Welfare Benefits

Potential to Recover Hundreds of Millions More in Overpayments Gao ID: HEHS-95-111 June 20, 1995

Under welfare reform legislation being considered by Congress, resources for helping poor families may become increasingly limited--making it critical that only those who are eligible for benefits receive them. In 1992, benefit overpayments in three welfare programs--Aid to Families With Dependent Children, Food Stamps, and Medicaid--totaled $4.7 billion, or about four percent of the total benefit paid. Moreover, nationwide recovery of these benefits was relatively low. This report discusses (1) what states are doing to recover benefit overpayments, what the more effective practices are, and what states could do better and (2) what the federal government could do to help states recover more overpayments.

GAO found that: (1) the states with the highest recovery rates in fiscal year 1992 established claims for a greater portion of their overpayments; (2) successful practices to establish overpayments included using computer matching to identify potential overpayments, more timely efforts to verify overpayments and establish claims, and establishing overpayment claims on the more difficult collection cases; (3) states that used a broader array of recovery tools had greater collection rates than other states; (4) successful practices to recover overpayments included using lower average caseloads for eligibility staff, detailing more staff to recovery efforts, intercepting state income tax refunds, and using automated tracking and billing systems to recover overpayments; and (5) an additional $262 million could have been recovered in 1992 if all states had been as successful as the top performing states. GAO also found that: (1) two of the three federal agencies responsible for overseeing the programs do not help states identify the best recovery practices; and (2) eliminating client consent for temporary reductions in benefits due to administrative errors in the Food Stamp Program and intercepting federal income tax refunds to recover AFDC and Medicaid overpayments could increase overpayment recoveries by millions of dollars annually.

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.

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