The Social Security Administration's reports to Congress and the public give "an overly favorable impression" of the accuracy of its payments to 33 million retired beneficiaries, according to the General Accounting Office.
Although the Social Security Administration claims a payment accuracy rate averaging 99.5 percent for 1981-86, the GAO found that in January 1984, the Social Security Administration was making incorrect retirement and survivor payments in about 4.5 million cases each month and that the errors had been going on for an average of about five years.
About 60 percent of the errors in these cases involved underpayments totaling about $591 per case over the five-year period, the GAO found. The other 40 percent of errors involved overpayments totaling $1,069.50 per case.
The GAO said the source of confusion is the way Social Security calculates and reports errors.
For one thing, GAO said, the figures Social Security usually uses indicate only the proportion of total dollars paid in error. This allows it to claim that, of all dollars paid out in retirement and survivor cases, 99.5 percent were paid correctly and only 0.5 percent incorrectly.
But this ignores a different way of looking at the problem -- the proportion of cases in which there was some error, however small. The accuracy rate calculated by Social Security is lower -- 92.1 percent from 1981-86 -- when it is based on the proportion of cases in which there was an error, GAO said.
But in addition, the GAO said, the Social Security Administration excludes from the dollar calculations "(1) underpayment errors, (2) errors of $1 to $5 a month, and (3) errors barred from correction because they occurred over four years ago" and by law can no longer be corrected in most cases.
There are some arguments for excluding these items, GAO said. For example, that underpayments by definition are amounts that have not been paid out, and therefore cannot be classified as dollars paid in error, and that errors under $5 are insignificant.
But the GAO said that way of doing things gives, overall, a misleading impression about errors in retirement cases. (The figures do not include disability cases.)
Based on its own calculations and correcting for exclusions, the GAO said:The payment-accuracy rate in terms of dollars paid correctly was only about 99 percent, not 99.5 percent, and thus the error rate was really one percent of total dollars rather than 0.5 percent. This proportion of dollars paid inaccurately "seems low, but currently this rate amounts to $1.5 billion in erroneous benefits each year." The payment-accuracy rate in terms of the number of cases in which there were errors was really only about 85 percent from 1981-86, not 92.1 percent. About three-quarters of under- payment problems were the fault of SSA -- often the result of incorrect computations. More than half the overpayment problems were the result of beneficiary error. Although GAO believes actual error rates by both the dollar method and the case method are higher than Social Security normally reports, they have been going down somewhat in recent years.