. In addition, this information is not captured in the Supplemental Security Record (SSR), the database of SSI recipients. We found, however, that half of the current exclusions as of December 1994 had been active 9 or fewer months. In addition, more than 1,700 PASSes begun in 1993 were no longer active in December 1994. No comprehensive data are currently available on the total number of PASS applications, because SSA does not track denied plans. However, staff in almost all the field offices we visited agreed that the majority of PASSes are approved.

PASS Program Not Well Defined, Growing

SSA has neither clearly articulated the objectives of the PASS program nor established criteria for evaluating whether an individual plan will be successful. This lack of clear goals is reflected in inadequate guidance to field office staff and inconsistent and inefficient PASS program administration. Our interviews revealed a wide range of standards applied by SSA field office staff and third-party PASS preparers in assessing the feasibility of individual PASSes, ranging from cessation of all disability benefits to improved quality of life. Current PASS participants constitute less than 1 percent of the working-age SSI population; nonetheless, the number of PASSes has grown by more than 500 percent in the last 5 years. As a result of congressional direction to liberally construe the PASS provision, SSA has permitted individuals to become eligible for SSI by using a PASS. Consequently, the PASS program includes primarily DI beneficiaries, many of whom use PASS to gain eligibility for SSI payments.

Lack of Clear Outcome Measures Hinders Program Administration

In establishing the PASS program, the Congress specified that the work incentive should “provide every opportunity and encouragement to the blind and disabled to return to gainful employment.” SSA headquarters staff, however, have not issued regulations translating this goal into specific outcome measures of PASS program success, choosing instead to leave the interpretation open to the field office staff who administer it. As a result, the SSA field office staff and third-party PASS preparers we interviewed used different, and sometimes conflicting, interpretations of successful outcomes when developing and reviewing individual PASSes. For example, some field office staff will not approve a PASS unless they believe it will result in the applicant leaving the disability rolls, while the preparer may have written it to give the applicant a chance to attend school and try working, but not become self-supporting.

SSA field office staff in nearly all the offices we visited said that PASS use should result in a reduction, if not cessation, of SSI benefits. While 10 of the 38 PASS preparers we interviewed shared this view, others offered broader definitions of success, including working or attending school, improved self-esteem, and fuller participation in society. Some PASS preparers and SSA staff expressed concern that immediate economic self-sufficiency was not feasible for some members of the SSI population, and that the appropriate PASS outcome depended on the individual.

PASS program guidance from SSA headquarters to the field offices contributes to confusion over the goal of the work incentive. Prior to January 1995, the POMS, SSA’s primary written guidance to field office staff who administer the PASS program, stated that the occupational objectives on PASSes must ultimately produce enough additional earned income to reduce or eliminate SSI payments. The guidance also noted that the PASS program was “not intended to subsidize a continuing level of current work activity.” In contrast, the POMS transmittal concerning PASS issued in January 1995 directed field office staff to evaluate individual PASSes in terms of the applicant’s higher earnings potential upon completion of the PASS, and weakens the link between earnings and benefits payments. In addition, this guidance includes increased on-the-job independence and decreased reliance on employment support, irrespective of earnings, as acceptable PASS goals. According to field office staff, the verbal guidance they receive from regional and headquarters staff encourages them to be liberal and err on the side of approving individual PASSes. Agency literature available to SSI recipients primarily defines the PASS program in terms of employment goals, with little or no focus on reduced or eliminated benefits, or increased earnings potential.

SSA field office staff in half the offices we visited said PASS approvals and denials were inconsistent, and nearly all field office staff expressed frustration with the inadequate guidance they received from SSA headquarters on approving or denying PASSes. Some SSA field and regional offices have developed their own guidance for approving PASSes to compensate for gaps they see in the POMS. As a result, we found that the PASS program was implemented differently by location or even by individuals in the same location, depending on the prevailing beliefs about program goals. For example, some field offices in Wisconsin use a PASS evaluation form that requires applicants to estimate their pre- and post-PASS earnings to demonstrate increased earnings capacity before they will approve a plan. Staff in other field offices said they only look to see if there is even a “remote chance” of achieving a proposed occupational goal. The basis for decisions about acceptable cost items also varies. For example, some field office staff approved computer expenditures for students without documentation that computers were required, while staff in another office denied a request for computer equipment, noting that the university the applicant planned to attend did not require students to have computers. Work incentive staff in some regional offices review PASS approvals and denials made by the field offices; however, staff in SSA’s headquarters do not provide direct oversight of this process.

Program Has Few Participants, but More Growth Predicted

PASS program participants in December 1994 represented only three-tenths of 1 percent of the working-age SSI population. Nonetheless, the number of PASSes has risen dramatically in recent years, from 1,546 in March 1990 to 10,329 in December 1994. PASS program growth has been much slower during 1995; the number of plans increased by only 169 between December 1994 and June 1995. However, SSA field staff in 15 of the 19 offices we visited predicted that the number of PASSes will continue to grow. Several PASS preparers also told us they believe that more outreach will increase PASS use. Outreach efforts, especially by outside organizations, have already increased awareness of the PASS program. For example, in the Denver area, several professional PASS preparers have established businesses that seek out clients. Since the late 1980s, individuals and organizations across the nation have assisted disability benefit recipients to understand and use work incentives, especially the PASS program. At the same time, some state agencies that provide employment services to the disabled have started to use PASSes to supplement other funds. Private agencies, too, are being encouraged to look at the PASS program as a funding source for their clients.

The potential universe of PASS program participants is significant and increasing with the recent tremendous growth in the number of federal disability benefit recipients. All 4 million DI beneficiaries are potentially eligible for a PASS. In addition, any of the 2.3 million blind or disabled adults receiving SSI with additional income or resources to exclude could potentially participate in the PASS program.

Participants Are Largely DI Beneficiaries; Many Gain SSI Eligibility Through PASS Program

The PASS program encompasses primarily DI beneficiaries, who can exclude their DI benefits under a PASS. Of the approximately 10,300 PASS participants in December 1994, about 75 percent were concurrent beneficiaries, many of whom would not receive federal SSI benefits without a PASS. In comparison, about 30 percent of disabled adults in the overall SSI program also received DI benefits. We estimated that, overall, more than 40 percent of all PASS program participants had earned or unearned income, primarily DI benefits, in excess of the eligibility level for federal SSI benefits. These individuals received, on average, $318 in monthly federal SSI payments. Without the PASS program, they would not have been eligible to receive any federal SSI payments. The federal cost of PASS program participation for these individuals who use a PASS to establish SSI eligibility is often higher than just the SSI payment, because the participants may also gain access to other means-tested benefits, such as Medicaid and food stamps, while retaining access to DI payments and Medicare. In these instances, Medicaid supplements Medicare benefits, covering deductibles, medications, and other medical costs not covered by Medicare. Nearly one-fourth of recipients whose plans started in 1994 first applied for SSI benefits that year.

PASS program participation for SSI recipients who are not concurrent beneficiaries is generally limited to those who are already working and can exclude their earned income or who receive other types of income or resources, such as an inheritance. Many SSI recipients who may benefit from the PASS program are unable to participate because they lack income or resources and cannot make the initial investments in education and skills that can be key to successful vocational rehabilitation.

SSA’s Management of the PASS Program Is Poor

Our field work suggests that SSA’s current implementation of the PASS program is poorly managed and designed. Information required of applicants is inadequate for evaluating plan feasibility. SSA field staff lack the training, guidance, and expertise to effectively review PASSes, and the PASS program competes with other field tasks, such as processing initial claims, that receive more work credit in SSA’s system for measuring office productivity.

Staff Lack Necessary Data, Expertise, and Guidance to Evaluate PASSes

POMS guidance specifically directs field office staff to evaluate applicants’ goals in light of their impairments and other disability-related factors. However, the POMS does not require much of the information that would be relevant to determine whether a work goal is feasible, including the nature of an applicant’s disability, on a PASS application. This information may not be otherwise available to field office staff. Because of this inconsistency, staff may approve or deny PASSes without knowledge of the applicant’s skills, education, work history, impairments, or even the disabling condition. Further, PASSes are not required to provide any information about the demands of the proposed job, and required skills and qualifications. We also found that diagnosis information was missing on the SSR, which is accessible by field office staff, for more than 40 percent of recipients with PASSes in December 1994. In addition, the detailed assessments of applicants’ work ability compiled by state Disability Determination Services during its reviews to decide program eligibility are often not sent to staff in SSA’s field offices.

Field office staff also lack specific training and experience in determining the vocational capabilities and needs of people with disabilities. As a result, staff in every office we visited reported that they do not feel equipped to adequately evaluate PASS work goals and expenditures. Staff in half of these field offices described the evaluation process as inconsistent between and often within offices, and some noted it was unfair to PASS program applicants. SSA headquarters staff are aware of the field staff’s concerns, which were discussed at a 1994 work group on the PASS program. Field office staff’s lack of knowledge and training is also frustrating to third-party PASS preparers; half of those we interviewed said they did not believe field office staff were qualified to make decisions about PASS feasibility. In addition, at least 14 of 38 PASS preparers raised concerns about field office staff’s lack of awareness and understanding about disability issues, including the vocational capabilities of people with disabilities. The differences in plan approvals and denials have also led some PASS preparers to “shop around” within a field office or across offices to find someone who will approve a plan that has been denied elsewhere, according to field office staff and preparers.

According to field office staff who evaluate plans, the guidance and criteria for approving and denying PASSes is inadequate, given their lack of expertise. While the POMS acknowledges that self-support is “highly subjective and often complex” to define, staff are directed to use a “common sense approach” when evaluating plans. When no licensed or accredited vocational rehabilitation agency or individual has been involved in developing a PASS, field office staff can seek outside input from a vocational rehabilitation or other employment services agency, or use their “judgment and intuition” to determine PASS feasibility. As a result, SSA field office staff can make highly individual decisions about plans based on their personal beliefs. For example, one field office staff member told us she denied a plan with the goal of writing a cookbook because she believed there were already too many cookbooks on the market. Furthermore, if they seek guidance outside of SSA, field office staff are limited to vocational agencies willing to provide evaluations of the feasibility of proposed work goals at no cost, unless the program applicant agrees to include the cost of the evaluation on his or her PASS. These agencies, however, are not required to advise SSA, and we found that some public agencies did not provide assistance to SSA field offices for individuals who were not already their clients. Field office staff also contact regional or central office work incentive staff with questions about feasibility; however, the staff in the regional and central offices are not necessarily trained in vocational rehabilitation.

The field office staff’s lack of vocational rehabilitation knowledge and the limited guidance they receive also limits their ability to evaluate whether charges for particular items in PASS budgets are reasonable or necessary. Staff in at least eight field offices said they had no basis on which to judge whether a proposed item was reasonably priced. POMS guidance directs staff to be “as pragmatic as possible” when evaluating questionable expenses or determining the relationship of an item or service to the work goal. We found that some staff used personal criteria for evaluating the appropriateness of certain costs, especially automobiles and computers. For example, one field staff member told us she denied a plan that included a $22,000 automobile because she herself could not afford a car that expensive, even with a job, so “why should someone receiving federal assistance be allowed to buy one?” Some PASS preparers reported that they were frustrated with the inconsistent and subjective criteria they believed staff used when assessing the appropriateness of expenses.

Items and services purchased with PASS funds do not need to be directly related to the claimant’s disability, but only necessary to achieve the work goal. Field office staff provided examples of expenses they considered excessive or unnecessary, including new cars and doctoral degrees, that were submitted on PASS plans and permissible under PASS guidelines. In addition, some field office staff said they have difficulty evaluating specialized or highly technical equipment with which they are not familiar. SSA headquarters has also not determined whether only new cost items related to the goal should be approved, or whether the PASS can be used to pay for existing expenses, such as car loan payments, deemed necessary to achieve the goal.

PASS Program Given Lower Priority Than Other Field Office Activities

SSA field office staff in many of the offices we visited reported that time spent administering the PASS program is not adequately reflected in SSA’s work credit system. The time necessary to thoroughly evaluate a PASS, including seeking additional information about feasibility, was estimated by field office staff as up to 8 hours or more. The work credit for reviewing PASSes submitted by individuals already entitled to SSI, which is grouped with other tasks including recording wages earned, was 6.8 minutes in June 1995. Furthermore, PASS denials receive no credit at all, yet some field office staff reported that plan denials take even longer than approvals, because of the amount of evidence needed to justify the denial. Requests from two regional offices that SSA create a separate work credit category just for the PASS program were turned down by SSA headquarters. In our interviews, few field office staff identified the PASS program as a high priority workload. Many reported that initial claims and other tasks necessary to secure or start benefits for claimants were a higher priority than PASS. Monitoring PASS program compliance is also considered to be a time-consuming effort by field office staff, especially when participants have not kept adequate records. POMS guidance on reviewing PASSes and monitoring compliance includes a number of steps that could take several hours to complete.

More than half the PASS preparers we spoke with reported significant concern about the length of time required by field offices to approve plans. POMS directs field office staff to review PASSes “as soon as possible.” SSA does not track the length of time PASS program applicants must wait for a decision on their plan. We were not able to develop an estimate because submission and approval dates were frequently not recorded on the plans we reviewed. However, we saw and heard examples of plans reviewed and approved within a day, as well as delays of several months before a response was given on a submitted PASS. Delays in approval could result in lost employment and schooling opportunities for applicants, and the slow approval process serves as a disincentive to PASS program participation, according to PASS preparers. For example, the two agencies involved in a demonstration project attempting to increase PASS use and evaluate PASS effectiveness in funding supported employment, conducted in 1989 and 1990 by the Association for Retarded Citizens of the United States, ultimately withdrew as a result of lengthy delays in approving PASSes. On the other hand, quick reviews may not effectively screen out applicants with infeasible PASSes.

PASS Program Impact Unknown

Although the PASS program has been in existence for more than 20 years, SSA has no published data on the PASS program’s effect on employment and benefits, nor has the agency maintained the type of management data necessary for measuring program impact. We attempted to evaluate the PASS program’s impact on employment among former participants. However, we were unable to adequately determine the long-term effect of PASS program participation for a number of reasons, including the fact that most PASS use has been very recent and that SSA has not maintained comprehensive historical data on PASS program participants. Furthermore, participation in the PASS program is based on self-selection, and therefore PASS program participants may well be different from other SSI and DI beneficiaries in ways that could affect their future employment and earnings, independent of the program.

On the basis of the limited data available, we examined the current status of former participants using selected economic measures of potential success—increasing earnings, reducing SSI benefits, and leaving the disability rolls. Among the SSI population, former PASS program participants were more likely than other SSI recipients to have sufficient earnings to reduce their SSI benefits, but few left the rolls as a result of their earnings. The PASS population was also likely to have been working before using the work incentive. Nearly half had earnings higher than before they had the PASS. Success in returning DI beneficiaries to work was negligible. Generally, earnings among concurrent beneficiaries who were former PASS program participants were not high enough to terminate DI benefits. While many concurrent beneficiaries we reviewed left the SSI program after their PASS ended, nearly all were still receiving their DI benefits in May 1995. We estimated the cost of additional cash payments to PASS participants in January 1995 as $2.6 million, or about $30 million annually.

SSA Lacks Outcome Data on PASS Program

The lack of clear outcome measures prevents SSA from evaluating the PASS program’s success in helping recipients return to work. Consequently, the agency does not have data on the PASS program’s effect on employment during the more than two decades since its inception and thus cannot make informed decisions on and changes to the program, such as developing appropriate criteria for setting time limits on PASSes or determining the best candidates to target, as well as improving program implementation. While SSA’s current database for the SSI program, the SSR, includes some characteristics of PASS program participants, it does not systematically track PASS denials, PASSes that exclude only resources and not income, and the occupational objectives and budgets listed on plans. Therefore, SSA also does not know, for example, the acceptance and denial rates for PASS program applicants, nor the total number of applicants or active plans. SSA officials responsible for the PASS program are considering changes to the way program data are tracked, which would capture some of this information, including denials and resource-only exclusions.

Former Participants More Likely to Work Than Other SSI Recipients; Few Left SSI Rolls

Former PASS participants who remained in the SSI program were more likely to have earnings that reduced their SSI cash payments than were other SSI recipients. We examined December 1994 earnings and benefit data for 4,751 former PASS program participants whose plans had ended by that date. We excluded from our analysis concurrent former PASS participants who stopped receiving SSI payments after their PASS exclusion ended. More than one-third of the 4,751 were reporting earnings to the SSI program, and the majority of these earned enough income to at least partially reduce their SSI payment amount. Half of the wage earners still receiving benefits reported wages of $360 or more for the month, which would result in a reduction in monthly benefits of about $147. About one-fifth of the 4,751 former PASS participants were earning more than $500, SSA’s measure of substantial gainful employment for most claimants. SSI benefits and reported earnings received before program participation were not available for all of the former PASS holders, and therefore we could not determine whether their earnings had increased or benefits had decreased after participating in the PASS program. Similarly, we could not estimate the cost of PASS program participation for this group of 4,751 former participants.

In contrast to the experience of former PASS participants, only about 8 percent of other working-age disabled SSI recipients reported any earnings during December 1994, averaging $300 per person. Similarly, while 14 percent of the 4,751 former PASS program participants had earnings high enough to end their cash benefits altogether, and were receiving Medicaid benefits only, only about 1 percent of other working-age disabled SSI recipients earned this much.

Very few former PASS program participants left the SSI rolls in the relatively short time frames for which data were available. Among the SSI-only former program participants we reviewed, about 160 had stopped receiving SSI or Medicaid by December 1994 for any income-related reason. They represented only about 2.5 percent of the 6,582 PASS program participants 1991 through 1993, including those concurrent beneficiaries who left SSI after their PASSes ended because their unearned income was too high. This low rate of leaving the SSI rolls by working for former PASS program participants is consistent with the overall experience of both the SSI and DI programs, which have traditionally seen low rates of return to work. However, even very limited workforce participation by SSI recipients can accrue significant federal savings. For example, the reduced benefits paid to all working recipients in January 1995, including former PASS program participants, lowered SSI cash payments by $18.6 million in that month alone.

Many Participants Had Prior Earnings; Amount Often Increased After PASS Ended

We found that many PASS program participants had already worked while on the rolls. Because SSI preprogram benefit and earnings data were not available for most PASS program participants, we examined the annual earnings data reported to SSA for all workers, regardless of disability status, to determine whether PASS program participants had been working before starting their PASSes. About half of both current and former PASS program participants we analyzed had earnings the year before their plans began, averaging between $2,000 and $3,000.

Although we did not determine whether earnings increased as a result of the PASS, former participants’ annual earnings were frequently higher in the year their plans ended. We reviewed pre-and post-PASS annual earnings data for 3,659 recipients whose plans had ended by December 1993. Approximately 55 percent had earnings in the year before their PASS, and about 60 percent had earnings in 1993. Nearly half were earning more in 1993 than they did before they had a PASS, including those with no prior earnings. The median increase in annual earnings for those with any earnings was more than $3,000. In addition, about one-fifth of the entire group had no earnings the year before their PASS started, but were working in 1993.

PASS Program Participation Has Limited Impact on DI Program

PASS program participation had almost no financial impact on the DI program. Given the high benefit paid to many DI beneficiaries—$660 a month, on average—a successful PASS program offers a chance for significant DI trust fund savings if participants leave the DI rolls, even with the cost of additional SSI benefits. However, while approximately 40 percent of concurrent beneficiaries left the SSI rolls after their PASS exclusions ended, about 93 percent were still receiving their DI benefits in the following year. And for the remaining 7 percent, many had DI benefits terminated for reasons other than earnings, such as death. Furthermore, unlike the SSI program, DI benefits are not offset by monthly earnings below $500, and previous GAO analysis has shown that earnings above this amount may not be economically rational for DI beneficiaries who face the loss of substantial cash and medical benefits. For example, a DI beneficiary receiving $700 or $800 a month in cash benefits, plus Medicare benefits, could lose both for earning as little as $501 a month.

Oversight and Internal Control Weaknesses Leave Program Vulnerable to Abuse

While the PASS work incentive provision is designed to be flexible and individual, oversight from SSA headquarters has been lax and required little accountability, leaving the PASS program open to abuse. Although SSA has established few required elements for PASS plans, we found evidence of noncompliance even with these minimal standards. In addition, we found that SSA’s guidance to its field staff on administering the PASS program, as discussed in chapter 2, also lacks several internal control measures necessary to adequately ensure that expenditures are appropriate and beneficial. Specifically, SSA has no standard application form or effective time limits for PASSes, no penalties for willful noncompliance with the PASS program, and no standards for third-party PASS preparers. These internal control weaknesses result in SSA having little or no reasonable assurance that the PASS program is being used appropriately. While SSA headquarters is aware of many of these inadequacies and has established a work group to address some, efforts to date are not sufficient to protect taxpayer dollars and to restore public confidence.

PASS Requirements Minimal, Not Always Met

SSA regulations require only minimal information to be provided in PASSes, yet we found that even this information was not always present. According to regulations, the PASS must be in writing and (1) state a specific occupational goal, (2) disclose the amount of money the applicant has and will receive, (3) specify how this money will be spent to attain his or her occupational goal, and (4) explain how the PASS money will be kept separate from the applicant’s other funds. SSA’s PASS program guidance also states that PASSes should be “as descriptive as possible about the occupational objective.” In addition, the occupational objective must be a job or profession, or increased hours or responsibilities at a job already held by the applicant; completion of education/training programs or the purchase of transportation are not occupational objectives, although they may be a means to attain an objective.

Field office staff sometimes approve PASSes even when these minimum standards are not met. Oversight of field office approvals and denials varies among the 10 regional offices; not all regions review the decisions made by their field offices. Our analysis of 366 approved PASSes found at least 20 that did not have acceptable occupational goals as defined in the most recent POMS. These included 11 approved plans with objectives solely to complete education/training programs, 4 plans with objectives to purchase automobiles and/or maintain car payments, and 5 plans in which no job or profession was identified. One of these plans, for example, stated that a PASS was necessary to “obtain a second job.”

Our review of PASSes also revealed plans that did not state the amount of money recipients had and would receive, nor how the PASS money would be kept separate from the applicant’s other funds. For example, 27 of the PASSes we reviewed did not show what money and other resources the PASS program applicant had or would receive to use in attaining the occupational objective. Without this information, SSA field office staff cannot determine whether the occupational goal is economically feasible. Further, at least 75—or about 20 percent—of the PASSes did not describe how the applicant would keep income/resources separate from other assets. If PASS funds are commingled with other benefits in the same account, it is difficult for SSA field office staff to measure compliance and ensure that PASS funds are spent only for approved items.

PASS Internal Controls Insufficient to Guarantee Taxpayer Protection

SSA’s internal controls over the PASS program result in only limited guarantees that program moneys are being used appropriately and that taxpayer dollars are being spent judiciously. SSA regional and field office staff raised concerns about the integrity of the PASS program, noting that in its current state the program may be vulnerable to abuse. While not all of the internal control weaknesses we found have a proven adverse impact, each contributes to the potential for misuse. Internal control weaknesses we noted included the lack of a standard application form, no effective limits on the length of time a PASS may be in effect, few penalties for willful noncompliance with the PASS program, infrequent and nonstandardized compliance reviews, and inadequate controls over third-party PASS preparers. While SSA headquarters staff are aware of field office concerns, their efforts to date, including an internal work group on the PASS program and a new version of the POMS, have not sufficiently addressed them.

No Standard Application Form Required

SSA regulations do not require a standard PASS program application form, and as a result, PASSes vary in specificity and completeness both within and across SSA field offices nationwide. Further, some SSA field office staff told us that many of the details they would find helpful for evaluating PASSes were often not provided on plans. SSA has developed a sample form, included in a pamphlet for SSI recipients, which captures the minimum of required types of information necessary to process the application. (See app. I.) However, applicants are not required to use this form. PASSes we reviewed ranged from a few sentences to very detailed business plans. For example, one PASS program applicant submitted a nine-page plan to open a business providing on-site fish aquarium maintenance for offices and other business establishments. Another presented an application to become a self-employed seamstress, which included an assessment of the market demand for her services and a detailed description of the need for proposed purchases. We also saw PASSes consisting of a few words jotted on notebook paper as well as plans lacking any specific occupational goal or discussion of the need for proposed purchases.

No Real Limits on Length, Number of PASSes

Current limits on the length of PASSes are being reviewed by SSA and may soon be removed in response to a congressional mandate that SSA develop individualized criteria for determining the time limit of a plan. Program regulations provide that PASSes be approved for an initial period of up to 18 months. Changes and extensions must be approved by SSA, with a 36-month maximum for general occupational goals and 48 months maximum for PASSes that require lengthy educational or training programs. These time limits have been successfully challenged in one federal district court as “unreasonable” and without consideration of individual needs,and some PASS advocates have actively lobbied to have them removed. In 1992, the SSI Modernization Project recommended that the SSA Commissioner remove the regulatory limit on PASS length, and an internal SSA memo recommended allowing extensions beyond the existing limits, noting that time limits could be viewed as an additional barrier that keeps people with disabilities from achieving self-support. These recommendations were never implemented. Instead, the Social Security Independence and Program Improvements Act of 1994 (P.L. 103-296) required that SSA reexamine criteria for limits on the length of times PASSes may be active by taking into account reasonable individual needs. In an emergency teletype dated January 1995, SSA instructed field offices to grant 6-month extensions to PASS program participants who have exceeded the 36- or 48-month time limits, as long as the individual is in compliance and still needs to exclude income or resources to achieve his or her goal. Regulations currently under development will likely remove absolute time limits on the length of time a PASS may be in effect, according to SSA officials.

Because the PASS program is operating without clearly defined objectives and other internal controls, removing all time limits for PASS completion would likely exacerbate the program’s vulnerability to misuse. Most SSA region and field office staff we interviewed who administer the PASS program do not want all PASS time limits eliminated. Some staff told us they believed that without any time limits PASS program participants may abuse the provision, staying out of work indefinitely and continuing to receive benefits such as Medicaid as well as increased SSI payments; others said that field office staff lack the background to make assessments of reasonable lengths of time for proposed PASSes in light of the applicant’s disability.

No limit is placed on the number of approved PASSes an individual can have, provided that each one involves a different occupational objective. While only one PASS can be in effect at a time, a participant could have an unlimited number of subsequent plans if the first is unsuccessful. Individuals can even have a new plan if they were found to be deliberately noncompliant on a previous plan. While few in number, we saw instances where individuals were on their second or third PASS. For example, we reviewed one case in which a recipient had previous PASSes to be a word processor and receive a vocational evaluation, and now was pursuing a third goal of being a florist.

Guidance on Acceptable Expenditures Unclear

The lack of adequate guidance on acceptable PASS expenditures means that SSA cannot provide reasonable assurance that PASS funds are being spent appropriately. While POMS states that PASSes must explain the necessity of each proposed purchase in the PASS budget, and that these items must be reasonably priced (moderate or fair and not extreme or excessive within the geographic location), it offers insufficient specific guidance on allowable PASS expenditures, according to field office staff. While the current POMS provides examples of acceptable expenditures such as tuition, books, uniforms, equipment, child care, and attendant care that are acceptable if they are found necessary and reasonably priced, it places no absolute limits on the types of items that can be approved, nor their costs. For example, the POMS specifies only that a luxury or sports car would “rarely” be appropriate, but sets no limit on the amount that can be spent on an automobile. Furthermore, the standards for justifying necessity or cost have not been specified, leaving them open to individual interpretation. Some SSA field office staff cited examples of approved PASSes that they believed did not contain evidence that the proposed expenditure items were reasonably priced and/or in direct relation to the proposed occupational goal. Not surprisingly, approved and denied expenditures in the plans we examined were inconsistent. For example, the proposed purchase of a $13,000 automobile in one plan was denied on the basis that the applicant did not provide sufficient evidence to justify the car’s cost; in another plan, the purchase of an automobile was denied altogether because the plan did not specify why the purchase of any automobile was necessary to achieve the occupational goal. In contrast, we also saw plans in which similarly expensive vehicles were approved, or in which less justification for purchasing an automobile was provided. Some field office staff also told us that some individuals who helped prepare PASSes were occasionally unwilling to provide documentation to support proposed expenditures.

Compliance Monitoring Is Infrequent and Nonstandardized

The periodic reviews SSA requires to determine whether PASS program participants are complying with their plans are infrequent and nonstandardized. These reviews are intended to ensure adherence to the spending plan and to determine whether the occupational objective has been reached or whether the participant is meeting plan milestones. Recent changes to the POMS require compliance reviews at least every 12 months, compared with the previous requirement of at least every 18 months, and require reviews every 6 months under certain circumstances. SSA field staff in most offices we visited, as well as several third-party PASS preparers, told us that frequent reviews would help prevent noncompliance and the resulting overpayments from additional SSI payments to PASS program participants not following their plans. In addition, staff in at least four offices told us they review plans more frequently than the POMS guidelines recommend if they have concerns about the feasibility of a plan. One field office staff member, for example, said that she performs early compliance reviews for plans that include high expenditures, such as a $20,000 car.

SSA headquarters, however, does not have specific requirements about how compliance reviews should be done. The POMS directs field office staff to conduct the review in a manner convenient to the individual, either in person, by mail, or over the telephone. We found that all three methods were used. Ensuring compliance consists of reconciling actual expenditures with funds set aside under a plan and determining whether the program participant has reached his or her goal. Field office staff cited examples of PASS program participants submitting grocery bags or shoe boxes of receipts to be reconciled. In addition, according to SSA field office staff, many PASS program participants do not understand how to account for their funds, and some have not kept records of purchases. Little specific information about compliance reviews is included in the notification letter sent to individuals when their PASS is approved. Furthermore, some third-party PASS preparers told us that proper accounting of expenditures can be a difficult task for some program participants.

Few Penalties Exist for Willful Noncompliance

Guidance to field office staff does not make a distinction between willful noncompliance and noncompliance for other reasons. While the POMS specifies that a series of unsuccessful plans “may be grounds” for questioning the feasibility of a new PASS, there are no prohibitions on subsequent PASSes for individuals who have abandoned or willfully not complied with previous ones. Materials from one organization that prepares PASSes, for example, tells prospective clients that “there is no penalty for not obtaining or maintaining employment after participating in PASS.” POMS directs SSA field office staff to ask the participant for evidence of PASS expenditures. If the participant provides none, the field office staff must obtain authorization from the participant to contact appropriate third parties to verify savings and purchases. Therefore, SSA field office staff must rely on the cooperation of the program participant and the third party to obtain needed evidence.

SSA headquarters guidance is unclear about actions field office staff should take if a PASS program participant is noncompliant with his or her plan. Although SSA regulations require all changes to PASSes to receive prior SSA approval, if during a compliance review a PASS program participant is found to be out of compliance with the terms of the PASS, the POMS gives the participant the opportunity to amend the plan and return to compliance. Specifically, if the PASS program participant has not met the occupational goal or is not in compliance, the POMS states that field office staff should amend the PASS retroactively to fit the participant’s circumstances if this will result in compliance. For example, if an individual proposes to use a PASS to attend college as an engineering student and subsequently changes majors to journalism, the plan can be amended to reflect this change if this would make the program participant compliant with his or her amended plan. Similarly, if a PASS budget includes the purchase of a used car and the participant leases a new car instead, the plan can also be changed retroactively.

SSA’s POMS also does not encourage terminating PASSes for recipient noncompliance. If the PASS cannot be amended or amendment would not result in compliance, POMS recommends suspending the PASS. Terminating a PASS is recommended only as a last option. If they are found noncompliant, program participants may be charged with repaying the additional benefits they received during their PASS. However, some SSA field office staff we interviewed were unaware they could collect these overpayments from individuals who had not complied with their plans.

The amount of overpaid funds that can be withheld by SSA from a subsequent SSI check is limited to 10 percent of the total benefit, unless the claimant agrees to a higher amount.

SSA Lacks Internal Controls Over Third-Party PASS Preparers

SSA guidance states that anyone can help prepare a PASS, including a vocational rehabilitation counselor, an organization that helps people with disabilities, an employer, a friend or relative, or SSA. Of the 380 PASSes we reviewed, more than half were prepared by third parties. Although SSA staff will help disability benefit recipients to fill out a plan free of charge, field office staff infrequently prepare PASSes. Indeed, SSA field office staff prepared only 14 of the 380 PASSes we reviewed. Recognizing the need for outside help, SSA field offices are to maintain a referral list of organizations that can assist people with writing their PASS, for a fee or not, although it does not endorse any organization.

Although SSA has determined that anyone can help prepare a PASS, it did not establish minimum standards for third-party PASS preparation. As a result, the services provided by third-party PASS preparers vary greatly. Some preparers we interviewed provide extensive assistance and resources to their clients to determine their goals and needed expenses, including vocational evaluations of their abilities and needs; others provide only guidance to clients, directing them to do their own research. In addition, the amount of vocational rehabilitation expertise and experience varied considerably among the PASS preparers we interviewed. Some were certified vocational rehabilitation professionals or had graduate training; others had no special experience or training in assisting people with disabilities with obtaining or maintaining work. In the last several years, a number of SSI and DI recipients have received training, generally funded by a PASS, on preparing PASSes for a fee in several states, including Iowa, Oregon, Maine, and Colorado.

The fees charged by preparers also range considerably. For example, the median fee charged among the PASSes we reviewed was $200, while the highest fee for PASS preparation and monitoring was $832. Some PASS preparers charge fees for PASS preparation as well as additional fees for other services, such as PASS amendments and monitoring. Other PASS preparers charge no fees but provide some or all of the services mentioned. POMS clearly states that fees are acceptable PASS expenditure items, but it is not clear whether SSA anticipated the amount of fees PASS preparers would charge in some cases and whether SSA intended to allow the applicants to claim the total amount as a planned PASS expenditure that would be offset by additional SSI payments. According to the current POMS, PASS preparation fees should be evaluated on the basis of the preparer’s involvement in formulating the plan, including the type of work done and number of hours. However, the absence of preparer standards and qualifications and the lack of nationwide SSA guidelines on appropriate charges make this guidance difficult for SSA field staff to administer. At least one SSA region issued its own guidance on acceptable fee amounts, recommending limits of $25 an hour and a total of no more than $500 for an individual PASS. Other regions approve fees in excess of these recommended limits.

SSA lacks a uniform policy toward third-party PASS preparers, and conflict exists between some preparers and the SSA field staff. While some PASS preparers encourage good relationships with SSA, others have adversarial relations with local field offices. The lack of written objectives and a clear definition of success creates the potential for disagreement and conflict regarding PASS approvals and denials. We found in at least six offices we visited that this conflict was disruptive to field office operations.

Most of the PASS preparers we interviewed expressed frustration with the inconsistencies in PASS approvals and denials across field offices where they submit plans. At the same time, some SSA field office staff told us they believed that some third-party preparers wrote “ridiculous” PASSes, unlikely to result in economic self-support, or simply designed to maximize an individual’s purchases or the preparer’s earnings. Field office staff and PASS preparers we spoke with were sometimes divided as to whether individuals who request a PASS should have a high probability of achieving the occupational goal, or if it should just be theoretically possible. Some PASS preparers we spoke with believed that nearly all PASSes are feasible, citing the requirement that the PASS program be liberally interpreted. One PASS preparer told us, for example, that the PASS program is an individual’s opportunity “to pursue their dream.” Another said he encourages his clients to “shoot for the stars” when developing a PASS.

Staff in at least nine SSA field offices we visited said that they felt pressured by third-party PASS preparers to approve PASSes. A few third-party preparers said they use tactics such as repeated calls to SSA field offices, involvement of advocacy groups, publicity, and letters to local congressional representatives to pressure field office staff to approve plans. Tension between PASS preparers and SSA field office staff may also arise because PASS preparers sometimes get paid their fee only if a PASS is approved.

SSA has no internal controls to prevent conflicts of interest on the part of third-party preparers. For example, some PASS preparers also provide vocational and rehabilitation services for people with disabilities, and may write PASSes to pay for the services they also provide. We saw plans, for example, written to fund job coaching or independent living services provided by the agency developing the PASS.

SSA Is Aware of Internal Control Weaknesses but Has Taken Little Action

SSA is aware of and is trying to address some, but not all, of the internal control weaknesses present in the PASS program. Many are detailed in a 1994 internal SSA PASS program strategy paper. In addition, SSA issued new POMS guidance on the PASS program in January 1995 in an attempt to provide field office staff with better control over the program. Nonetheless, field office staff in nearly every office we visited reported that SSA’s guidance on administering the PASS program still does not provide them with enough specifics for approving and denying plans. In September 1994, SSA assembled a work group to address various PASS program issues, including the role of third-party PASS preparers and field office staff’s evaluation of plans. This group reconvened in August 1995 to review data from an internal SSA study of the PASS program conducted by the Office of Program Integrity Review and to address several related policy issues stemming from this study. SSA officials responsible for the PASS program told us they are currently considering a number of regulatory and policy options resulting from this group. In the near future, SSA plans to disseminate materials to educate PASS program participants and third-party preparers about PASS rules and responsibilities, but this will not address the issues of third-party preparer qualifications, services provided, fees charged, or conflicts of interest.

Conclusions, Matter for Congressional Consideration, and Recommendations

SSA has done a poor job implementing and managing the PASS program. The PASS program is small, comprising less than three-tenths of 1 percent of the working-age disabled SSI population; however, SSA pays about $30 million in additional cash benefits to PASS program participants annually, not including medical and other benefits. Moreover, the large potential for future growth merits attention now to serious management and internal control weaknesses.

As a result of the PASS program’s design, more than 40 percent of all program participants had income, primarily DI benefits, that exceeded SSI standards and used their PASS to gain eligibility for federal SSI payments. These individuals maximize their federal benefits while participating in the PASS program, but almost none leave the DI rolls as a result of work. In addition, SSA has allowed PASS preparation and monitoring fees paid to third parties to be disregarded when calculating benefit amounts and has neither placed limits on the amount of such fees nor set standards for what services those fees should cover. Administrative action on these issues by SSA may well result in legal challenge because of SSA’s long-standing practices of allowing DI beneficiaries to use the PASS program as a means for gaining SSI eligibility and of allowing fees to third-party preparers as PASS expenses.

SSA has not translated the Congress’ broad goals for the PASS work incentive into a coherent program design, and it has not provided adequate criteria or guidance to field offices charged with administering the program. In following the congressional directive that the work incentive be “liberally construed,” SSA has placed few limits on the program, such as stringent criteria for assessing whether an individual PASS work goal is feasible and whether proposed expenses are appropriate. SSA has also not developed outcome measures to evaluate the program’s effect on participants’ return to work. At the same time, field office staff who administer the PASS program receive inadequate training, information, and credit for this task.

Finally, SSA has not addressed internal control weaknesses that have left the program vulnerable to abuse and undermined program integrity. The PASS program lacks even minimal controls to provide reasonable assurance that additional funds are being spent appropriately and to safeguard against fraud and abuse. Currently, the lack of a standardized application form or compliance review process results in inconsistent and inequitable implementation, and insufficient guidelines on expenditures and lack of penalties for willful noncompliance make the PASS program a potential target for abuse. Further, while third-party PASS preparers may play an important role in assisting disability benefit recipients, some of the services provided and fees received could create conflicts of interest and additional potential for abuse. Through its recently assembled work group, SSA is planning to address some of the design and internal control weaknesses we identified, but it is too early to determine whether SSA’s actions will be effective.

Matter for Congressional Consideration

The Congress may wish to consider whether individuals otherwise financially ineligible for SSI because their DI benefits or other income exceeds the eligibility threshold should continue to gain eligibility for SSI through the PASS program.

Recommendations

SSA needs to make major improvements in the management of the PASS program to achieve more consistent administration, better support field staff, collect data sufficient to control and evaluate the program, and provide internal controls against program waste and abuse. We recommend that the Commissioner take the following actions, or, if necessary, seek legislation to do the following: clarify the goals of the PASS program; decide whether fees paid to third parties should continue to be disregarded when calculating benefit payment amounts and whether the amount of disregarded fees should be capped; standardize the PASS program, including the application, reporting guidelines on expenditures for compliance reviews, and informational and educational materials for PASS preparers; improve support to field staff, including enhancing their ability to evaluate the feasibility of proposed work goals, and requiring PASSes to incorporate additional data relevant to determining their feasibility, including the applicant’s disability, previous work experience, if any, and education; gather additional management data on PASS program participation and impact, and use these data to evaluate the impact of PASS program participation on employment; and strengthen internal controls by establishing more specific guidelines on acceptable PASS expenditures, developing penalties for willful noncompliance with the PASS program, including a determination of whether subsequent plans are permissible, examining the role of third-party preparers, including their potential financial conflicts of interest, and considering the strength of existing safeguards against abuse when determining the appropriate limits on the length and number of PASSes individual participants may have.

SSA’s Comments and Our Evaluation

SSA generally concurred with our recommendations, and cited in its comments actions it intends to take to address them, including such actions as developing a standardized application form and providing improved support to field office staff. We deleted a recommendation in our draft report regarding the work credit field office staff receive for PASS tasks, because of the progress SSA has made in this area. SSA commented that it had limited statutory authority to address all of our recommendations. As we had stated in our recommendations, SSA may find it necessary to seek legislation to implement program changes. More details on SSA’s specific proposed actions are included in appendix VI, as well as a full copy of SSA’s comments and our response.