PASS Program: SSA Work Incentive for Disabled Beneficiaries Poorly
Managed (Chapter Report, 02/28/96, GAO/HEHS-96-51).
The Social Security Administration (SSA) is poorly managing a small but
growing program to encourage disability beneficiaries to seek
employment. The "plan for achieving self-support" (PASS) program,
established in 1972, is currently small--only about 10,300 persons
participated in December 1994--but the number of participants has
swelled more than fivefold during the past five years as awareness of
the program has increased, and millions more disabled beneficiaries have
become eligible to participate. The PASS program is vulnerable to abuse
because of vague guidelines, and its impact on employment is unknown
because SSA does not collect basic data on participants and their
employment. In addition, SSA top management has not adequately
considered the potential problems posed by professional PASS preparers,
whose fees--as much as $800--are often included as PASS expenses. SSA is
trying to address some of these internal control weaknesses, but it
cannot guarantee today that taxpayer dollars are being well spent.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: HEHS-96-51
TITLE: PASS Program: SSA Work Incentive for Disabled Beneficiaries
Poorly Managed
DATE: 02/28/96
SUBJECT: Workfare
Income maintenance programs
Employment or training programs
Program abuses
Vocational rehabilitation
Beneficiaries
Disability benefits
Disadvantaged persons
Federal social security programs
Internal controls
Persons with disabilities
IDENTIFIER: SSA Plan for Achieving Self Support Program
Supplemental Security Income Program
Social Security Disability Insurance Program
SSA Supplemental Security Record Data Base
Medicaid Program
Medicare Program
SSA Program Operations Manual System
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Cover
================================================================ COVER
Report to the Committee on Finance, U.S. Senate, and the Committee
on Ways and Means, House of Representatives
February 1996
PASS PROGRAM - SSA WORK INCENTIVE
FOR DISABLED BENEFICIARIES POORLY
MANAGED
GAO/HEHS-96-51
PASS Program Poorly Managed
(105598)
Abbreviations
=============================================================== ABBREV
DI - Disability Insurance
MBR - Master Beneficiary Record
OIG - Office of the Inspector General
PASS - plan for achieving self-support
POMS - Program Operations Manual System
SGA - substantial gainful activity
SSA - Social Security Administration
SSI - Supplemental Security Income
SSR - Supplemental Security Record
Letter
=============================================================== LETTER
B-259613
February 28, 1996
The Honorable William V. Roth, Jr.
Chairman
The Honorable Daniel Patrick Moynihan
Ranking Minority Member
Committee on Finance
United States Senate
The Honorable Bill Archer
Chairman
The Honorable Sam M. Gibbons
Ranking Minority Member
Committee on Ways and Means
House of Representatives
This report responds to the request in House Conference Report
103-670 that we review the Social Security Administration's plan for
achieving self-support (PASS) program. The PASS work incentive
program was established in 1972 as part of the Supplemental Security
Income program to help disability benefit recipients to return to
gainful employment. However, very few recipients have left the
federal disability rolls by returning to work. In this report we
provide data on the characteristics and uses of individual PASSes and
provide recommendations for strengthening PASS program implementation
and internal controls.
We will send copies of this report to the Commissioner of Social
Security, the Secretary of Health and Human Services, and other
interested parties. We will also make copies available to others
upon request.
Please contact me on (202) 512-7215 if you or your staff have any
questions concerning this report. Other GAO contacts and
contributors for this report are listed in appendix VII.
Jane L. Ross
Director, Income Security Issues
EXECUTIVE SUMMARY
============================================================ Chapter 0
PURPOSE
---------------------------------------------------------- Chapter 0:1
The increased recognition of the employment capabilities of people
with disabilities corresponds with the desires of many to obtain or
maintain meaningful work. Currently, income support for the disabled
is provided primarily through two federal programs, the Supplemental
Security Income (SSI) program and the Disability Insurance (DI)
program, both administered by the Social Security Administration
(SSA). The SSI program provides income assistance and health
benefits to low-income blind, disabled, and elderly people. The DI
program provides cash and health benefits to disabled former workers
who paid taxes into the DI trust fund. In 1994, the value of
benefits paid out by both programs to about 7 million individuals
exceeded $100 billion. Despite increasing societal emphasis on
employment for the disabled, the number of individuals enrolled in
one or both programs doubled between 1985 and 1994, and each year
only a few individuals leave either program by returning to work.
In 1972, the Congress enacted the provision establishing the plan for
achieving self-support (PASS) work incentive, referred to in this
report as the PASS program, as part of the SSI program to "provide
every opportunity and encouragement" for people with disabilities to
undertake gainful employment. The PASS program allows disabled SSI
recipients and DI beneficiaries to receive higher SSI monthly
benefits by excluding from their SSI eligibility and benefit
calculations any income or resources used to pursue a work goal.
Although the PASS program has been available for more than 20 years,
little information exists on its implementation, use, and outcomes.
As a result, the Congress requested GAO to conduct a study of the
PASS program and procedures. GAO designed its study to
evaluate SSA's management of the PASS program, including the
program's impact on employment, and
determine whether the PASS program is vulnerable to abuse.
To address its objectives, GAO interviewed staff in SSA's
headquarters, reviewed PASS program regulations and guidance, and
observed the initial activities of an SSA work group considering
proposed program changes. In addition, GAO visited 19 SSA field
offices, located in seven states, that have approved high numbers of
PASSes; interviewed staff in each of the 10 SSA regional offices;
reviewed 380 randomly selected PASSes; and spoke with individuals who
prepare PASSes for disability benefit recipients. Finally, GAO
analyzed data for PASS program participants from an extract of the
Supplemental Security Record and from the Master Beneficiary Record,
the main databases of the SSI and DI programs, respectively, as well
as SSA's annual earnings database of employer-reported earnings.
BACKGROUND
---------------------------------------------------------- Chapter 0:2
Almost 7.2 million people under age 65 received federal disability
assistance in 1994 from the SSI or DI programs. Nearly 700,000
people--or 10 percent--received payments from both programs, making
them concurrent beneficiaries. Eligibility for both programs is
based on medical impairment(s) that prevent gainful employment,
currently measured as employment that results in earnings of $500 or
more a month. Once benefit eligibility is established, relatively
few individuals subsequently become employed; claimants in both
programs receive cash benefits for an average of a decade or more.
PASS program applicants submit individualized, written plans
outlining their employment goal, which are reviewed by staff in one
of the more than 1,300 SSA field offices that administer SSI. An
approved PASS allows disabled individuals to exclude any non-SSI
income or resources they have, including DI benefits, from the
determination of the amount of their SSI cash payment. The excluded
moneys are to be used to pay for expenses related to the employment
goal, such as special adaptive equipment, tuition, training,
transportation, materials, or supplies. Excluding income and
resources from consideration under a PASS can result in a person
becoming eligible for SSI or receiving higher monthly SSI cash
payments. For example, under a PASS, an SSI recipient with monthly
earnings of $200 may set aside these funds for job training costs to
become an electrician and still receive the full SSI payment each
month. Under the PASS program, individuals whose income and assets
would otherwise bar them from eligibility in SSI can establish or
continue eligibility for the SSI program and associated benefits,
including Medicaid.
RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3
SSA has done a poor job implementing and managing the PASS program.
Because SSA has provided insufficient program direction and support
to its field office staff, these staff have difficulties approving
and denying program applications. While the PASS program is
currently small--only about 10,300 individuals participated in
December 1994--the number of PASSes has increased more than fivefold
in the past 5 years as awareness of the provision has grown, and
millions more DI and SSI beneficiaries are eligible to participate.
Reflecting diversity in the disability community, the PASSes GAO
reviewed encompassed a wide variety of goals, ranging from doing
janitorial work to becoming a college professor. About 40 percent of
PASS program participants, largely DI beneficiaries, would not be
eligible for federal SSI payments if some of their income was not
being disregarded under a PASS.
The impact of the PASS program on employment is unknown because SSA
lacks basic data on PASS program participation. While GAO found that
many former program participants were working after their PASS ended,
many also worked before participating in the program, and few left
the SSI and DI rolls. Nearly all DI beneficiaries who had
participated in the PASS program were receiving their full benefits
in May 1995, resulting in virtually no savings for the DI trust fund.
GAO estimated the cost of additional SSI payments to all program
participants at $2.6 million for January 1995, or about $30 million
annually.
A lack of safeguards has also left the PASS program vulnerable to
abuse. Internal control weaknesses include the broad and vague
nature of PASS program guidelines, the lack of a standardized
application form, and the absence of limits on the number of PASSes
an individual may have approved in his or her lifetime. In addition,
SSA headquarters management has not adequately addressed the
potential problems presented by professional PASS preparers, whose
fees--as much as $800--are often included as PASS expenses. Although
SSA is attempting to address some of these internal control
weaknesses in its recently established work group, it cannot now
provide reasonable assurance that taxpayer dollars are being used
appropriately.
PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4
PASS PROGRAM POORLY MANAGED,
GROWING
-------------------------------------------------------- Chapter 0:4.1
SSA has not specified criteria for its staff to use in assessing the
appropriateness of plans proposed by PASS program applicants, or the
basis on which success of those plans should be measured. GAO found
that field office staff apply varying measures of successful outcomes
to PASSes when evaluating their feasibility, including gaining work
experience, reducing cash benefits through earnings, and leaving the
disability rolls as a result of work. Reflecting the diversity of
the disability population, GAO found a wide variety of goals and
proposed expenditures in the plans it reviewed, although most
included cars, computers, or tuition.
In addition, the PASS program currently lacks several key elements
that could contribute to effective management. For example, SSA
guidance does not require PASSes to capture information on the
applicant's disability, education, and skills. Further, the SSA
staff responsible for reviewing individual plans lack the necessary
vocational training, experience, and guidance to assess whether
applicants can achieve their work goals.
Although the PASS program encompassed only about 10,300 claimants, or
less than 1 percent of the SSI population in December 1994, the
number of participants increased over 500 percent between 1990 and
1994. Further growth is predicted, because millions of SSI and DI
beneficiaries are eligible to participate. Currently, the program
includes primarily DI beneficiaries who have unearned income to set
aside under a PASS. Three-quarters of PASS participants are
concurrent beneficiaries--those who receive benefits from both the DI
and SSI programs--and 40 percent of all PASS participants, almost all
of them DI beneficiaries, had additional income that exceeded the
income eligibility level for federal SSI payments. However, as a
result of PASS program participation, these individuals received an
average of $318 in additional federal SSI payments in January 1995.
Because SSA has not collected sufficient management data on PASS
program participation and outcomes and has not defined clear program
goals, the agency is unable to monitor the program's effectiveness.
Using the available data, GAO's analysis of more than 4,000 former
PASS participants found that while they were more likely to work than
other SSI recipients and often had earnings high enough to reduce
their SSI payments, most had also worked prior to participating in
the PASS program. Furthermore, almost no recipients eligible only
for SSI had left that program by December 1994. Nearly all
concurrent beneficiaries were still receiving DI benefits after their
PASSes ended; many who had left the rolls did so for reasons other
than earnings, such as death. Earnings below the level of
substantial gainful activity--$500 a month for most beneficiaries--do
not reduce DI benefits or accrue any savings to the DI trust fund.
In contrast, earnings by all working SSI recipients, including former
PASS program participants, reduced SSI payments by more than $18
million in January 1995. GAO estimated the cost of additional
benefits paid out to PASS program participants was $2.6 million for
January 1995.
INADEQUATE INTERNAL CONTROLS
COMPROMISE PASS PROGRAM
INTEGRITY
-------------------------------------------------------- Chapter 0:4.2
GAO's review of the PASS program showed limited adherence to existing
regulations as well as insufficient safeguards to protect SSI program
integrity. Internal control weaknesses include (1) minimal or
nonexistent PASS program participation requirements, such as no
penalties for willful noncompliance and no limits on the number of
PASSes a person may have approved; (2) broad and nonstandardized PASS
guidance and compliance reviews, which create inconsistent program
administration; and (3) lack of SSA policy regarding third-party PASS
preparers, including the fees some charge for plan development and
their potential financial conflicts of interest. SSA is aware of and
is considering addressing some of these weaknesses, but cannot now
provide reasonable assurance that funds are spent appropriately.
MATTER FOR CONGRESSIONAL
CONSIDERATION AND
RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5
GAO is offering one matter for consideration to the Congress to
address program eligibility. GAO is also making several
recommendations to the Commissioner of SSA in the areas of improving
consistency of program management, support to field office staff,
data collection and program evaluation, and internal controls. (See
ch. 4.)
AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6
SSA generally concurred with GAO's recommendations, which it noted
were consistent with its work group study findings, and cited plans
to address them. However, SSA commented that it had limited
statutory authority to address all of GAO's recommendations. As
stated in GAO's recommendations, SSA may find it necessary to seek
legislation to implement program changes. More details on SSA's
specific proposed actions, as well as a full copy of SSA's comments
and GAO's response, are included in appendix VI.
INTRODUCTION
============================================================ Chapter 1
The Social Security Administration's (SSA) Disability Insurance (DI)
and Supplemental Security Income (SSI) programs are the two largest
federal programs providing cash and medical assistance to people with
severe, long-term disabilities, at an annual cost of more than $100
billion. The DI program offers partial income replacement for
disabled workers who have earned Social Security benefits. The SSI
program provides federal and state cash assistance to people who are
elderly, blind, or disabled, regardless of insured status, whose
income and resources are below a specified amount. In the
legislation authorizing the SSI and DI programs, the Congress
articulated its aim to rehabilitate into productive activity as many
disability benefit recipients as possible.
Consistent with this goal, the Congress has passed several work
incentive provisions to reduce the risks of seeking employment for
recipients, by safeguarding cash and medical benefits while a
recipient tries to work. One such provision authorized the plan for
achieving self-support (PASS) program as part of the SSI program in
1972. In explaining this provision, the pertinent House Report
stated that the Ways and Means Committee wanted to "provide every
encouragement and opportunity" for participants to work.
THE DI AND SSI PROGRAMS
---------------------------------------------------------- Chapter 1:1
The DI program, authorized in 1956, provides cash and medical
benefits to workers under age 65 who become disabled and cannot
continue working, as well as to their dependents. The DI program is
funded through Federal Insurance Contribution Act taxes paid into a
trust fund by employers and workers. In 1994, 3.3 million people
with disabilities were enrolled in DI and received, on average, cash
benefits of about $660 a month.
The SSI program was authorized in 1972 under title XVI of the Social
Security Act as a means-tested income assistance program for people
who are elderly, blind, or disabled. Unlike DI beneficiaries, SSI
recipients do not need to have a work history to qualify for
benefits, but need only have low income and limited assets. General
government revenues provide the federal funding for the SSI program,
while some states supplement federal payments with their own funds.
SSI disabled beneficiaries receive an average monthly cash benefit of
about $380 (beneficiaries in the 43 states that provide a monthly
supplement received, on average, an additional $110 in 1993) and
immediate Medicaid eligibility in most states. In 1994, 2.3 million
blind and disabled adults under age 65 and 893,000 children were
enrolled in SSI. Individuals who are insured under Social Security,
but fall below SSI's income and resource eligibility threshold, can
qualify for both DI and SSI benefits. An additional 671,000 people
under age 65, called concurrent beneficiaries, were enrolled in both
programs in 1994.
To be considered disabled under either program, a person must be
unable to engage in substantial gainful activity (SGA)\1 because of a
medically determinable physical or mental impairment that is expected
to last not less than 12 months or result in death. The severity of
the impairment must prevent the applicant not only from doing his or
her previous work, if any, but also from engaging in any other kind
of substantial work in the national economy, considering his or her
age, education, and work experience. The process used to determine
eligibility for benefits is the same for both programs.
--------------------
\1 Regulations currently define SGA as monthly earnings of more than
$500. This limit changes each year for blind individuals to reflect
changes in general wage levels; in 1994 it was $930 a month.
PASS PROGRAM STRUCTURE AND
PARTICIPANTS
---------------------------------------------------------- Chapter 1:2
In establishing the SSI and DI programs, the Congress considered it
very important that disabled persons be helped to return to
self-supporting employment wherever possible. To this end, over the
years the Congress has enacted numerous work incentive provisions in
both the SSI and DI programs to encourage more people to work their
way off the disability rolls. These include the PASS program and
extended eligibility for Medicare benefits to working DI
beneficiaries. During a beneficiary's work attempt, these work
incentive provisions allow varying degrees of safeguards for cash and
medical benefits, as well as program eligibility. However, despite
the Congress' aim to return the maximum number of DI and SSI
beneficiaries to work, few beneficiaries have actually done so. Only
1 in every 500 DI beneficiaries is terminated from the rolls because
he or she has returned to work. While SSA has no comparable measures
for the SSI population, we recently reported that this population's
return-to-work rate is similarly low.\2
The PASS program was established by the Congress as part of the SSI
program to assist disability benefit recipients with beginning or
returning to work. The PASS program is administered by staff in the
approximately 1,300 SSA field offices nationwide, based on policy and
regulations developed by SSA headquarters staff in the Office of
Program Benefits Policy. The Program Operations Manual System (POMS)
is the primary policy guidance to staff on the PASS program. Work
incentive staff in SSA's 10 regional offices provide additional
guidance and oversight to field office staff. In December 1994,
about 10,300 individuals participated in the PASS program and had
active PASSes.\3
In commenting on the PASS provision, the pertinent House Report
stated that it should be "liberally construed," and SSA headquarters
has chosen to place few constraints on the program in regulations or
in the POMS. For example, there is no required application format
and no limit on the number of approved plans an individual can have
in a lifetime. PASSes are written plans, developed specifically for
an individual, that identify a work goal and the items and services
needed to achieve that goal. (For a sample plan format, see app.
I.) To purchase these items and services, PASS program participants
may use any non-SSI income or resources they have--for example, DI
benefits or wages from a job. Anyone can write a PASS--the
disability benefit recipient, an SSA staff member, a vocational
rehabilitation professional, staff from another agency, or a relative
or friend; no vocational rehabilitation expertise is required.
Normally, any additional income or resources would reduce the amount
of the SSI payment, but SSA disregards the income and resources
included in a PASS when determining income available to the SSI
recipient. Consequently, excluding income and resources to pursue a
work goal under a PASS can result in additional monthly SSI cash
payments. For example, an SSI recipient earning $300 a month in a
part-time job is normally eligible for about $350 in SSI benefits, if
he or she is single and lives alone. However, using a PASS, this
individual could use these earnings to pay for classes and
transportation to school to become an accountant and receive the
maximum 1995 federal benefit of $458 each month.
As currently implemented, the PASS program can also be used to
establish eligibility for SSI by disabled individuals whose incomes
or resources would otherwise exceed program eligibility limits. If a
DI beneficiary who receives $620 a month in benefits, for example,
can set $300 of this income aside under a PASS to pursue a work goal,
he or she becomes eligible for SSI payments because his or her
countable income is less than the federal SSI eligibility rate.
Eligibility for SSI usually brings eligibility for other means-tested
benefits, including Medicaid and food stamps.
PASSes are submitted to staff in one of the SSA field offices for
review. These staff approve or deny plans on the basis of the work
goal's feasibility and adjust SSI payment levels for approved plans.
Work goals must be stated in terms of specific job titles or
professions. For example, education can be part of a plan but cannot
be a goal in itself. As long as applicants specify a different work
goal in each PASS, there is also no limit placed on the number of
plans one individual can have, although only one plan can be active
at a time and each PASS is limited to a maximum of 48 months.
However, interim guidelines issued in January 1995, in response to a
mandate in the Social Security Independence and Program Improvement
Act of 1994, allow additional 6-month extensions to ongoing plans.
In December 1994, PASS participants represented only about
three-tenths of 1 percent of the working-age disabled SSI population.
The number of PASSes varies by state, with clusters in areas where
outreach by professional PASS preparers and service providers has
been greatest. As a result, knowledge of and experience with the
PASS program varies greatly among field offices and staff. Some
offices have no active PASSes, while administering the PASS program
constitutes a significant workload in others. Compared with other
SSI recipients, PASS program participants are generally younger and
more often men. In addition, PASS program participants are more
likely to have mental illness as their disabling condition. For a
more detailed description of the demographics of program
participants, see appendix II.
The PASS program is unique among all DI and SSI work incentives
because it is available to disabled individuals who are not already
working. Specifically, the PASS provision allows participants to
exclude unearned, as well as earned, income for consideration in
determining benefit amount. All other work incentive protections,
such as extended eligibility for health and cash benefits for working
recipients, apply to earned income only. Furthermore, while SSI and
DI beneficiaries who work can use the impairment-related work expense
provision to deduct from their gross wages the cost of items and
services needed to work, only half these costs are offset by
increased SSI benefits. In contrast, PASS expenses are deducted
after all other exclusions when determining an individual's countable
income, and therefore fully subsidized by additional SSI cash
payments, up to the maximum benefit amount.
--------------------
\2 Social Security Disability: Management Action and Program
Redesign Needed to Address Long-Standing Problems (GAO/T-HEHS-95-233,
Aug. 3, 1995).
\3 The number includes only approved plans that exclude some type of
earned or unearned income from benefit calculations; SSA does not
track the number of plans that only exclude resources, such as
private retirement plans. In our review of 380 plans, we found only
8 with resource exclusions.
OBJECTIVES, SCOPE, AND
METHODOLOGY
---------------------------------------------------------- Chapter 1:3
House Conference Report 103-670, accompanying the Social Security
Independence and Program Improvement Act of 1994 (P.L. 103-296),
asked that we review SSA's PASS program. Specifically, we were asked
to provide data for the last 5 years, to the extent possible, on (1)
the number and characteristics of individuals who have applied for a
plan, (2) the number and characteristics of those whose plans have
been approved, (3) the kinds of plans that have been approved and
their duration, (4) the success of individuals in fulfilling their
plans, and (5) the extent to which individuals who have completed a
PASS have become economically self-sufficient. We were also asked to
study whether improvements can or should be made to the PASS program,
including the process used to approve plans. Because SSA's Office of
Program Integrity Review was already tracking PASS program
participants' compliance with their plans and the outcome of PASS
program participation, we focused our efforts on PASS program
management and internal controls.
To analyze PASS program implementation and determine what changes and
improvements were needed, we reviewed PASS guidance, legislation, and
regulations. We also interviewed Social Security headquarters staff
responsible for the program and monitored an SSA work group charged
with considering PASS program policy changes. In addition, we met
with staff in 19 SSA field offices, located in California, Colorado,
Maine, Massachusetts, Michigan, Vermont, and Wisconsin, that had high
numbers of active PASSes to discuss their experience with the work
incentive. (For a list of locations visited, see app. III.) In
these same states, we met with 38 individuals, representing 32
different organizations, who prepare PASSes for disability benefit
recipients. In addition, we spoke with the PASS program liaison in
each of the 10 SSA regional offices to learn about program trends
nationwide.
To determine the numbers and characteristics of PASSes and program
participants, we analyzed an extract of the Supplemental Security
Record (SSR), the main database of SSI participants. We also used
data from the SSR, the Master Beneficiary Record (MBR) of DI
beneficiaries, and SSA's Master Earnings File maintained for all
workers to assess the current earnings and benefit status of former
PASS participants. We were unable to evaluate program impact,
because most program participation has been recent, and SSA has only
4 years of historical data on the PASS program, which includes no
data on the outcomes of program participation. In addition,
individuals self-select into the PASS program, and may already be
different from other SSI and DI beneficiaries in ways that would
affect their future employment and earnings. Finally, we reviewed
380 randomly selected PASS files in 17 field offices to gather
additional data about PASSes, including the types of work goals and
proposed purchases. We did not, however, verify that specific
program participants complied with the goals and activities specified
in their PASSes. For more information about our methodology, see
appendix IV.
We did our work between January and November 1995 in accordance with
generally accepted government auditing standards.
PASS PROGRAM REFLECTS MANAGEMENT
INATTENTION
============================================================ Chapter 2
SSA has not translated the PASS program's goals of providing
opportunities for participants to work into a well-defined program
structure with specific objectives. Confusion about program
objectives has resulted in different and sometimes conflicting PASS
approvals and denials across field offices. In addition, SSA field
office staff find it difficult to approve or deny PASSes because SSA
headquarters has not developed clear criteria for evaluating PASSes.
Most field office staff do not have expertise or training in
evaluating work opportunities for people with disabilities, whose
needs are extremely diverse. Reflecting this diversity, the PASSes
we reviewed encompassed a wide array of work goals, from janitorial
work to professional positions, and included expenditures ranging
from business cards to new cars. Finally, the PASS program includes
primarily DI beneficiaries, many of whom use the PASS program to gain
eligibility for federal SSI payments.
Because SSA has not developed measures to evaluate how well the PASS
program is helping participants become or stay employed, the agency
lacks adequate management data on PASS use. For this reason, we
could not accurately measure PASS program impact. We did find that
many former PASS participants are earning enough income to at least
reduce their SSI payments, compared with other SSI recipients,
although many had worked prior to participating in the PASS program.
Few, however, have earned enough to end SSI payments. In addition,
nearly all concurrent beneficiaries continue to receive DI benefits
after their plans end, even if they leave the SSI program, limiting
the potential federal savings stemming from the PASS program.
PASS GOALS AND EXPENDITURES
VARY
---------------------------------------------------------- Chapter 2:1
The 380 PASSes we reviewed encompassed a wide variety of goals,
including increasing hours and responsibilities at a current job,
seeking a new job, or pursuing education as a step toward work. (See
fig. 2.1.) About one-third of plans had education as a major
component, although the level of education desired ranged from
attending culinary school to pursuing a Ph.D. in philosophy.
Another one-third of PASS program applicants were seeking new jobs,
while about 10 percent proposed to maintain or increase their hours
or responsibilities at a current job. For those individuals
proposing specific occupational goals, the demands of these jobs, as
well as their likely income, were highly variable. We found that
many PASSes were written to help applicants achieve low-skill,
low-wage service jobs, such as janitorial work, product assembly, or
employment in fast-food restaurants; however, we also saw plans
written to help participants become psychotherapists, computer
programmers, engineers, and college professors. Some program
participants' goals were more unusual, involving self-employment in
music, arts, and crafts. Self-employment was the goal in 15 percent
of the PASSes we reviewed, including small businesses in tailoring,
tree stump removal, and window washing. In addition, some PASS
program participants were approved to support themselves as
professional PASS preparers, writing plans for other disability
benefit recipients for a fee. (See app. V for a sample of
occupational goals listed on the approved PASSes we reviewed.)
Figure 2.1: Education Is a
Major Component of Many PASS
Goals
(See figure in printed
edition.)
The proposed purchases listed on PASSes varied, as did their cost.
Automobiles (new and used vehicles as well as insurance, maintenance,
and modification costs), tuition, and computers were common items in
PASS budgets. More than 80 percent of the plans we reviewed included
at least one of these items. Costs for these items ranged from a
$41,000 wheelchair-modified van or thousands of dollars in highly
specialized computer equipment to a $19 monthly bus pass. SSA has
placed no absolute limits on the types or costs of items that PASSes
can be used to purchase as long as they are necessary to achieve the
work goal and reasonably priced. The wide range of approved
purchases we saw included photographic film, cellular telephone
service, business advertising, professional attire, job coaching, and
school supplies.
The total budget also ranged considerably in the PASSes we reviewed,
depending on the amount of the income excluded and the plan's time
length. The average monthly exclusion for all PASSes in December
1994 was $400, although some individuals were excluding more than
$1,000 a month. Total costs associated with a single PASS could be
significant; for example, one plan had a budget of $67,233 for an
individual to return to work as a radiological technologist, which
included items such as a standing wheelchair, a modified van and
insurance, a track lift system, and a computer. Field staff in at
least eight of the offices we visited raised concerns about PASS
applications in which proposed purchases were exactly equal to total
excludable income. Several PASS preparers confirmed that they
develop budgets based on the maximum excludable income, regardless of
the occupational goal.
We were not able to determine the average time length of PASSes,
because extensions and end-dates were not always documented in the
files we reviewed. In addition, this information is not captured in
the Supplemental Security Record (SSR), the database of SSI
recipients. We found, however, that half of the current exclusions
as of December 1994 had been active 9 or fewer months. In addition,
more than 1,700 PASSes begun in 1993 were no longer active in
December 1994. No comprehensive data are currently available on the
total number of PASS applications, because SSA does not track denied
plans. However, staff in almost all the field offices we visited
agreed that the majority of PASSes are approved.
PASS PROGRAM NOT WELL DEFINED,
GROWING
---------------------------------------------------------- Chapter 2:2
SSA has neither clearly articulated the objectives of the PASS
program nor established criteria for evaluating whether an individual
plan will be successful. This lack of clear goals is reflected in
inadequate guidance to field office staff and inconsistent and
inefficient PASS program administration. Our interviews revealed a
wide range of standards applied by SSA field office staff and
third-party PASS preparers in assessing the feasibility of individual
PASSes, ranging from cessation of all disability benefits to improved
quality of life. Current PASS participants constitute less than 1
percent of the working-age SSI population; nonetheless, the number of
PASSes has grown by more than 500 percent in the last 5 years. As a
result of congressional direction to liberally construe the PASS
provision, SSA has permitted individuals to become eligible for SSI
by using a PASS. Consequently, the PASS program includes primarily
DI beneficiaries, many of whom use PASS to gain eligibility for SSI
payments.
LACK OF CLEAR OUTCOME
MEASURES HINDERS PROGRAM
ADMINISTRATION
-------------------------------------------------------- Chapter 2:2.1
In establishing the PASS program, the Congress specified that the
work incentive should "provide every opportunity and encouragement to
the blind and disabled to return to gainful employment." SSA
headquarters staff, however, have not issued regulations translating
this goal into specific outcome measures of PASS program success,
choosing instead to leave the interpretation open to the field office
staff who administer it. As a result, the SSA field office staff and
third-party PASS preparers we interviewed used different, and
sometimes conflicting, interpretations of successful outcomes when
developing and reviewing individual PASSes. For example, some field
office staff will not approve a PASS unless they believe it will
result in the applicant leaving the disability rolls, while the
preparer may have written it to give the applicant a chance to attend
school and try working, but not become self-supporting.
SSA field office staff in nearly all the offices we visited said that
PASS use should result in a reduction, if not cessation, of SSI
benefits. While 10 of the 38 PASS preparers we interviewed shared
this view, others offered broader definitions of success, including
working or attending school, improved self-esteem, and fuller
participation in society. Some PASS preparers and SSA staff
expressed concern that immediate economic self-sufficiency was not
feasible for some members of the SSI population, and that the
appropriate PASS outcome depended on the individual.
PASS program guidance from SSA headquarters to the field offices
contributes to confusion over the goal of the work incentive. Prior
to January 1995, the POMS, SSA's primary written guidance to field
office staff who administer the PASS program, stated that the
occupational objectives on PASSes must ultimately produce enough
additional earned income to reduce or eliminate SSI payments. The
guidance also noted that the PASS program was "not intended to
subsidize a continuing level of current work activity." In contrast,
the POMS transmittal concerning PASS issued in January 1995 directed
field office staff to evaluate individual PASSes in terms of the
applicant's higher earnings potential upon completion of the PASS,
and weakens the link between earnings and benefits payments. In
addition, this guidance includes increased on-the-job independence
and decreased reliance on employment support, irrespective of
earnings, as acceptable PASS goals. According to field office staff,
the verbal guidance they receive from regional and headquarters staff
encourages them to be liberal and err on the side of approving
individual PASSes. Agency literature available to SSI recipients
primarily defines the PASS program in terms of employment goals, with
little or no focus on reduced or eliminated benefits, or increased
earnings potential.
SSA field office staff in half the offices we visited said PASS
approvals and denials were inconsistent, and nearly all field office
staff expressed frustration with the inadequate guidance they
received from SSA headquarters on approving or denying PASSes. Some
SSA field and regional offices have developed their own guidance for
approving PASSes to compensate for gaps they see in the POMS. As a
result, we found that the PASS program was implemented differently by
location or even by individuals in the same location, depending on
the prevailing beliefs about program goals. For example, some field
offices in Wisconsin use a PASS evaluation form that requires
applicants to estimate their pre- and post-PASS earnings to
demonstrate increased earnings capacity before they will approve a
plan. Staff in other field offices said they only look to see if
there is even a "remote chance" of achieving a proposed occupational
goal. The basis for decisions about acceptable cost items also
varies. For example, some field office staff approved computer
expenditures for students without documentation that computers were
required, while staff in another office denied a request for computer
equipment, noting that the university the applicant planned to attend
did not require students to have computers. Work incentive staff in
some regional offices review PASS approvals and denials made by the
field offices; however, staff in SSA's headquarters do not provide
direct oversight of this process.
PROGRAM HAS FEW
PARTICIPANTS, BUT MORE
GROWTH PREDICTED
-------------------------------------------------------- Chapter 2:2.2
PASS program participants in December 1994 represented only
three-tenths of 1 percent of the working-age SSI population.
Nonetheless, the number of PASSes has risen dramatically in recent
years, from 1,546 in March 1990 to 10,329 in December 1994. PASS
program growth has been much slower during 1995; the number of plans
increased by only 169 between December 1994 and June 1995. However,
SSA field staff in 15 of the 19 offices we visited predicted that the
number of PASSes will continue to grow. Several PASS preparers also
told us they believe that more outreach will increase PASS use.
Outreach efforts, especially by outside organizations, have already
increased awareness of the PASS program. For example, in the Denver
area, several professional PASS preparers have established businesses
that seek out clients. Since the late 1980s, individuals and
organizations across the nation have assisted disability benefit
recipients to understand and use work incentives, especially the PASS
program. At the same time, some state agencies that provide
employment services to the disabled have started to use PASSes to
supplement other funds. Private agencies, too, are being encouraged
to look at the PASS program as a funding source for their clients.
The potential universe of PASS program participants is significant
and increasing with the recent tremendous growth in the number of
federal disability benefit recipients.\4 All 4 million DI
beneficiaries are potentially eligible for a PASS. In addition, any
of the 2.3 million blind or disabled adults receiving SSI with
additional income or resources to exclude could potentially
participate in the PASS program.
--------------------
\4 See Social Security: Disability Rolls Keep Growing, While
Explanations Remain Elusive (GAO/HEHS-94-34, Feb. 8, 1994).
PARTICIPANTS ARE LARGELY DI
BENEFICIARIES; MANY GAIN SSI
ELIGIBILITY THROUGH PASS
PROGRAM
-------------------------------------------------------- Chapter 2:2.3
The PASS program encompasses primarily DI beneficiaries, who can
exclude their DI benefits under a PASS. Of the approximately 10,300
PASS participants in December 1994, about 75 percent were concurrent
beneficiaries, many of whom would not receive federal SSI benefits
without a PASS. In comparison, about 30 percent of disabled adults
in the overall SSI program also received DI benefits. We estimated
that, overall, more than 40 percent of all PASS program participants
had earned or unearned income, primarily DI benefits, in excess of
the eligibility level for federal SSI benefits. These individuals
received, on average, $318 in monthly federal SSI payments. Without
the PASS program, they would not have been eligible to receive any
federal SSI payments. The federal cost of PASS program participation
for these individuals who use a PASS to establish SSI eligibility is
often higher than just the SSI payment, because the participants may
also gain access to other means-tested benefits, such as Medicaid and
food stamps, while retaining access to DI payments and Medicare. In
these instances, Medicaid supplements Medicare benefits, covering
deductibles, medications, and other medical costs not covered by
Medicare. Nearly one-fourth of recipients whose plans started in
1994 first applied for SSI benefits that year.
PASS program participation for SSI recipients who are not concurrent
beneficiaries is generally limited to those who are already working
and can exclude their earned income or who receive other types of
income or resources, such as an inheritance. Many SSI recipients who
may benefit from the PASS program are unable to participate because
they lack income or resources and cannot make the initial investments
in education and skills that can be key to successful vocational
rehabilitation.
SSA'S MANAGEMENT OF THE PASS
PROGRAM IS POOR
---------------------------------------------------------- Chapter 2:3
Our field work suggests that SSA's current implementation of the PASS
program is poorly managed and designed. Information required of
applicants is inadequate for evaluating plan feasibility. SSA field
staff lack the training, guidance, and expertise to effectively
review PASSes, and the PASS program competes with other field tasks,
such as processing initial claims, that receive more work credit in
SSA's system for measuring office productivity.
STAFF LACK NECESSARY DATA,
EXPERTISE, AND GUIDANCE TO
EVALUATE PASSES
-------------------------------------------------------- Chapter 2:3.1
POMS guidance specifically directs field office staff to evaluate
applicants' goals in light of their impairments and other
disability-related factors. However, the POMS does not require much
of the information that would be relevant to determine whether a work
goal is feasible, including the nature of an applicant's disability,
on a PASS application. This information may not be otherwise
available to field office staff. Because of this inconsistency,
staff may approve or deny PASSes without knowledge of the applicant's
skills, education, work history, impairments, or even the disabling
condition. Further, PASSes are not required to provide any
information about the demands of the proposed job, and required
skills and qualifications. We also found that diagnosis information
was missing on the SSR, which is accessible by field office staff,
for more than 40 percent of recipients with PASSes in December 1994.
In addition, the detailed assessments of applicants' work ability
compiled by state Disability Determination Services during its
reviews to decide program eligibility are often not sent to staff in
SSA's field offices.
Field office staff also lack specific training and experience in
determining the vocational capabilities and needs of people with
disabilities. As a result, staff in every office we visited reported
that they do not feel equipped to adequately evaluate PASS work goals
and expenditures. Staff in half of these field offices described the
evaluation process as inconsistent between and often within offices,
and some noted it was unfair to PASS program applicants. SSA
headquarters staff are aware of the field staff's concerns, which
were discussed at a 1994 work group on the PASS program. Field
office staff's lack of knowledge and training is also frustrating to
third-party PASS preparers; half of those we interviewed said they
did not believe field office staff were qualified to make decisions
about PASS feasibility. In addition, at least 14 of 38 PASS
preparers raised concerns about field office staff's lack of
awareness and understanding about disability issues, including the
vocational capabilities of people with disabilities. The differences
in plan approvals and denials have also led some PASS preparers to
"shop around" within a field office or across offices to find someone
who will approve a plan that has been denied elsewhere, according to
field office staff and preparers.
According to field office staff who evaluate plans, the guidance and
criteria for approving and denying PASSes is inadequate, given their
lack of expertise. While the POMS acknowledges that self-support is
"highly subjective and often complex" to define, staff are directed
to use a "common sense approach" when evaluating plans. When no
licensed or accredited vocational rehabilitation agency or individual
has been involved in developing a PASS, field office staff can seek
outside input from a vocational rehabilitation or other employment
services agency, or use their "judgment and intuition" to determine
PASS feasibility. As a result, SSA field office staff can make
highly individual decisions about plans based on their personal
beliefs. For example, one field office staff member told us she
denied a plan with the goal of writing a cookbook because she
believed there were already too many cookbooks on the market.
Furthermore, if they seek guidance outside of SSA, field office staff
are limited to vocational agencies willing to provide evaluations of
the feasibility of proposed work goals at no cost, unless the program
applicant agrees to include the cost of the evaluation on his or her
PASS. These agencies, however, are not required to advise SSA, and
we found that some public agencies did not provide assistance to SSA
field offices for individuals who were not already their clients.
Field office staff also contact regional or central office work
incentive staff with questions about feasibility; however, the staff
in the regional and central offices are not necessarily trained in
vocational rehabilitation.
The field office staff's lack of vocational rehabilitation knowledge
and the limited guidance they receive also limits their ability to
evaluate whether charges for particular items in PASS budgets are
reasonable or necessary. Staff in at least eight field offices said
they had no basis on which to judge whether a proposed item was
reasonably priced. POMS guidance directs staff to be "as pragmatic
as possible" when evaluating questionable expenses or determining the
relationship of an item or service to the work goal. We found that
some staff used personal criteria for evaluating the appropriateness
of certain costs, especially automobiles and computers. For example,
one field staff member told us she denied a plan that included a
$22,000 automobile because she herself could not afford a car that
expensive, even with a job, so "why should someone receiving federal
assistance be allowed to buy one?" Some PASS preparers reported that
they were frustrated with the inconsistent and subjective criteria
they believed staff used when assessing the appropriateness of
expenses.
Items and services purchased with PASS funds do not need to be
directly related to the claimant's disability, but only necessary to
achieve the work goal. Field office staff provided examples of
expenses they considered excessive or unnecessary, including new cars
and doctoral degrees, that were submitted on PASS plans and
permissible under PASS guidelines. In addition, some field office
staff said they have difficulty evaluating specialized or highly
technical equipment with which they are not familiar. SSA
headquarters has also not determined whether only new cost items
related to the goal should be approved, or whether the PASS can be
used to pay for existing expenses, such as car loan payments, deemed
necessary to achieve the goal.
PASS PROGRAM GIVEN LOWER
PRIORITY THAN OTHER FIELD
OFFICE ACTIVITIES
-------------------------------------------------------- Chapter 2:3.2
SSA field office staff in many of the offices we visited reported
that time spent administering the PASS program is not adequately
reflected in SSA's work credit system.\5 The time necessary to
thoroughly evaluate a PASS, including seeking additional information
about feasibility, was estimated by field office staff as up to 8
hours or more. The work credit for reviewing PASSes submitted by
individuals already entitled to SSI, which is grouped with other
tasks including recording wages earned, was 6.8 minutes in June 1995.
Furthermore, PASS denials receive no credit at all, yet some field
office staff reported that plan denials take even longer than
approvals, because of the amount of evidence needed to justify the
denial. Requests from two regional offices that SSA create a
separate work credit category just for the PASS program were turned
down by SSA headquarters. In our interviews, few field office staff
identified the PASS program as a high priority workload. Many
reported that initial claims and other tasks necessary to secure or
start benefits for claimants were a higher priority than PASS.
Monitoring PASS program compliance is also considered to be a
time-consuming effort by field office staff, especially when
participants have not kept adequate records. POMS guidance on
reviewing PASSes and monitoring compliance includes a number of steps
that could take several hours to complete.
More than half the PASS preparers we spoke with reported significant
concern about the length of time required by field offices to approve
plans. POMS directs field office staff to review PASSes "as soon as
possible." SSA does not track the length of time PASS program
applicants must wait for a decision on their plan. We were not able
to develop an estimate because submission and approval dates were
frequently not recorded on the plans we reviewed. However, we saw
and heard examples of plans reviewed and approved within a day, as
well as delays of several months before a response was given on a
submitted PASS. Delays in approval could result in lost employment
and schooling opportunities for applicants, and the slow approval
process serves as a disincentive to PASS program participation,
according to PASS preparers. For example, the two agencies involved
in a demonstration project attempting to increase PASS use and
evaluate PASS effectiveness in funding supported employment,
conducted in 1989 and 1990 by the Association for Retarded Citizens
of the United States, ultimately withdrew as a result of lengthy
delays in approving PASSes. On the other hand, quick reviews may not
effectively screen out applicants with infeasible PASSes.
--------------------
\5 SSA's work credit system measures individual office productivity,
through tracking of specific tasks, and is used to allocate staffing
resources across field offices nationwide.
PASS PROGRAM IMPACT UNKNOWN
---------------------------------------------------------- Chapter 2:4
Although the PASS program has been in existence for more than 20
years, SSA has no published data on the PASS program's effect on
employment and benefits, nor has the agency maintained the type of
management data necessary for measuring program impact. We attempted
to evaluate the PASS program's impact on employment among former
participants. However, we were unable to adequately determine the
long-term effect of PASS program participation for a number of
reasons, including the fact that most PASS use has been very recent
and that SSA has not maintained comprehensive historical data on PASS
program participants. Furthermore, participation in the PASS program
is based on self-selection, and therefore PASS program participants
may well be different from other SSI and DI beneficiaries in ways
that could affect their future employment and earnings, independent
of the program.
On the basis of the limited data available, we examined the current
status of former participants using selected economic measures of
potential success--increasing earnings, reducing SSI benefits, and
leaving the disability rolls.\6 Among the SSI population, former PASS
program participants were more likely than other SSI recipients to
have sufficient earnings to reduce their SSI benefits, but few left
the rolls as a result of their earnings. The PASS population was
also likely to have been working before using the work incentive.
Nearly half had earnings higher than before they had the PASS.
Success in returning DI beneficiaries to work was negligible.
Generally, earnings among concurrent beneficiaries who were former
PASS program participants were not high enough to terminate DI
benefits. While many concurrent beneficiaries we reviewed left the
SSI program after their PASS ended, nearly all were still receiving
their DI benefits in May 1995. We estimated the cost of additional
cash payments to PASS participants in January 1995 as $2.6 million,
or about $30 million annually.
--------------------
\6 Although mentioned by some PASS preparers and field office staff
as valid indicators of PASS success, we did not evaluate other
possible measures of self-support, including increased employability,
self-esteem, and social integration, or decreased reliance on
employment supports such as job coaching.
SSA LACKS OUTCOME DATA ON
PASS PROGRAM
-------------------------------------------------------- Chapter 2:4.1
The lack of clear outcome measures prevents SSA from evaluating the
PASS program's success in helping recipients return to work.
Consequently, the agency does not have data on the PASS program's
effect on employment during the more than two decades since its
inception and thus cannot make informed decisions on and changes to
the program, such as developing appropriate criteria for setting time
limits on PASSes or determining the best candidates to target, as
well as improving program implementation. While SSA's current
database for the SSI program, the SSR, includes some characteristics
of PASS program participants, it does not systematically track PASS
denials, PASSes that exclude only resources and not income, and the
occupational objectives and budgets listed on plans. Therefore, SSA
also does not know, for example, the acceptance and denial rates for
PASS program applicants, nor the total number of applicants or active
plans. SSA officials responsible for the PASS program are
considering changes to the way program data are tracked, which would
capture some of this information, including denials and resource-only
exclusions.
FORMER PARTICIPANTS MORE
LIKELY TO WORK THAN OTHER
SSI RECIPIENTS; FEW LEFT SSI
ROLLS
-------------------------------------------------------- Chapter 2:4.2
Former PASS participants who remained in the SSI program were more
likely to have earnings that reduced their SSI cash payments than
were other SSI recipients. We examined December 1994 earnings and
benefit data for 4,751 former PASS program participants whose plans
had ended by that date. We excluded from our analysis concurrent
former PASS participants who stopped receiving SSI payments after
their PASS exclusion ended. More than one-third of the 4,751 were
reporting earnings to the SSI program, and the majority of these
earned enough income to at least partially reduce their SSI payment
amount. Half of the wage earners still receiving benefits reported
wages of $360 or more for the month, which would result in a
reduction in monthly benefits of about $147.\7 About one-fifth of the
4,751 former PASS participants were earning more than $500, SSA's
measure of substantial gainful employment for most claimants. SSI
benefits and reported earnings received before program participation
were not available for all of the former PASS holders, and therefore
we could not determine whether their earnings had increased or
benefits had decreased after participating in the PASS program.
Similarly, we could not estimate the cost of PASS program
participation for this group of 4,751 former participants.
In contrast to the experience of former PASS participants, only about
8 percent of other working-age disabled SSI recipients reported any
earnings during December 1994, averaging $300 per person. Similarly,
while 14 percent of the 4,751 former PASS program participants had
earnings high enough to end their cash benefits altogether, and were
receiving Medicaid benefits only, only about 1 percent of other
working-age disabled SSI recipients earned this much.
Very few former PASS program participants left the SSI rolls in the
relatively short time frames for which data were available. Among
the SSI-only former program participants we reviewed, about 160 had
stopped receiving SSI or Medicaid by December 1994 for any
income-related reason. They represented only about 2.5 percent of
the 6,582 PASS program participants 1991 through 1993, including
those concurrent beneficiaries who left SSI after their PASSes ended
because their unearned income was too high. This low rate of leaving
the SSI rolls by working for former PASS program participants is
consistent with the overall experience of both the SSI and DI
programs, which have traditionally seen low rates of return to work.
However, even very limited workforce participation by SSI recipients
can accrue significant federal savings. For example, the reduced
benefits paid to all working recipients in January 1995, including
former PASS program participants, lowered SSI cash payments by $18.6
million in that month alone.
--------------------
\7 The SSI program disregards the first $65 of earned income, and
half of all earnings over that amount, when determining the payment
amount.
MANY PARTICIPANTS HAD PRIOR
EARNINGS; AMOUNT OFTEN
INCREASED AFTER PASS ENDED
-------------------------------------------------------- Chapter 2:4.3
We found that many PASS program participants had already worked while
on the rolls. Because SSI preprogram benefit and earnings data were
not available for most PASS program participants, we examined the
annual earnings data reported to SSA for all workers, regardless of
disability status, to determine whether PASS program participants had
been working before starting their PASSes. About half of both
current and former PASS program participants we analyzed had earnings
the year before their plans began, averaging between $2,000 and
$3,000.
Although we did not determine whether earnings increased as a result
of the PASS, former participants' annual earnings were frequently
higher in the year their plans ended. We reviewed pre- and post-PASS
annual earnings data for 3,659 recipients whose plans had ended by
December 1993. Approximately 55 percent had earnings in the year
before their PASS, and about 60 percent had earnings in 1993. Nearly
half were earning more in 1993 than they did before they had a PASS,
including those with no prior earnings. The median increase in
annual earnings for those with any earnings was more than $3,000. In
addition, about one-fifth of the entire group had no earnings the
year before their PASS started, but were working in 1993.
PASS PROGRAM PARTICIPATION
HAS LIMITED IMPACT ON DI
PROGRAM
-------------------------------------------------------- Chapter 2:4.4
PASS program participation had almost no financial impact on the DI
program. Given the high benefit paid to many DI beneficiaries--$660
a month, on average--a successful PASS program offers a chance for
significant DI trust fund savings if participants leave the DI rolls,
even with the cost of additional SSI benefits. However, while
approximately 40 percent of concurrent beneficiaries left the SSI
rolls after their PASS exclusions ended, about 93 percent were still
receiving their DI benefits in the following year. And for the
remaining 7 percent, many had DI benefits terminated for reasons
other than earnings, such as death. Furthermore, unlike the SSI
program, DI benefits are not offset by monthly earnings below $500,
and previous GAO analysis has shown that earnings above this amount
may not be economically rational for DI beneficiaries who face the
loss of substantial cash and medical benefits.\8 For example, a DI
beneficiary receiving $700 or $800 a month in cash benefits, plus
Medicare benefits, could lose both for earning as little as $501 a
month.
--------------------
\8 See Social Security: Federal Disability Programs Face Major
Issues (GAO/T-HEHS-95-97, Mar. 2, 1995).
OVERSIGHT AND INTERNAL CONTROL
WEAKNESSES LEAVE PROGRAM
VULNERABLE TO ABUSE
============================================================ Chapter 3
While the PASS work incentive provision is designed to be flexible
and individual, oversight from SSA headquarters has been lax and
required little accountability, leaving the PASS program open to
abuse. Although SSA has established few required elements for PASS
plans, we found evidence of noncompliance even with these minimal
standards. In addition, we found that SSA's guidance to its field
staff on administering the PASS program, as discussed in chapter 2,
also lacks several internal control measures necessary to adequately
ensure that expenditures are appropriate and beneficial.
Specifically, SSA has no standard application form or effective time
limits for PASSes, no penalties for willful noncompliance with the
PASS program, and no standards for third-party PASS preparers. These
internal control weaknesses result in SSA having little or no
reasonable assurance that the PASS program is being used
appropriately. While SSA headquarters is aware of many of these
inadequacies and has established a work group to address some,
efforts to date are not sufficient to protect taxpayer dollars and to
restore public confidence.
PASS REQUIREMENTS MINIMAL, NOT
ALWAYS MET
---------------------------------------------------------- Chapter 3:1
SSA regulations require only minimal information to be provided in
PASSes, yet we found that even this information was not always
present. According to regulations, the PASS must be in writing and
(1) state a specific occupational goal, (2) disclose the amount of
money the applicant has and will receive, (3) specify how this money
will be spent to attain his or her occupational goal, and (4) explain
how the PASS money will be kept separate from the applicant's other
funds. SSA's PASS program guidance also states that PASSes should be
"as descriptive as possible about the occupational objective." In
addition, the occupational objective must be a job or profession, or
increased hours or responsibilities at a job already held by the
applicant; completion of education/training programs or the purchase
of transportation are not occupational objectives, although they may
be a means to attain an objective.
Field office staff sometimes approve PASSes even when these minimum
standards are not met. Oversight of field office approvals and
denials varies among the 10 regional offices; not all regions review
the decisions made by their field offices. Our analysis of 366
approved PASSes found at least 20 that did not have acceptable
occupational goals as defined in the most recent POMS. These
included 11 approved plans with objectives solely to complete
education/training programs, 4 plans with objectives to purchase
automobiles and/or maintain car payments, and 5 plans in which no job
or profession was identified. One of these plans, for example,
stated that a PASS was necessary to "obtain a second job."
Our review of PASSes also revealed plans that did not state the
amount of money recipients had and would receive, nor how the PASS
money would be kept separate from the applicant's other funds. For
example, 27 of the PASSes we reviewed did not show what money and
other resources the PASS program applicant had or would receive to
use in attaining the occupational objective. Without this
information, SSA field office staff cannot determine whether the
occupational goal is economically feasible. Further, at least 75--or
about 20 percent--of the PASSes did not describe how the applicant
would keep income/resources separate from other assets. If PASS
funds are commingled with other benefits in the same account, it is
difficult for SSA field office staff to measure compliance and ensure
that PASS funds are spent only for approved items.
PASS INTERNAL CONTROLS
INSUFFICIENT TO GUARANTEE
TAXPAYER PROTECTION
---------------------------------------------------------- Chapter 3:2
SSA's internal controls over the PASS program result in only limited
guarantees that program moneys are being used appropriately and that
taxpayer dollars are being spent judiciously. SSA regional and field
office staff raised concerns about the integrity of the PASS program,
noting that in its current state the program may be vulnerable to
abuse. While not all of the internal control weaknesses we found
have a proven adverse impact, each contributes to the potential for
misuse. Internal control weaknesses we noted included the lack of a
standard application form, no effective limits on the length of time
a PASS may be in effect, few penalties for willful noncompliance with
the PASS program, infrequent and nonstandardized compliance reviews,
and inadequate controls over third-party PASS preparers. While SSA
headquarters staff are aware of field office concerns, their efforts
to date, including an internal work group on the PASS program and a
new version of the POMS, have not sufficiently addressed them.
NO STANDARD APPLICATION FORM
REQUIRED
-------------------------------------------------------- Chapter 3:2.1
SSA regulations do not require a standard PASS program application
form, and as a result, PASSes vary in specificity and completeness
both within and across SSA field offices nationwide. Further, some
SSA field office staff told us that many of the details they would
find helpful for evaluating PASSes were often not provided on plans.
SSA has developed a sample form, included in a pamphlet for SSI
recipients, which captures the minimum of required types of
information necessary to process the application. (See app. I.)
However, applicants are not required to use this form. PASSes we
reviewed ranged from a few sentences to very detailed business plans.
For example, one PASS program applicant submitted a nine- page plan
to open a business providing on-site fish aquarium maintenance for
offices and other business establishments. Another presented an
application to become a self-employed seamstress, which included an
assessment of the market demand for her services and a detailed
description of the need for proposed purchases. We also saw PASSes
consisting of a few words jotted on notebook paper as well as plans
lacking any specific occupational goal or discussion of the need for
proposed purchases.
NO REAL LIMITS ON LENGTH,
NUMBER OF PASSES
-------------------------------------------------------- Chapter 3:2.2
Current limits on the length of PASSes are being reviewed by SSA and
may soon be removed in response to a congressional mandate that SSA
develop individualized criteria for determining the time limit of a
plan. Program regulations provide that PASSes be approved for an
initial period of up to 18 months. Changes and extensions must be
approved by SSA, with a 36-month maximum for general occupational
goals and 48 months maximum for PASSes that require lengthy
educational or training programs. These time limits have been
successfully challenged in one federal district court as
"unreasonable" and without consideration of individual needs,\9 and
some PASS advocates have actively lobbied to have them removed. In
1992, the SSI Modernization Project recommended that the SSA
Commissioner remove the regulatory limit on PASS length, and an
internal SSA memo recommended allowing extensions beyond the existing
limits, noting that time limits could be viewed as an additional
barrier that keeps people with disabilities from achieving
self-support. These recommendations were never implemented.
Instead, the Social Security Independence and Program Improvements
Act of 1994 (P.L. 103-296)
required that SSA reexamine criteria for limits on the length of
times PASSes may be active by taking into account reasonable
individual needs. In an emergency teletype dated January 1995, SSA
instructed field offices to grant 6-month extensions to PASS program
participants who have exceeded the 36- or 48-month time limits, as
long as the individual is in compliance and still needs to exclude
income or resources to achieve his or her goal. Regulations
currently under development will likely remove absolute time limits
on the length of time a PASS may be in effect, according to SSA
officials.
Because the PASS program is operating without clearly defined
objectives and other internal controls, removing all time limits for
PASS completion would likely exacerbate the program's vulnerability
to misuse. Most SSA region and field office staff we interviewed who
administer the PASS program do not want all PASS time limits
eliminated. Some staff told us they believed that without any time
limits PASS program participants may abuse the provision, staying out
of work indefinitely and continuing to receive benefits such as
Medicaid as well as increased SSI payments; others said that field
office staff lack the background to make assessments of reasonable
lengths of time for proposed PASSes in light of the applicant's
disability.
No limit is placed on the number of approved PASSes an individual can
have, provided that each one involves a different occupational
objective. While only one PASS can be in effect at a time, a
participant could have an unlimited number of subsequent plans if the
first is unsuccessful. Individuals can even have a new plan if they
were found to be deliberately noncompliant on a previous plan. While
few in number, we saw instances where individuals were on their
second or third PASS. For example, we reviewed one case in which a
recipient had previous PASSes to be a word processor and receive a
vocational evaluation, and now was pursuing a third goal of being a
florist.
--------------------
\9 Panzarino vs. Heckler, 624 F.Supp. 350 (S.D.N.Y. 1985).
GUIDANCE ON ACCEPTABLE
EXPENDITURES UNCLEAR
-------------------------------------------------------- Chapter 3:2.3
The lack of adequate guidance on acceptable PASS expenditures means
that SSA cannot provide reasonable assurance that PASS funds are
being spent appropriately. While POMS states that PASSes must
explain the necessity of each proposed purchase in the PASS budget,
and that these items must be reasonably priced (moderate or fair and
not extreme or excessive within the geographic location), it offers
insufficient specific guidance on allowable PASS expenditures,
according to field office staff. While the current POMS provides
examples of acceptable expenditures such as tuition, books, uniforms,
equipment, child care, and attendant care that are acceptable if they
are found necessary and reasonably priced, it places no absolute
limits on the types of items that can be approved, nor their costs.
For example, the POMS specifies only that a luxury or sports car
would "rarely" be appropriate, but sets no limit on the amount that
can be spent on an automobile. Furthermore, the standards for
justifying necessity or cost have not been specified, leaving them
open to individual interpretation. Some SSA field office staff cited
examples of approved PASSes that they believed did not contain
evidence that the proposed expenditure items were reasonably priced
and/or in direct relation to the proposed occupational goal. Not
surprisingly, approved and denied expenditures in the plans we
examined were inconsistent. For example, the proposed purchase of a
$13,000 automobile in one plan was denied on the basis that the
applicant did not provide sufficient evidence to justify the car's
cost; in another plan, the purchase of an automobile was denied
altogether because the plan did not specify why the purchase of any
automobile was necessary to achieve the occupational goal. In
contrast, we also saw plans in which similarly expensive vehicles
were approved, or in which less justification for purchasing an
automobile was provided. Some field office staff also told us that
some individuals who helped prepare PASSes were occasionally
unwilling to provide documentation to support proposed expenditures.
COMPLIANCE MONITORING IS
INFREQUENT AND
NONSTANDARDIZED
-------------------------------------------------------- Chapter 3:2.4
The periodic reviews SSA requires to determine whether PASS program
participants are complying with their plans are infrequent and
nonstandardized. These reviews are intended to ensure adherence to
the spending plan and to determine whether the occupational objective
has been reached or whether the participant is meeting plan
milestones. Recent changes to the POMS require compliance reviews at
least every 12 months, compared with the previous requirement of at
least every 18 months, and require reviews every 6 months under
certain circumstances. SSA field staff in most offices we visited,
as well as several third-party PASS preparers, told us that frequent
reviews would help prevent noncompliance and the resulting
overpayments from additional SSI payments to PASS program
participants not following their plans. In addition, staff in at
least four offices told us they review plans more frequently than the
POMS guidelines recommend if they have concerns about the feasibility
of a plan. One field office staff member, for example, said that she
performs early compliance reviews for plans that include high
expenditures, such as a $20,000 car.
SSA headquarters, however, does not have specific requirements about
how compliance reviews should be done. The POMS directs field office
staff to conduct the review in a manner convenient to the individual,
either in person, by mail, or over the telephone. We found that all
three methods were used. Ensuring compliance consists of reconciling
actual expenditures with funds set aside under a plan and determining
whether the program participant has reached his or her goal. Field
office staff cited examples of PASS program participants submitting
grocery bags or shoe boxes of receipts to be reconciled. In
addition, according to SSA field office staff, many PASS program
participants do not understand how to account for their funds, and
some have not kept records of purchases. Little specific information
about compliance reviews is included in the notification letter sent
to individuals when their PASS is approved. Furthermore, some
third-party PASS preparers told us that proper accounting of
expenditures can be a difficult task for some program participants.
FEW PENALTIES EXIST FOR
WILLFUL NONCOMPLIANCE
-------------------------------------------------------- Chapter 3:2.5
Guidance to field office staff does not make a distinction between
willful noncompliance and noncompliance for other reasons. While the
POMS specifies that a series of unsuccessful plans "may be grounds"
for questioning the feasibility of a new PASS, there are no
prohibitions on subsequent PASSes for individuals who have abandoned
or willfully not complied with previous ones. Materials from one
organization that prepares PASSes, for example, tells prospective
clients that "there is no penalty for not obtaining or maintaining
employment after participating in PASS." POMS directs SSA field
office staff to ask the participant for evidence of PASS
expenditures. If the participant provides none, the field office
staff must obtain authorization from the participant to contact
appropriate third parties to verify savings and purchases.
Therefore, SSA field office staff must rely on the cooperation of the
program participant and the third party to obtain needed evidence.
SSA headquarters guidance is unclear about actions field office staff
should take if a PASS program participant is noncompliant with his or
her plan. Although SSA regulations require all changes to PASSes to
receive prior SSA approval, if during a compliance review a PASS
program participant is found to be out of compliance with the terms
of the PASS, the POMS gives the participant the opportunity to amend
the plan and return to compliance. Specifically, if the PASS program
participant has not met the occupational goal or is not in
compliance, the POMS states that field office staff should amend the
PASS retroactively to fit the participant's circumstances if this
will result in compliance. For example, if an individual proposes to
use a PASS to attend college as an engineering student and
subsequently changes majors to journalism, the plan can be amended to
reflect this change if this would make the program participant
compliant with his or her amended plan. Similarly, if a PASS budget
includes the purchase of a used car and the participant leases a new
car instead, the plan can also be changed retroactively.
SSA's POMS also does not encourage terminating PASSes for recipient
noncompliance. If the PASS cannot be amended or amendment would not
result in compliance, POMS recommends suspending the PASS.\10
Terminating a PASS is recommended only as a last option. If they are
found noncompliant, program participants may be charged with repaying
the additional benefits they received during their PASS. However,
some SSA field office staff we interviewed were unaware they could
collect these overpayments from individuals who had not complied with
their plans. The amount of overpaid funds that can be withheld by
SSA from a subsequent SSI check is limited to 10 percent of the total
benefit, unless the claimant agrees to a higher amount.
--------------------
\10 When a PASS is suspended, PASS funds are no longer disregarded by
SSA when calculating the benefit amount. However, the PASS may be
resumed any time within the next 12 months.
SSA LACKS INTERNAL CONTROLS
OVER THIRD-PARTY PASS
PREPARERS
-------------------------------------------------------- Chapter 3:2.6
SSA guidance states that anyone can help prepare a PASS, including a
vocational rehabilitation counselor, an organization that helps
people with disabilities, an employer, a friend or relative, or SSA.
Of the 380 PASSes we reviewed, more than half were prepared by third
parties. Although SSA staff will help disability benefit recipients
to fill out a plan free of charge, field office staff infrequently
prepare PASSes. Indeed, SSA field office staff prepared only 14 of
the 380 PASSes we reviewed. Recognizing the need for outside help,
SSA field offices are to maintain a referral list of organizations
that can assist people with writing their PASS, for a fee or not,
although it does not endorse any organization.
Although SSA has determined that anyone can help prepare a PASS, it
did not establish minimum standards for third-party PASS preparation.
As a result, the services provided by third-party PASS preparers vary
greatly. Some preparers we interviewed provide extensive assistance
and resources to their clients to determine their goals and needed
expenses, including vocational evaluations of their abilities and
needs; others provide only guidance to clients, directing them to do
their own research. In addition, the amount of vocational
rehabilitation expertise and experience varied considerably among the
PASS preparers we interviewed. Some were certified vocational
rehabilitation professionals or had graduate training; others had no
special experience or training in assisting people with disabilities
with obtaining or maintaining work. In the last several years, a
number of SSI and DI recipients have received training, generally
funded by a PASS, on preparing PASSes for a fee in several states,
including Iowa, Oregon, Maine, and Colorado.
The fees charged by preparers also range considerably. For example,
the median fee charged among the PASSes we reviewed was $200, while
the highest fee for PASS preparation and monitoring was $832. Some
PASS preparers charge fees for PASS preparation as well as additional
fees for other services, such as PASS amendments and monitoring.
Other PASS preparers charge no fees but provide some or all of the
services mentioned. POMS clearly states that fees are acceptable
PASS expenditure items, but it is not clear whether SSA anticipated
the amount of fees PASS preparers would charge in some cases and
whether SSA intended to allow the applicants to claim the total
amount as a planned PASS expenditure that would be offset by
additional SSI payments. According to the current POMS, PASS
preparation fees should be evaluated on the basis of the preparer's
involvement in formulating the plan, including the type of work done
and number of hours. However, the absence of preparer standards and
qualifications and the lack of nationwide SSA guidelines on
appropriate charges make this guidance difficult for SSA field staff
to administer. At least one SSA region issued its own guidance on
acceptable fee amounts, recommending limits of $25 an hour and a
total of no more than $500 for an individual PASS. Other regions
approve fees in excess of these recommended limits.
SSA lacks a uniform policy toward third-party PASS preparers, and
conflict exists between some preparers and the SSA field staff.
While some PASS preparers encourage good relationships with SSA,
others have adversarial relations with local field offices. The lack
of written objectives and a clear definition of success creates the
potential for disagreement and conflict regarding PASS approvals and
denials. We found in at least six offices we visited that this
conflict was disruptive to field office operations.
Most of the PASS preparers we interviewed expressed frustration with
the inconsistencies in PASS approvals and denials across field
offices where they submit plans. At the same time, some SSA field
office staff told us they believed that some third-party preparers
wrote "ridiculous" PASSes, unlikely to result in economic
self-support, or simply designed to maximize an individual's
purchases or the preparer's earnings. Field office staff and PASS
preparers we spoke with were sometimes divided as to whether
individuals who request a PASS should have a high probability of
achieving the occupational goal, or if it should just be
theoretically possible. Some PASS preparers we spoke with believed
that nearly all PASSes are feasible, citing the requirement that the
PASS program be liberally interpreted. One PASS preparer told us,
for example, that the PASS program is an individual's opportunity "to
pursue their dream." Another said he encourages his clients to "shoot
for the stars" when developing a PASS.
Staff in at least nine SSA field offices we visited said that they
felt pressured by third-party PASS preparers to approve PASSes. A
few third-party preparers said they use tactics such as repeated
calls to SSA field offices, involvement of advocacy groups,
publicity, and letters to local congressional representatives to
pressure field office staff to approve plans. Tension between PASS
preparers and SSA field office staff may also arise because PASS
preparers sometimes get paid their fee only if a PASS is approved.
SSA has no internal controls to prevent conflicts of interest on the
part of third-party preparers. For example, some PASS preparers also
provide vocational and rehabilitation services for people with
disabilities, and may write PASSes to pay for the services they also
provide. We saw plans, for example, written to fund job coaching or
independent living services provided by the agency developing the
PASS.
SSA IS AWARE OF INTERNAL
CONTROL WEAKNESSES BUT HAS
TAKEN LITTLE ACTION
-------------------------------------------------------- Chapter 3:2.7
SSA is aware of and is trying to address some, but not all, of the
internal control weaknesses present in the PASS program. Many are
detailed in a 1994 internal SSA PASS program strategy paper. In
addition, SSA issued new POMS guidance on the PASS program in January
1995 in an attempt to provide field office staff with better control
over the program. Nonetheless, field office staff in nearly every
office we visited reported that SSA's guidance on administering the
PASS program still does not provide them with enough specifics for
approving and denying plans. In September 1994, SSA assembled a work
group to address various PASS program issues, including the role of
third-party PASS preparers and field office staff's evaluation of
plans. This group reconvened in August 1995 to review data from an
internal SSA study of the PASS program conducted by the Office of
Program Integrity Review and to address several related policy issues
stemming from this study. SSA officials responsible for the PASS
program told us they are currently considering a number of regulatory
and policy options resulting from this group. In the near future,
SSA plans to disseminate materials to educate PASS program
participants and third-party preparers about PASS rules and
responsibilities, but this will not address the issues of third-party
preparer qualifications, services provided, fees charged, or
conflicts of interest.
CONCLUSIONS, MATTER FOR
CONGRESSIONAL CONSIDERATION, AND
RECOMMENDATIONS
============================================================ Chapter 4
SSA has done a poor job implementing and managing the PASS program.
The PASS program is small, comprising less than three-tenths of 1
percent of the working-age disabled SSI population; however, SSA pays
about $30 million in additional cash benefits to PASS program
participants annually, not including medical and other benefits.
Moreover, the large potential for future growth merits attention now
to serious management and internal control weaknesses.
As a result of the PASS program's design, more than 40 percent of all
program participants had income, primarily DI benefits, that exceeded
SSI standards and used their PASS to gain eligibility for federal SSI
payments. These individuals maximize their federal benefits while
participating in the PASS program, but almost none leave the DI rolls
as a result of work. In addition, SSA has allowed PASS preparation
and monitoring fees paid to third parties to be disregarded when
calculating benefit amounts and has neither placed limits on the
amount of such fees nor set standards for what services those fees
should cover. Administrative action on these issues by SSA may well
result in legal challenge because of SSA's long-standing practices of
allowing DI beneficiaries to use the PASS program as a means for
gaining SSI eligibility and of allowing fees to third-party preparers
as PASS expenses.
SSA has not translated the Congress' broad goals for the PASS work
incentive into a coherent program design, and it has not provided
adequate criteria or guidance to field offices charged with
administering the program. In following the congressional directive
that the work incentive be "liberally construed," SSA has placed few
limits on the program, such as stringent criteria for assessing
whether an individual PASS work goal is feasible and whether proposed
expenses are appropriate. SSA has also not developed outcome
measures to evaluate the program's effect on participants' return to
work. At the same time, field office staff who administer the PASS
program receive inadequate training, information, and credit for this
task.
Finally, SSA has not addressed internal control weaknesses that have
left the program vulnerable to abuse and undermined program
integrity. The PASS program lacks even minimal controls to provide
reasonable assurance that additional funds are being spent
appropriately and to safeguard against fraud and abuse. Currently,
the lack of a standardized application form or compliance review
process results in inconsistent and inequitable implementation, and
insufficient guidelines on expenditures and lack of penalties for
willful noncompliance make the PASS program a potential target for
abuse. Further, while third-party PASS preparers may play an
important role in assisting disability benefit recipients, some of
the services provided and fees received could create conflicts of
interest and additional potential for abuse. Through its recently
assembled work group, SSA is planning to address some of the design
and internal control weaknesses we identified, but it is too early to
determine whether SSA's actions will be effective.
MATTER FOR CONGRESSIONAL
CONSIDERATION
---------------------------------------------------------- Chapter 4:1
The Congress may wish to consider whether individuals otherwise
financially ineligible for SSI because their DI benefits or other
income exceeds the eligibility threshold should continue to gain
eligibility for SSI through the PASS program.
RECOMMENDATIONS
---------------------------------------------------------- Chapter 4:2
SSA needs to make major improvements in the management of the PASS
program to achieve more consistent administration, better support
field staff, collect data sufficient to control and evaluate the
program, and provide internal controls against program waste and
abuse. We recommend that the Commissioner take the following
actions, or, if necessary, seek legislation to do the following:
clarify the goals of the PASS program;
decide whether fees paid to third parties should continue to be
disregarded when calculating benefit payment amounts and whether
the amount of disregarded fees should be capped;
standardize the PASS program, including the application, reporting
guidelines on expenditures for compliance reviews, and
informational and educational materials for PASS preparers;
improve support to field staff, including enhancing their ability
to evaluate the feasibility of proposed work goals, and
requiring PASSes to incorporate additional data relevant to
determining their feasibility, including the applicant's
disability, previous work experience, if any, and education;
gather additional management data on PASS program participation and
impact, and use these data to evaluate the impact of PASS
program participation on employment; and
strengthen internal controls by establishing more specific
guidelines on acceptable PASS expenditures, developing penalties
for willful noncompliance with the PASS program, including a
determination of whether subsequent plans are permissible,
examining the role of third-party preparers, including their
potential financial conflicts of interest, and considering the
strength of existing safeguards against abuse when determining
the appropriate limits on the length and number of PASSes
individual participants may have.
SSA'S COMMENTS AND OUR
EVALUATION
---------------------------------------------------------- Chapter 4:3
SSA generally concurred with our recommendations, and cited in its
comments actions it intends to take to address them, including such
actions as developing a standardized application form and providing
improved support to field office staff. We deleted a recommendation
in our draft report regarding the work credit field office staff
receive for PASS tasks, because of the progress SSA has made in this
area. SSA commented that it had limited statutory authority to
address all of our recommendations. As we had stated in our
recommendations, SSA may find it necessary to seek legislation to
implement program changes. More details on SSA's specific proposed
actions are included in appendix VI, as well as a full copy of SSA's
comments and our response.
(See figure in printed edition.)Appendix I
SAMPLE PASS FORMAT
============================================================ Chapter 4
DEMOGRAPHICS OF PROGRAM
PARTICIPANTS
========================================================== Appendix II
Relative to the whole SSI disabled population, PASS program
participants are younger and more likely to be men. More than a
third of program participants in December 1994 were 30 years old or
younger, and two-thirds were less than 40 years old. In contrast,
more than half of the working-age SSI population was 40 years or
older. About 55 percent of all PASS program participants were men,
compared with only 45 percent of all disabled SSI recipients. Half
of PASS program participants had been receiving SSI benefits for more
than 4 years, and a few had been on the rolls since the SSI program
began, more than 20 years ago. (See table II.1.)
Table II.1
PASS Program Participants Are Younger
Than Working-Age SSI Population
Noneld
erly
adult
disabl
PASS ed SSI
partic recipi
Characteristic ipants ents
------------------------------------------------------ ------ ------
30 years or younger 35 21\a
40 years or older 33 56
Male 55 45\b,c
Disabled with mental illness 41 30\b
Benefits managed by a representative payee 19 31\c
Concurrent beneficiary 75 32\c
----------------------------------------------------------------------
Note: Data are as of 1994.
\a Ages 29 and younger.
\b Includes disabled children.
\c Includes elderly receiving SSI because of a disability.
Source: SSA.
As shown in table II.1, a larger proportion of PASS participants (41
percent) than the general SSI disabled population (30 percent) had
mental illness as their disabling diagnosis. However, program
participants were less likely to have another person, known as a
representative payee, handling their benefits. About one in five had
a representative payee, compared with nearly one in three disabled
adult SSI recipients. A very few PASS program participants were also
using other SSI work incentives to deduct expenses related to
working, such as impairment-related work expenses or work expenses
for the blind.\11
We found that in January 1995 approximately one-third of all
unmarried PASS program participants were eligible for the maximum
federal SSI payment allowable for persons with their living
arrangements. The median SSI payment to all PASS program
participants in that month was $436. On average, program
participants received $270 more in federal SSI payments in January
1995 than they would have been entitled to without their PASS.
--------------------
\11 The same expenses cannot be deducted under more than one work
incentive.
SITES GAO VISITED
========================================================= Appendix III
We selected SSI field offices for site visits that had a
comparatively large number of approved PASSes in March 1994. To
avoid duplication, we did not visit any office included in a 1992
review of the PASS program by the Office of the Inspector General,
even through these offices often had very high numbers of plans as
well and were located in the same areas. Within each office, we
spoke with all of the claims representatives and management staff
available, as a group, who had any experience reviewing PASSes and
administering the PASS program.
Table III.1
Sites GAO Visited
Number
of
PASSes
review
Field office ed
-------------------------------------------------------------- ------
California
Berkeley District Office 31
Fairfield District Office 20
San Francisco Civic Center District Office 17
San Francisco Western Addition Branch Office 13
Santa Rosa District Office 26
Colorado
Aurora District Office 6
Boulder District Office 9
Englewood Branch Office 19
Greeley District Office 13
Lakewood District Office 21
Maine
Portland District Office 15
Saco Branch Office None\a
Massachusetts
Somerville District Office 11
Quincy District Office 22
Michigan
Ann Arbor District Office None\a
Vermont
Montpelier District Office 14
Rutland District Office 46
Wisconsin
Fond du Lac District Office 26
Madison District Office 71
======================================================================
Total 380
----------------------------------------------------------------------
\a We conducted interviews at these offices but did not review any
files.
METHODOLOGY
========================================================== Appendix IV
We derived statistical data on PASS plans and participants from (1)
data we collected during PASS file reviews in selected SSA field
offices and (2) existing SSA databases. The following describes our
methodology for each source.
PASS FILE REVIEW
-------------------------------------------------------- Appendix IV:1
We selected the 19 sites for our visits from a list of 94 offices
with 20 or more active PASSes in March 1994. In selecting offices to
visit, we factored in those in areas we knew had active third-party
PASS preparers. The Program Operations Manual System requires field
offices to maintain copies of PASSes separate from other client files
in a PASS "library." In each office, we drew a sample of plans from
the PASS library, choosing a random starting point and reviewing
every second, third, fourth, or fifth PASS, depending on the total
number of plans. We did not set a target for any office, and the
number of plans actually reviewed depended on the complexity of the
plans and the time available in each office. The files we reviewed
were a mixture of active, completed, and prematurely terminated
PASSes, including both approved and denied plans. While they are
representative of all PASSes administered by those offices where they
were reviewed, our findings regarding their characteristics cannot be
generalized to all PASSes nationwide.
Data that were captured from PASSes using a computer-based
questionnaire were then compiled and analyzed using a statistical
type and title, for which aggregate statistics are cited in this
report, we did an independent 100-percent verification of the
accuracy of our data entry. During pretesting of our data capture
procedure in the Ann Arbor, Michigan, district office, we determined
that much of the data we sought, such as the approved plan starting
date and approved budget for the plan, was not routinely available
from PASS files. Therefore, for items that are used only anecdotally
in this report, such as the costs of proposed purchases, we did not
do a complete data entry verification. We also did not verify that
PASS participants were actually complying with their plans, because
this was the emphasis of the internal SSA review of PASS. For this
reason, our data only reflect approved proposed work goals and
purchases.
ANALYSIS OF SOCIAL SECURITY
DATA
-------------------------------------------------------- Appendix IV:2
We used three separate SSA databases to profile current and former
PASS program participants--the Workers' Database, Master Earnings
File, and Master Beneficiary Record. The Workers' Database contains
selected data fields on all SSI recipients with work activity in
their most recent 12 months of program eligibility, regardless of
when that last eligibility period ended. The Workers' Database is
extracted monthly from the Supplemental Security Record. We used the
December files from 1991 through 1994 to determine PASS program
participants' benefit status and the amount of earnings they were
reporting to the SSI program. By comparing these four December
files, we were able to track program participants over time. Table
IV.1 shows the 1994 status of former PASS program participants.
Because we were only interested in the potential impact of PASS
program participation on earnings, we did not access current benefit
data for former PASS program participants who were not working. We
assumed that individuals not selected into the Workers' Database in
subsequent years had no PASS or were not reporting any earnings to
the SSI program. We could not tell if they were still receiving SSI
benefits. However, we assumed that they had not left the SSI program
for earnings-related reasons because these earnings would have been
present during their last 12 months of program eligibility.
Table IV.1
Status of 1991-93 PASS Program
Participants as of December 1994
Indivi
Indivi dual
dual found
was on
not Worker
found s'
on Databa
1994 se,
Worker but
s' had no Had
First year the PASS appeared on Databa 1994 1994
Workers' Database se PASS PASS Total
-------------------------------------- ------ ------ ------ ------
1991 1,252 1,500 818 3,570
1992 855 1,229 1,527 3,611
1993 299 1,447 2,862 4,608
======================================================================
Total, all years 2,406 4,176 5,207 11,789
----------------------------------------------------------------------
To obtain a more complete picture of PASS program participants'
earnings, we obtained data from SSA's Master Earnings File.
Information on wages and self-employment earnings for all individuals
with Social Security numbers, regardless of disability status, is
sent directly to SSA from employers and the Internal Revenue Service.
We obtained annual earnings data for all individuals with PASSes in
the four Workers' Database files. The files contained data from 1937
to 1993, the last year of completed postings. These data provided a
more comprehensive profile of earnings and enabled us to compare pre-
and post-PASS earnings for those individuals whose PASSes ended
before December 1993.
Finally, for all PASS program participants who were concurrent
beneficiaries, we extracted selected fields from the Master
Beneficiary Record in May 1995. The MBR contains benefit and
demographic data for all DI beneficiaries. We used these data to
track DI benefit status for former PASS program participants,
including those who left the SSI rolls after their PASSes ended.
SELECTED DATA FROM PASSES GAO
REVIEWED
=========================================================== Appendix V
The following is a 10-percent sample of the occupational goals, as
written, for the 366 approved PASSes we reviewed. These plans
represent a mixture of active and completed PASSes.
OCCUPATIONAL GOAL
--------------------------------------------------------- Appendix V:1
Complete bachelor's degree in political science to become a
consultant
Computer specialist
Apply to law school to be a lawyer
Marriage, family, child counselor
Budget analyst
Receive a vocational rehabilitation evaluation
Start a lawn care business
Obtain diploma and job in medical administration
Complete degree at Boston College and seek employment
Computer science
Complete degree and become a graphics programmer
Attend the University of Massachusetts to become a theater
administrator
Work 15 hours a week as a housekeeper at Budgetel
Multimedia/video production developer
Attend school to learn car repair
Maintain job as a filing clerk
Keep clerical assistant job
Licensed real estate agent
Full service custodian
Arts and crafts decorative artist
Video production degree
Education in business administration to be an accounting assistant
Counselor
Environmental scientist
Certified drafter
Accounting clerk
Train field dogs for hunting
Paralegal
Self-employed book indexer
Obtain career planning to work in accounting field
Custodian
Part-time employment as a janitor/maintenance worker
Part-time employment as shipping/receiving clerk
Clerical work at Walmart
Biotechnology lab technician
Newspaper or magazine journalist
Video production technician
(See figure in printed edition.)Appendix VI
COMMENTS FROM THE SOCIAL SECURITY
ADMINISTRATION AND OUR EVALUATION
=========================================================== Appendix V
those in the report text appear at the end of this appendix.
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
The following are GAO's comments on the Social Security
Administration's letter dated December 20, 1995.
GAO COMMENTS
--------------------------------------------------------- Appendix V:2
1. We are aware of the work group study and recognize that it
examined the PASS program during the same period we conducted our
review. As SSA noted in its comments, the work group's findings are
consistent with ours.
2. Our conclusions describe possible statutory barriers to proposed
recommendations, and direct the Commissioner to seek legislative
authority, if necessary, to implement these recommendations. (See
ch. 4.) In its comments, SSA noted that it did not have the
statutory authority to address all of our recommendations. However,
many of the issues we raised are already well known to SSA, and the
agency could have sought legislative action or clarification at any
time. To our knowledge, SSA has never sought legislative remedy for
its concerns. By including as a matter for congressional
consideration the issue of non-SSI recipients who use the PASS
program to gain eligibility for SSI, we acknowledged that SSA could
not unilaterally change the eligibility criteria for the PASS
program.
3. The definition of self-support SSA cites is not explicitly
included in literature to claimants about the PASS program.
Furthermore, while the January 1995 POMS does note that participation
in the PASS program is expected to "produce additional earned income
to eliminate, or at least reduce, SSI payments," many field staff
expressed confusion about the intended goals of the program. Our
interviews with field office staff and third-party PASS preparers
showed that many different interpretations of self-support were being
used to develop and evaluate plans and that approvals were
inconsistent as a result. SSA did not provide us with any specific
information about forthcoming changes to the POMS or other PASS
program policies and procedures, including a strategy to
operationalize this definition of self-support. (See pp. 19-20.) We
conducted our field interviews from January through March 1995.
Staff in nearly all the field offices we visited had received and
been briefed on the revised PASS program instructions. Although they
had limited experience implementing them, the majority of staff
members told us that they believed the new instructions would not
provide sufficient guidance for approving and denying plans. (See p.
37.)
4. Language from the House Report accompanying the PASS work
incentive, including the directive that the provision be liberally
construed, was included throughout the report and remains. The
report was not revised.
5. We believe that SSA's proposal to instruct regional and local
management to be cognizant of PASS workload when allocating staff and
resources among field offices is a reasonable one. In addition, the
proposed development of PASS specialists to review and approve or
deny PASSes should mitigate the workload burden on individual
offices. Accordingly, we have deleted our recommendation on the
workload credit for the PASS program. (See p. 39.)
6. We are not suggesting that SSA implement across-the-board time
limits to cover all PASSes. Rather, the Social Security Independence
and Program Improvement Act of 1994 requires SSA to establish
criteria for time limits that take into account the reasonable length
of time needed to achieve an individual employment goal, as well as
other appropriate factors. We believe that within the confines of
the law, time limits for individuals, although not across-the-board
limits, can and should be established that do not compromise SSA's
ability to control the PASS program.
7. While we recognize that SSA does not have the statutory authority
to regulate private businesses, in its comments the agency notes that
it has the authority "to determine the appropriateness of a PASS
preparation fee as an excludable expense under a PASS." Similarly,
SSA could place limits on the amount of the fee that could be
excluded under a PASS, regardless of the amount charged to the
program participant. In addition, SSA could issue guidelines to its
field staff regarding circumstances under which fees would not be
excludable, such as when the preparer is already providing other
services to be paid with PASS funds.
8. We recognize that there are consequences for noncompliance with a
PASS, including losing the additional funds and/or SSI eligibility
resulting from PASS exclusions and that possible overpayments are
subject to recovery. Accordingly, the report was revised to
acknowledge SSA's ability to apply statutory penalties for
nonreporting. However, these consequences are the same whether a
plan has been purposely abandoned or noncompliance has occurred for
another reason beyond the claimant's control, such as illness or
hospitalization. Specifically, as stated in the report, neither the
POMS nor PASS program regulations prohibit individuals with a history
of deliberate PASS noncompliance from having another plan approved.
The report has also been revised to clarify the limits of SSA's
authority in recovering SSI overpayments. (See pp. 34-35.)
9. We recognize that the PASS work incentive was enacted as a
provision in the SSI program legislation and was never legally
established as a distinct program. However, since the House
Conference Report (103-670)
accompanying the Social Security Independence and Program Improvement
Act of 1994 refers to the "PASS program," we have opted to use the
term for ease of understanding.
10. The report was revised to clarify the exact language authorizing
the PASS provision.
11. The request in the law that we review the PASS program was broad
in scope. Recognizing other ongoing studies of the PASS program, we
reached agreement with the relevant congressional committees on these
objectives.
12. The report was revised to clarify the reason SSA is modifying
time limits for individual plans.
13. No revision was made as this clarification about the maximum
amount of additional SSI benefits PASS program participants may
receive is already present in the report. (See p. 13.)
14. The report was revised to clarify that SSA has not published any
program impact data for the PASS program, including the internal data
used by the SSA work group, developed in a study by the Office of
Program Integrity Review. We reviewed drafts of the Office of the
Inspector General report; however, the OIG review did not encompass
the PASS program's impact on employment and benefits.
15. The report was revised to include additional information about
the minimum frequency for compliance reviews.
16. The report has been revised to recognize that SSA made an
explicit decision to allow DI beneficiaries and others to use the
PASS program to gain eligibility for SSI payments because of
congressional direction to liberally construe the provisions of the
statute. In addition, the issue of eligibility was raised in a
matter for congressional consideration in the draft report SSA
reviewed. (See pp. 38-39.)
17. We believe that participation in the PASS program does serve to
safeguard or protect cash benefits, because excluding income or
resources under an approved plan prevents a participant's cash award
from being reduced by this income or resources. The report was not
revised.
18. The report was revised to clarify Medicaid eligibility for SSI
recipients.
19. The report was revised to reflect SSA's comment regarding the
cognizant office for PASS program policy. Although the Office of
Disability does not have line responsibility for PASS program policy,
the Assistant Commissioner for the Office of Disability discussed
with us the relationship between the PASS program and the Office of
Disability's Employment Strategy.
20. The report was revised to clarify the effect of
impairment-related work expenses on SSI benefits.
21. The report was revised to clarify that items must be reasonably
priced. However, SSA does not place any dollar limits on PASS cost
items.
22. The report was revised to clarify our findings about earnings.
GAO CONTACTS AND STAFF
ACKNOWLEDGMENTS
========================================================= Appendix VII
GAO CONTACTS
Cynthia Bascetta, Assistant Director, (202) 512-7207
Sara Koerber Galantowicz, Evaluator-in-Charge, (617) 565-7463
Lisa P. Gardner, Evaluator, (303) 572-7468
ACKNOWLEDGMENTS
In addition to those named above, the following individuals made
important contributions to this report: Susan Higgins and Michelle
McCormick assisted with the design, field work, and report drafting;
Edmund Price designed our data collection instrument for field
review; Daniel Schwimer provided legal review; Jay Smale and James
Wright assisted with data analysis and presentation; and Vanessa R.
Taylor performed all analyses of Social Security data.
*** End of document. ***