Waste of the Day: Bigtime Disability Payouts May Stop People from Working, Report Finds

Topline: Some disabled Americans on Social Security aren’t out of work solely because of their medical condition. Social Security payments themselves may “also contribute to disability beneficiaries’ reluctance to work,” according to a new report from the Government Accountability Office.

Are disability payments higher than one could earn as wages and salary?

Key facts: Social Security paid $170 billion in disability benefits to 11 million people last year.

The GAO identified three issues with those payments that they say “disincentivize” beneficiaries from finding jobs.

The first reason is perhaps the most obvious: by returning to work, disability beneficiaries can lose some or all of their Social Security benefits and may end up with less income than if they were unemployed. They could also lose their Medicare or Medicaid coverage.

Social Security pays only for total disability — there are no benefits for partial disability or short-term disability.

If a person claims to be disabled and is working and earning more than $1,550 per month, they are not eligible for disability insurance payments. The Social Security Advisory Board has called this a “tax on work” that discourages employment.

Disabled Americans may also be hesitant to find work because potential benefit overpayments can leave them in debt, according to the GAO.

Between 70 and 80 percent of disabled individuals who return to work end up receiving too much money from Social Security because administrators often take too long to adjust benefit amounts.

Social Security then demands repayment once the mistakes are found, but sometimes the money has already been spent and the beneficiary struggles to refund it.

Complex rules for returning to work

The rules for returning to work are also so complicated that some Americans don’t understand them and never bother looking for a job.

One disability advocate cited in the GAO report said the laws in the 60-page rulebook are “so numerous and complex” that even most Social Security employees can’t grasp them.

Search all federal, state and local government salaries and vendor spending with the AI search bot, Benjamin, at OpenTheBooks.com.

Background: Disabled Americans can be eligible for both Disability Insurance and Supplemental Security Income.

OpenTheBooks found that from 2021 to 2022, the Supplemental Security Income fund mistakenly sent out $10.6 billion in “improper payments” to the wrong person or for the wrong amount.

Disability Insurance, together with Survivors and Old-Age Insurance, lost $5 billion to improper payments.

Only about 20% of improper Social Security payments were recaptured.

Summary: Congress has previously acknowledged the dangers of the so-called “benefits cliff” in Social Security. Changes are needed to encourage recipients to find work without penalizing them for doing so.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

This article was originally published by RealClearInvestigations and made available via RealClearWire.