The DI program was established in 1956 to provide monthly cash benefits to individuals unable to work because of severe long-term disability. Cash benefits are payable monthly, as long as the worker remains eligible for benefits, until the worker reaches full retirement age or dies. In fiscal year 2011, more than 10 million beneficiaries received DI benefits exceeding $128 billion, and the program’s average monthly benefit was about $926. 42 U.S.C. § 423 and 20 C.F.R. § 404.1572. deceased, retired, or considered eligible for disability benefits, meaning one disability beneficiary can generate multiple monthly disability payments for dependents. To help ensure that SSA does not pay benefits to persons who do not have long-term disabilities, a DI program statute requires individuals to serve a 5-month waiting period prior to receiving DI benefits. The waiting period begins in the first full month in which the individual has been under a disability and continues for the next 4 consecutive months.determinable impairment that prevents the individual from earning SGA- level wages throughout a period of 5 consecutive calendar months. As shown in figure 1, if an individual has substantial earnings from work during any month of the waiting period, the individual is considered to be not disabled and therefore ineligible for DI benefits, and any DI payments SSA makes are potentially improper. On the basis of our analysis of SSA data on individuals who were DI beneficiaries as of December 2010 and earnings data from the NDNH, we estimate that SSA made $1.29 billion in DI benefit payments that were potentially improper to about 36,000 individuals as of January 2013. Our estimate for the amount of payments that were potentially improper has a margin of error of plus or minus $352 million, meaning the actual amount of payments that were potentially improper could be as low as $936 million and as high as $1.64 billion with a 95 percent level of confidence.Our estimate for the number of individuals has a margin of error of plus or minus 7,000 individuals, meaning the actual number of individuals to whom SSA made payments that were potentially improper could be as low as 29,000 and as high as 43,000 with a 95 percent level of confidence. As shown in figure 3, the estimated 36,000 DI beneficiaries receiving potential overpayments represent about 0.4 percent of all primary DI beneficiaries at that time. Our analysis identifies individuals who received DI benefits that were potentially improper due to work activity performed (1) during the 5-month waiting period, or (2) beyond the 9-month trial work period and the grace period. It is important to note that it is not possible to determine from data analysis alone the extent to which SSA made improper disability benefit payments to these individuals. To adequately assess an individual’s work status, a detailed evaluation of all the facts and circumstances must be conducted for each beneficiary. This evaluation would include contacting the beneficiary and the beneficiary’s employer to gather information on certain impairment-related work expenses, such as transportation costs and attendant care services, which are not considered in our analysis. On the basis of this additional information, SSA can determine whether the individual is entitled to continue to receive disability benefits or have such payments suspended. As described below, SSA had identified and established overpayments for some of the individuals we reviewed at the time of our audit. However, SSA had not identified potentially disqualifying work activity for other individuals we reviewed at the time of our audit. We estimate that SSA made payments that were potentially improper to about 21,000 individuals who were DI beneficiaries in 2010 and who had substantial earnings from work during the 5-month waiting period, resulting in potential overpayments of $920 million as of January 2013. Our estimate for the amount of payments that were potentially improper due to work activity during the waiting period has a margin of error of plus or minus $348 million, meaning the actual amount of payments that were potentially improper due to work activity during the waiting period could be as low as $571 million and as high as $1.27 billion with a 95 percent Our estimate for the number of individuals has a level of confidence.margin of error of plus or minus 7,000 individuals, meaning the actual number of individuals to whom SSA made payments that were potentially improper could be as low as 14,000 and as high as 28,000 with a 95 percent level of confidence. The exact number of individuals who received improper disability payments and the exact amount of improper payments made to those individuals cannot be determined without detailed case investigations by SSA. See appendix II for more information on the statistical estimations of overpayments for these populations. Specifically, these three beneficiaries were randomly selected from those in our sample with SGA-level earnings during the waiting period and additional SGA-level earnings after the waiting period that were earned within 1 year of their alleged disability onset date. According to SSA policy, when a beneficiary returns to work less than 1 year after onset it may indicate the 12-month duration requirement for disability was not met and thus the beneficiary’s disability claim must be denied. these examples cannot be projected to the population of individuals receiving potential DI benefit overpayments. As mentioned earlier, individuals are required to serve a 5-month waiting period prior to receiving DI benefits to ensure that SSA does not pay benefits to persons who do not have long-term disabilities. Specifically, substantial earnings from work during the 5-month waiting period may indicate that individuals are not considered disabled and therefore are not entitled to DI benefits. Thus, if SSA discovers substantial earnings from work during the waiting period prior to adjudicating the disability claim, SSA will deny the disability claim. SSA may also reopen previously awarded disability claims by revising the decision to a denial of benefits after providing due process rights. Additionally, SSA’s policies allow it the option of considering a later disability-onset date rather than denying the disability claim if it discovers the SGA-level work activity after the SGA subsequently stops. According to SSA guidance, an unsuccessful work attempt during the waiting period will not preclude a finding of disability. Waiting Period Example 1: Beneficiary Did Not Report All Earnings, SSA’s Enforcement Operation Did Not Generate Alert, and SSA Applied Trial Work Period Rather than Waiting Period Program Rules—Potential Overpayment of $90,000 The beneficiary filed for benefits in November 2009 while he had substantial earnings from working as a physician. He had substantial earnings from work in all 5 months of the waiting period, as much as $22,000 monthly, and continued to have substantial earnings from work in the month he started receiving benefits. As mentioned, SSA’s policies allow it the option of considering a later disability-onset date rather than denying the disability claim when it discovers SGA-level earnings during the waiting period. According to this SSA guidance, work activity of 6 months or less can be considered an “unsuccessful work attempt” during the waiting period, and will not preclude a finding of disability. During his initial claims interview, the beneficiary told SSA that he worked for only 2 months during the waiting period, a period short enough to be considered an unsuccessful work attempt. However, SSA did not verify the beneficiary’s wages with his employer and approved the individual for benefits beginning in January 2010. In contrast, the wages we confirmed with the beneficiary’s employer indicate that the beneficiary had earnings continuously above the SGA level for every month of the year that he applied for and was approved for benefits, including all 5 months of the waiting period. Further, because these earnings were continuously above the SGA level for more than 6 months, SSA policy indicates that his work activity cannot be considered an unsuccessful work attempt. As such, this individual’s work activity indicates that he was not disabled, and therefore was ineligible for benefits. Additionally, SSA’s enforcement operation did not generate an alert for his work activity during the waiting-period months in 2009 because his first benefit payment was in January 2010. According to SSA officials, the enforcement operation will only generate an earnings alert for a year in which a beneficiary receives a payment. In this example, because DI benefit payments began in 2010, and the waiting period was during the year prior to the first payment, no earnings alert was generated. In 2011, SSA initiated a work-related continuing disability review (CDR) as a result of an earnings alert for work activity after the waiting period. As mentioned, SSA conducts CDRs to determine if beneficiaries are working above the SGA level. However, during the CDR, SSA program staff did not request and verify wages from the beneficiary’s employer, nor did staff apply program rules regarding work activity during the waiting period. Instead, the CDR considered the work activity under the trial work period rules and determined that benefits should continue. Because the beneficiary’s impairment did not prevent him from earning SGA-level wages during the waiting period and his SGA continued after the waiting period, SSA policies indicate that SSA should have denied the individual benefits when his case was adjudicated, or reopened the determination after adjudication and revised the claim to a denial of benefits, which would have resulted in an overpayment of all benefits previously paid. As such, we estimate that SSA made $90,000 in cash benefit payments that were potentially improper to this individual over a period more than 3 years. As of May 2013, SSA had not detected or assessed any overpayments for the beneficiary and continued to pay monthly DI benefits of about $2,500. SSA officials told us they plan to conduct follow-up work on this case on the basis of the information we provided.