According to SSA policy, an underpayment is any monthly amount due a beneficiary that SSA has not been paid. Terminated beneficiaries include living and deceased
beneficiaries who are no longer receiving benefits. SSA should issue underpayments to living terminated beneficiaries after it makes direct contact to obtain a current
address and bank information. When underpaid beneficiaries are deceased, SSA should pay the underpayment to a surviving spouse, child, or parent or to the legal
representative of the decedent’s estate. SSA’s systems identify underpayments for terminated beneficiaries and record them as a special payment amount
underpayment on the Master Beneficiary Record.
SSA did not always take proper actions to pay underpayments due terminated beneficiaries. In December 2015, SSA improved systems controls to pay underpayments
due deceased beneficiaries to eligible surviving spouses. However, this control does not identify underpayments due to all terminated beneficiaries. For the
100 terminated beneficiaries in a GAO sample, 39 had underpayments that should be paid to eligible beneficiaries; 25 were cases where SSA did not locate the
beneficiaries or individuals who were eligible for the underpayments; 7 had erroneous underpayments that should have been corrected or removed from the Master
Beneficiary Record; and 29 were correctly paid or resolved.
This occurred because SSA employees established 74 percent of these underpayments manually, and SSA systems did not generate alerts after they were established. In
addition, SSA’s corrective actions to address prior GAO audit recommendations were not sufficient to ensure it resolved and issued underpayments to eligible
beneficiaries or individuals. Based on the random sample, we estimate SSA did not (1) issue payments to 27,724 eligible beneficiaries or individuals due approximately
$52.1 million, (2) locate 17,772 beneficiaries or individuals eligible for approximately $90.4 million in payments, and (3) remove or correct erroneous payments totaling
approximately $6.7 million recorded on the Master Beneficiary Record for 4,265 beneficiaries.
You can find the full Government Accountability Office Audit Report here.