Legislation Is Needed To Ensure That Cost-of-Living Increases in Federal Programs Will Be Considered on a More Timely Basis in Computing Supplemental Security Income Benefits

GAO reviewed the accounting system of the Supplemental Security Income (SSI) benefits program.

Benefits are based on a recipient's expected income during the coming 3 months. The Social Security Administration estimated that overpayments resulting from this accounting method would total about $60 million in fiscal year 1982. The Omnibus Budget Reconciliation Act mandated that SSI benefits be calculated on a monthly retrospective basis to reduce overpayments. Under this accounting method, the benefits for a particular month would be determined on the basis of the first or, at the discretion of the Secretary of Health and Human Services (HHS), the second month preceding the month of the benefit payment. The system was enacted under the assumption that a benefit payment based on actual income of a prior month would be more accurate than one based on projected income. However, retrospectively computed benefits will result in excessive payments to more than 2 million SSI recipients who also receive other Federal program benefits that increase periodically based on the cost-of-living index. The increase will not be recognized using the second preceding month under the retrospective accounting method, and SSI benefits will not be reduced until after the cost-of-living increases become effective. To the extent that these excessive payments are not recovered, much or all of the $60 million savings could be lost. Although the prospective accounting system would permit SSI payments to be immediately adjusted for cost-of-living and other increases in Federal benefits, it invites the problem of inaccurate income projections that retrospective accounting was designed to correct.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Peter J. Mcgough Team: General Accounting Office: Human Resources Division Phone: (301) 934-4430