The Social Security Administration’s Oversight of Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program

Audit Report

The Social Security

Administration’s Oversight of

Beneficiaries Who Receive

Benefits Under the Direct

Express® Debit Card Program

A-04-20-50977 June 2023

MEMORANDUM

Date:

June 22, 2023

Refer to:

A-04-20-50977

To:

Kilolo Kijakazi

Acting Commissioner

From:

Gail S. Ennis

Inspector General

Subject:

The Social Security Administration’s Oversight of Beneficiaries Who Receive Benefits Under the

Direct Express® Debit Card Program

The attached final report presents the results of the Office of Audit’s review. The objectives

were to determine whether the Social Security Administration has established internal controls

to (1) initiate enrollment, upon request, in the Direct Express

Debit Card program and

(2) resolve benefits returned to the Agency because of an unfinished enrollment.

Please provide within 60 days a corrective action plan that addresses each recommendation. If

you wish to discuss the final report, please call me or have your staff contact

Michelle L. Anderson, Assistant Inspector General for Audit.

Attachment

The Social Security Administration’s Oversight of

Beneficiaries Who Receive Benefits Under the Direct

Express® Debit Card Program

A-04-20-50977

June 2023 Office of Audit Report Summary

Objectives

To determine whether the Social

Security Administration (SSA) has

established internal controls to

(1) initiate enrollment, upon request, in

the Direct Express

Debit Card

program (Program) and (2) resolve

benefits returned to the Agency

because of an unfinished enrollment.

Background

The Program provides an option for

Old-Age, Survivors and Disability

Insurance (OASDI) beneficiaries,

Supplemental Security Income (SSI)

recipients, and their representative

payees to meet the Department of the

Treasury’s (Treasury) electronic

payment requirement. SSA

(1) initiates beneficiaries’ and

representative payees’ enrollment in

the Program upon their request and

(2) resolves benefits Comerica Bank

returns because the beneficiary or

representative payee did not activate

the Direct Express

debit card within

24 months of issuance, referred to as

an unfinished enrollment.

Between 2017 and 2021, Comerica

Bank returned to SSA approximately

$114 million for 49,649 beneficiaries

with an unfinished enrollment, referred

to as a backlog. In addition, between

April 2021 and July 2022, Comerica

Bank returned to SSA quarterly

deposits totaling approximately

$18 million for 5,816 beneficiaries,

referred to as ongoing unfinished

enrollments.

Results

SSA had est

ablished internal controls to initiate enrollment in the

Program and updated policy to remind staff that the beneficiary or

representative payee must verbally consent to having benefits

deposited onto a Direct Express

debit card. Also, SSA had

established procedures to resolve benefits returned because of an

unfinished enrollment.

As of May 2023, SSA had returned, where appropriate, or initiated

action on, approximately $73 million in OASDI benefits and

$26 million in SSI payments of the unfinished enrollment backlog.

SSA needs to take action on approximately $4 million in OASDI

benefits and $8 million in SSI payments.

We recognize that Treasury established the Program and the

Direct Express

Financial Agency Agreement is between Treasury

and Comerica Bank. However, SSA could improve its

communication with beneficiaries and representative payees

regarding enrollment in the Direct Express

Debit Card program.

SSA could also work with Treasury and Comerica Bank to ensure

benefits are delivered promptly.

Recommendations

We made five recommendations including developing a

standardized statement to confirm enrollment in the Program and

establishing a target completion date to resolve the backlog of

unfinished enrollments. We also recommended SSA work with

Treasury and Comerica Bank to provide additional instruction on

activating the debit card, shorten the timeframe a Direct Express

account is deemed an unfinished enrollment, and explore the

reason for undeliverable debit cards.

SSA agreed with our recommendations.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977)

TABLE OF CONTENTS

Objectives ................................................................................................................................... 1

Background ................................................................................................................................. 1

Results of Review ....................................................................................................................... 2

Enrollment in the Direct Express

Debit Card Program ......................................................... 2

Backlog of Unfinished Enrollments ........................................................................................ 4

Ongoing Unfinished Enrollments ........................................................................................... 5

Opportunities for the Agency to Better Serve Its Beneficiaries ............................................... 6

Conclusions ................................................................................................................................ 7

Recommendations ...................................................................................................................... 7

Agency Comments ...................................................................................................................... 7

–Direct Express

Unfinished Enrollments ........................................................... A-1

–Scope and Methodology ................................................................................... B-1

–Agency Comments............................................................................................ C-1

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977)

ABBREVIATIONS

ACH Automated Clearing House

Agreement Direct Express

Financial Agency Agreement

OASDI Old-Age, Survivors and Disability Insurance

OIG Office of the Inspector General

POMS Program Operations Manual System

Program Direct Express

Debit Card Program

Pub. L. No. Public Law Number

SSA Social Security Administration

SSI Supplemental Security Income

Stat. United States Statutes at Large

Treasury Department of the Treasury

U.S.C. United States Code

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) 1

OBJECTIVES

Our objectives were to determine whether the Social Security Administration (SSA) has

established internal controls to (1) initiate enrollment, upon request, in the Direct Express

Debit

Card program (Program) and (2) resolve benefits returned to the Agency because of an

unfinished enrollment.

BACKGROUND

The Program provides an option for Old-Age, Survivors and Disability Insurance (OASDI)

beneficiaries, Supplemental Security Income (SSI) recipients,

and their representative payees

to meet the Department of the Treasury’s (Treasury) electronic payment requirement.

Treasury’s All-Electronic Payment Initiative requires that all OASDI and SSI applicants who file

for benefits select a form of electronic payment. To facilitate compliance, Treasury established

the Program and, in 2008, selected Comerica Bank to issue the Direct Express

debit card. As

of December 2022, approximately 2.2 million OASDI beneficiaries and 1.8 million SSI recipients

had received benefit payments through the Program.

SSA assists beneficiaries and representative payees who choose to participate in the Program

by (1) initiating enrollment in the Program upon their request and (2) resolving benefits

Comerica Bank returns because the beneficiary or representative payee did not activate the

Direct Express

debit card within 24 months of its issuance, referred to as an unfinished

enrollment.

Because privacy laws restrict SSA’s access to beneficiaries’ financial accounts,

SSA relies on Comerica Bank to monitor debit card activations and notify the Agency of

beneficiaries who have an unfinished enrollment.

Between 2017 and 2021, Comerica Bank

returned to SSA approximately $114 million for 49,649 beneficiaries with an unfinished

enrollment, referred to as a backlog.

In addition, between April 2021 and July 2022, Comerica

Bank returned to SSA quarterly deposits totaling approximately $18 million for

5,816 beneficiaries, referred to as ongoing unfinished enrollments.

Unless otherwise noted, we use the term beneficiaries to describe individuals who receive benefits through either

the OASDI and/or SSI program.

A representative payee is a person or organization that receives and manages benefits on a beneficiary’s behalf.

Beneficiaries, recipients, and representative payees who were receiving payment by check had until March 1, 2013

to switch to a form of electronic payment. Treasury may grant an exception to individuals who meet certain

requirements.

All direct deposits of benefits included approximately 65.3 million OASDI beneficiaries and 7.2 million SSI recipients.

SSA also contacts Comerica Bank on the beneficiary or representative payee’s behalf to assist with locked, frozen,

or replacement debit card requests. For other customer service matters, SSA will instruct the beneficiary or

representative payee to contact Comerica Bank.

Gramm-Leach-Bliley Act, Pub. L. No. 106-102, §§ 501-502, 113 Stat. 1338, pp. 1436 and 1437 (1999); 15 U.S.C.

§§ 6801-6802; Right to Financial Privacy Act of 1978, Pub. L. No. 95-630, §§ 1101-1102, 92 Stat. 3697, 3697-3698;

12 U.S.C. §§ 3401-3402.

In 2020, SSA received approximately $110 million (96 percent) of the $114 million in backlog deposits. See

Appendix A for the amount of backlog deposits SSA received between 2017 and 2021 and SSA’s actions to address

the backlog of unfinished enrollments.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) 2

To test SSA’s process to initiate enrollment in the Program, we reviewed a random sample of

45 beneficiaries with benefits deposited into a Direct Express

account between January 2015

and September 2020. We also mailed requests for a telephone interview to 99 beneficiaries

and/or their representative payee who were enrolled in the Program between 2008 and 2017.

These beneficiaries had not activated their Direct Express

debit card as of December 2019

after which Comerica Bank closed the account and returned benefits to SSA. To test SSA’s

process for resolving unfinished enrollments, we reviewed a random sample of

100 beneficiaries

who have an unfinished enrollment and an account balance between $100

and $100,000 and the 39 beneficiaries

who have an account balance greater than $100,000.

SSA deposited benefits into these accounts between May 2008 and December 2020.

RESULTS OF REVIEW

SSA had established internal controls to initiate enrollment in the Program and updated policy to

remind staff that the beneficiary or representative payee must verbally consent to having

benefits deposited onto a Direct Express

debit card. Also, SSA had established procedures to

resolve benefits returned because of an unfinished enrollment. While SSA’s controls allow SSA

employees to appropriately initiate enrollment and resolve benefits Comerica Bank returned to

SSA, we identified opportunities for SSA to better serve beneficiaries enrolled in the Program.

For example, SSA could implement additional procedures to confirm beneficiary and

representative payee’s intent to enroll in the Program. SSA could also work with Treasury and

Comerica Bank to provide additional instruction on activating the debit card, shorten the

timeframe a Direct Express

account becomes an unfinished enrollment to ensure benefits are

delivered promptly, and explore the cause of undeliverable card-carrier packages.

Enrollment in the Direct Express

Debit Card Program

SSA has controls to initiate enrollment, when requested, in the Program. When employees

initiate enrollment, they are required to verify the requestor’s identity by requiring they provide

the appropriate response to open-ended questions and/or provide documentation that confirms

their identity. SSA also requires that employees obtain the beneficiary or representative

payee’s verbal consent to enroll in the Program.

To test these controls, we randomly selected

45 beneficiaries

and reviewed SSA systems for indication of a fraudulent enrollment or that the

beneficiary did not intend to enroll in Direct Express

. We did not identify documented concerns

for these beneficiaries.

For the 100 randomly selected OASDI beneficiaries and SSI recipients, 77 were alive and 23 deceased as of May

and July 2021.

For the 39 OASDI beneficiaries, 29 were alive and 10 deceased as of May 2021.

See Appendix B for our scope and methodology.

SSA employees will annotate, in the appropriate system, the Direct Express

selection and obtain information

necessary for the enrollment file. Comerica Bank receives the electronic enrollment file; establishes the

Direct Express

account; transmits account information to SSA; and mails the requestor a card-carrier package that

includes the debit card and information on how to use and activate the card.

We randomly selected 45 individuals from a population of 3.3 million OASDI beneficiaries and SSI recipients with

payments deposited into a Direct Express

account established between January 2015 and September 2020.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) 3

We also mailed requests for a telephone interview to 99 beneficiaries and/or their representative

payee who had not activated their Direct Express

account to inquire (1) whether they

authorized enrollment in the Program and (2) why the debit card was not activated. We

conducted 18 telephone interviews between February and August 2022. We acknowledge the

low response rate to our request for a telephone interview

and interview responses were

based on recollection of events that occurred in 2017 and earlier. As such, we did not use the

interview responses to opine on SSA’s internal controls. However, the interview responses

provided insight into why Direct Express

debit cards were not activated. Of the 18 individuals

interviewed:

 5 had agreed to have their benefits deposited into a Direct Express

account, but they were

unaware of the 24-month activation timeframe or chose not to use the debit card;

 2 could not recall whether they agreed to enrollment; and

 11 stated they did not request enrollment in the Program.

The 11 beneficiaries stated they did not complete enrollment because they were unaware they

had an account. When interviewed, seven of these beneficiaries stated they had not contacted

SSA concerning a Direct Express

enrollment as they believed all benefits were deposited into

their financial institution’s account.

They were unaware additional benefits were deposited in a

Direct Express

account. The remaining four beneficiaries stated they contacted SSA either

when they learned of the Direct Express

enrollment or to inquire about benefits they had not

received. SSA records contained documentation confirming two of the four beneficiaries

contacted SSA about benefits that were deposited into a Direct Express

account.

We cannot confirm whether beneficiaries or their representative payees authorized enrollment in

the Program. We recognize SSA requires that employees verify the requestor’s identity and

obtain verbal consent before it initiates enrollment. However, not all interviewees were aware of

the enrollment and that benefits were deposited into a Direct Express

account. Of the

11 interviewees, 8 stated they did not request enrollment even though SSA records indicated a

direct deposit confirmation

was mailed within 14 days after enrollment.

During our field work,

SSA revised its policy to include a reminder for staff to obtain verbal consent and not to

automatically enroll beneficiaries in the Program. To further improve communication between

Our request for a telephone interview stated beneficiaries were not required to participate, and declining to

participate would have no effect on their Social Security benefits. We mailed the initial request for a telephone

interview in February 2022 and mailed follow-up letters to non-responders in March 2022.

For our random sample of 100 and 39 beneficiaries with an account balance greater than $100,000, we reviewed

SSA’s payment records to determine whether there was a non-receipt entry related to a Direct Express

unfinished

enrollment deposit. Of the 139 records, 15 (11 percent) had at least 1 non-receipt entry related to a Direct Express

unfinished enrollment deposit. For the remaining 124 (89 percent) records, we did not identify a non-receipt entry

related to a Direct Express

unfinished enrollment deposit.

SSA mails a confirmation notice for a direct deposit enrollment, change, or cancellation. The notice alerts the

beneficiary or representative payee of a direct deposit action but does not specify the financial institution. The notice

language includes, “As you requested on or about [date] we changed [your/beneficiary’s name] direct deposit

information. We will send [your/beneficiary’s name] Social Security payments to the new financial institution or

account you selected.” SSA, POMS, NL 00730.108, B. (November 2, 2018).

For 3 of the 11 interviewees who stated they did not request enrollment in the Program, we did not identify a direct

deposit confirmation notice.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) 4

SSA and the beneficiary or representative payee, SSA should develop a standardized

statement for SSA employees to confirm the beneficiary or representative payee’s intent to

enroll in the Program and explain Comerica Bank is the financial institution that will mail the

debit card and provide instructions on activating the card.

Backlog of Unfinished Enrollments

SSA has established controls to resolve the backlog of benefits Comerica Bank returned

because of an unfinished enrollment. Between 2017 and 2021, SSA received approximately

$114 million for 49,649 beneficiaries

who had not activated their Direct Express

debit card

within 24 months of issuance. For this backlog, SSA developed national processing instructions

requiring that SSA employees manually record the returned Direct Express

benefit(s) to the

beneficiary’s payment record; review all associated records for the beneficiary; determine

whether the beneficiary is due the returned benefits; and reissue benefits, where appropriate.

According to SSA, it had not established a completion date for the backlog because of

competing priorities in its processing centers and, especially, its field offices.

SSA also stated

it de-prioritized the workload in 2020 because of COVID-19, and its field offices have faced

significant burdens since they re-opened to the public in April 2022.

In February 2022, SSA

prioritized the 39 beneficiaries with an account balance greater than $100,000 and, in

April 2022, it assigned the remaining accounts to SSA employees in its processing centers

(OASDI backlog) and field offices (SSI backlog).

To test SSA’s controls over resolving the backlog of unfinished enrollments, we reviewed

actions taken for our 139 sampled beneficiaries. As of August 2022, SSA had completed, or

initiated action on, 94 cases.

Except for two cases, SSA had properly completed, or initiated

action to resolve, benefits returned for these beneficiaries. We confirmed with SSA the two

cases required additional action.

As of May 2023, SSA’s Unfinished Enrollment Tracking

Tool,

indicated the processing centers had completed or initiated action on 22,298

(95 percent) OASDI cases while its field offices had completed or initiated action on 18,782

For 55 percent of beneficiaries, SSA made one deposit in the Direct Express

account.

SSA’s Office of Public Service and Operations Support, in the Office of the Deputy Commissioner of Operations,

receives a monthly report to monitor progress with completing the backlog.

In a prior audit, we reported SSA stated the pandemic presented unprecedented challenges to workloads and

customer service delivery. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. On

March 17, 2020, SSA began limiting in-person services and redirecting customers to online and telephone service

channels in response to the pandemic. On April 7, 2022, SSA reopened Social Security offices to walk-in service.

SSA, OIG, Comparing the Social Security Administration’s Workload Statistics During the COVID-19 Pandemic to

Prior Years, A-05-21-51062, p. 2 (July 2022).

For the 139 sampled beneficiaries, SSA had not taken action on 45 cases. Of these, 39 were for SSI recipients,

5 were for OASDI beneficiaries, and 1 received both SSI and OASDI benefits.

For the first beneficiary, SSA documentation stated the returned Direct Express

payments had been reimbursed.

However, further review found SSA had not repaid the beneficiary who was due $504 in returned Direct Express®

deposits. For the second beneficiary, SSA recorded the $592 in returned Direct Express

deposits. However, the

beneficiary was deceased, and SSA’s records did not contain documentation of estate or next of kin development.

As of March 2023, SSA had not taken additional action for the two beneficiaries.

SSA developed the Unfinished Enrollments Tracking Tool to record the backlog of benefits received and actions

taken to resolve a case.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) 5

(77 percent) SSI cases. For these beneficiaries, SSA returned, where appropriate, or initiated

action on approximately $73 million in OASDI benefits and approximately $26 million in SSI

payments received from Comerica Bank. SSA employees need to process 1,177 (5 percent)

OASDI cases and 5,506 (23 percent) SSI cases. For these unresolved cases, SSA has not

taken action on approximately $4 million in OASDI benefits and approximately $8 million in SSI

payments received from Comerica Bank.

We acknowledge SSA’s processing centers’ progress with resolving OASDI backlog cases and

the challenges its field offices face as COVID-19 has affected workloads and customer service

delivery. We also recognize both OASDI and SSI recipients rely on their benefits to meet

current and future needs. SSA policy

notes the SSI program is a means-tested program, and

its SSI recipients are expected to regularly access their payments. SSA should ensure SSI

recipients promptly receive entitled payments, where appropriate, since these benefits were

initially deposited into a Direct Express

account between 2008 and 2017. SSA should work

with its processing centers and regional offices to establish a target completion date to resolve

the backlog of unfinished enrollments.

Ongoing Unfinished Enrollments

Comerica Bank will return future benefits to SSA through the Automated Clearing House (ACH)

process when the Direct Express

debit card was not activated within 24 months of its issuance.

For these ongoing unfinished enrollments, SSA receives returned benefits each quarter.

Between April 2021 and July 2022, SSA received ACH deposits totaling approximately

$18 million for 5,816 beneficiaries

who did not activate the Direct Express

debit card within

24 months of issuance. The ACH process allows for automated recording and reissuing of

returned Direct Express

deposits, unlike the backlog cases that require manual recording and

processing. When the ACH process annotates the benefit record to identify a returned

Direct Express

deposit(s), SSA’s systems

can apply certain rules to determine whether the

beneficiary is due the returned benefits, and the system can reissue all or partial benefits. The

ACH process allows for faster resolution of benefits Comerica Bank returned to SSA because of

an unfinished enrollment.

We did not determine the discrepancy between the number and total deposits for backlog cases in SSA’s

Unfinished Enrollments Tracking Tool (47,763 beneficiaries with deposits totaling approximately $111 million) when

compared to the Comerica Bank files (49,649 beneficiaries with deposits totaling approximately $114 million) we

received from SSA.

SSA, POMS, GN 02401.904, B. (May 14, 2019).

For 49 percent of beneficiaries, SSA made one deposit in the Direct Express

account.

For returned SSI payments, the SSA system involved is the SSI System. For returned OASDI benefits, the two

SSA systems involved are the Returned Check Action and Manual Adjustment Credit and Award Date Entry systems.

Our review of ACH was limited to gaining an understanding on how the process worked.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) 6

Opportunities for the Agency to Better Serve Its Beneficiaries

We recognize that Treasury established the Program, and the Direct Express

Financial Agency

Agreement (Agreement) is between Treasury and Comerica Bank. However, to ensure benefits

are delivered promptly, SSA could work with Treasury and Comerica Bank to shorten the

timeframe a Direct Express

account is deemed an unfinished enrollment. The Agreement

initially determined an account not activated within 12 months of issuance was an unfinished

enrollment. The Agreement later revised the timeframe to 24 months, after which

Comerica Bank would close the account and return benefits to SSA. Comerica Bank told us the

timeframe was revised to 24 months based on a history of card activations and initial deposits

that occurred months after enrollment. However, SSA should work with Treasury and

Comerica Bank to determine whether a shorter timeframe is in its OASDI and SSI recipients’

best interest.

SSA also could work with Treasury and Comerica Bank to determine why Direct Express

debit

cards are returned as undeliverable mail. When SSA initiates enrollment, it includes the

beneficiary’s address in the enrollment file. Comerica Bank informed us it uses this address to

mail the Direct Express

debit card and destroys undeliverable card-carrier packages.

Comerica Bank does not notify SSA of undeliverable mail. Comerica Bank stated, for February

through April 2022, there were an average 6,900 undeliverable card-carrier packages a month.

For the same 3 months, Comerica Bank stated SSA averaged approximately 42,000

enrollments a month. Although Comerica Bank could not provide the percentage of

undeliverable mail attributable to SSA beneficiaries, it stated 99 percent of Direct Express

cardholders received payments from SSA.

Exploring reasons for undeliverable debit cards will

allow SSA to promptly notify beneficiaries or their representative payees of an undeliverable

debit card associated with a Direct Express

account or identify incorrect information preventing

delivery of entitled benefits.

Comerica Bank stated privacy laws restrict it from disclosing to SSA the beneficiaries with an

undeliverable Direct Express

debit card. We believe there are avenues SSA may pursue, with

both Comerica Bank and Treasury, to obtain information about undeliverable card-carrier

packages. These options include (1) requesting information

from Comerica Bank under the

authority of the Social Security Act,

(2) Comerica Bank releasing the information proactively

under an exception to the Gramm-Leach-Bliley Act,

and (3) asking Treasury to amend its

Agreement with Comerica Bank. We acknowledge that each option has limitations and

additional discussions and research with the parties will be needed.

Agencies that participate in the Program include the Coast Guard, Defense Finance and Accounting, Department

of Labor, Office of Personnel Management, Railroad Retirement Board, Treasury, and Department of Veterans

Affairs.

Applies to SSI claims only.

Social Security Act § 1631, 42 U.S.C. § 1383(e)(1)(B).

Gramm-Leach-Bliley Act, Pub. L. No. 106-102, §§ 501-502, 113 Stat. 1338, pp. 1436 and 1437 (1999); 15 U.S.C.

§§ 6801-6802.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) 7

CONCLUSIONS

SSA has controls to initiate enrollment in the Program. However, beneficiaries and

representative payees lost access to benefits deposited in a Direct Express

account because

they did not activate the debit card within 24 months of issuance. Between 2017 and 2022,

there were 55,465 beneficiaries with deposits totaling approximately $132 million returned to

SSA because they did not complete the activation process. Without improved communication

regarding enrolling in Direct Express

and the activation requirement, SSA beneficiaries and

representative payees will continue losing access to entitled benefits.

RECOMMENDATIONS

We recommend SSA:

1. Develop a standardized statement for SSA employees to confirm the beneficiary or

representative payee’s intent to enroll into the Program and explain Comerica Bank is the

financial institution that will mail the debit card and provide instructions on activating the

card. The standardized statement could also include such information as the

Direct Express

customer service telephone number.

2. Work with Treasury and Comerica Bank to provide additional instruction to newly enrolled

individuals on activating their Direct Express

debit cards within the prescribed enrollment

period.

3. Work with its processing centers and regional offices to establish a target completion date to

resolve the backlog of unfinished enrollments.

4. Work with Treasury and Comerica Bank to determine whether a shorter timeframe is needed

before a Direct Express

account is deemed an unfinished enrollment.

5. Work with Treasury and Comerica Bank to explore the reason for undeliverable debit cards.

AGENCY COMMENTS

SSA agreed with our recommendations, see Appendix C.

Mic

helle L. Anderson

Assistant Inspector General for Audit

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977)

APPENDICES

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) A-1

–DIRECT EXPRESS

UNFINISHED

ENROLLMENTS

The Social Security Administration (SSA) received approximately $114 million for 49,649 Old-

Age, Survivors and Disability Insurance (OASDI) beneficiaries and Supplemental Security

Income (SSI) recipients

who received benefits on a Direct Express

debit card not activated

within 24 months of issuance, referred to as a backlog. SSA deposited benefits in the Direct

Express

accounts between May 2008 and December 2020. Total deposits for these

beneficiaries ranged from $2 to $247,000. The number of individual deposits ranged between

1 and 154. For 55 percent of beneficiaries, SSA made one deposit in the Direct Express

account.

For the backlog of unfinished enrollments, Table A–1

shows the amount of deposits, by SSA

program, for living and deceased beneficiaries. Table A–2

shows the number of living and

deceased beneficiaries, by SSA program, in the backlog population.

Table A–1: Direct Express

Deposits for the Backlog Unfinished Enrollments

Category Living

Beneficiaries

Deceased

Beneficiaries

Total

Total OASDI Deposits

$53,736,018

$20,698,626

$74,434,644

Total SSI Deposits

26,205,118

7,525,562

33,730,680

Total Deposits for Concurrent

Beneficiaries

4,311,810

1,757,498

6,069,308

Total Deposits

$84,252,946

$29,981,686

$114,234,632

Table A–2: Direct Express

Beneficiaries for the Backlog Unfinished Enrollments

Category

Living

Beneficiaries

Deceased

Beneficiaries

Total

Number of OASDI Beneficiaries

18,213

6,017

24,230

Number of SSI Recipients

17,662

6,378

24,040

Number of Concurrent

Beneficiaries

953

426

1,379

Total Beneficiaries and Recipients

36,828

12,821

49,649

Unless otherwise noted, we use the term beneficiaries to describe individuals who receive benefits through either

the OASDI and/or SSI program.

Concurrent beneficiaries receive both OASDI benefits and SSI payments. SSA records identified the beneficiary as

alive or deceased as of May 2021.

See Footnote 2.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) A-2

SSA has taken the following actions to address the backlog of unfinished enrollments:

 Worked with Comerica Bank and the Department of the Treasury (Treasury) to ensure it

received only the Social Security benefits that were deposited in an unfinished enrollment

account.

Table A–3 shows the benefits returned to SSA, by year, for the backlog of

unfinished enrollments.

Table A–3: Deposits Returned to SSA Between 2017 and 2021

for the Backlog Unfinished Enrollments

Year Benefits

Returned to

SSA

Amount of Benefits

Returned to SSA

Percent of Benefits

Returned to SSA

2017

$872,968

0.8

2018

597,248

0.5

2019

2,531,637

2.2

2020

109,834,065

95.8

2021

758,915

0.7

Total

$114,594,833

100.0

 Developed the Unfinished Enrollments Tracking Tool to document returned benefits and

record actions taken to resolve a case.

 In April 2021, developed national processing instructions requiring that SSA staff manually

record the returned Direct Express

benefit(s) to the beneficiary’s payment record; review all

associated records for the beneficiary; determine whether the beneficiary is due the returned

benefits, and reissue benefits, where appropriate. For example, an SSA employee will

determine whether the beneficiary is due the entire amount of returned benefits or was

previously repaid or whether benefits should be applied to recover an overpayment.

 In September 2021, aired a video-on-demand as part of its training materials for SSA staff

assigned to resolve benefits returned because of an unfinished enrollment.

 In February 2022, instructed its processing centers to prioritize the unfinished enrollment

accounts with a balance greater than $100,000. SSA noted these are the most critical

cases, are of high interest, and should be reviewed as soon as possible. SSA has

completed or initiated action for all beneficiaries that had a balance greater than $100,000.

Agencies that participate in the Direct Express

Debit Card program include the Coast Guard, Defense Finance and

Accounting, Department of Labor, Office of Personnel Management, Railroad Retirement Board, Treasury, and

Department of Veterans Affairs. As such, SSA worked with Comerica Bank and Treasury to ensure it did not receive

benefits deposited by other agencies.

There were 39 OASDI beneficiaries with an account balance greater than $100,000.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) A-3

 In February 2022, SSA revised its sensitive policy reminding staff not to automatically enroll

beneficiaries into the Direct Express

Debit Card program. The beneficiary or

representative payee must verbally consent to benefits being deposited in a Direct Express

account.

 Consulted with its Office of Labor, Management, and Employee Relations to determine labor

obligations, if any, that may affect releasing the backlog to assigned staff.

 In April 2022, issued a directive to distribute the remaining backlog to assigned SSA staff.

Beginning April 2021, SSA receives quarterly files of Direct Express

accounts not activated

within 24 months of issuance, referred to as ongoing unfinished enrollments. Benefits returned

to SSA, quarterly, will be resolved through the Automated Clearing House (ACH) process,

except when manual intervention is required. Between April 2021 and July 2022, SSA received

approximately $18 million for 5,816 beneficiaries with an unfinished enrollment. SSA deposited

benefits in the Direct Express

accounts between April 2018 and April 2022. Total deposits for

these beneficiaries ranged from $1 to $101,000.

The number of individual deposits ranged

from 1 and 83.

For 49 percent of beneficiaries, SSA made one deposit in the Direct Express

account. Table A–4, shows the amount of benefits returned through the ACH process, by SSA

program, for ongoing unfinished enrollments.

Table A–4: Direct Express

Deposits Returned Through the ACH Process

Category Number of

Beneficiaries

Amount of Deposits

OASDI Beneficiaries

2,031

$8,339,899

SSI Recipients

2,075

3,250,989

Concurrent Beneficiaries

366,503

Type of Benefit Not Specified

1,614

5,810,099

Total Beneficiaries and Recipients

5,816

$17,767,490

The beneficiary with deposits totaling approximately $100,797 received two back payments of $40,814 and $14,005

and monthly benefits totaling $45,978.

The beneficiary with 83 individual deposits received multiple monthly benefits consisting of concurrent benefits

under his own Social Security number and OASDI benefits under a parent’s Social Security number.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) B-1

–SCOPE AND METHODOLOGY

To accomplish our objective, we:

Reviewed pertinent sections of the Social Security Administration’s (SSA) policies and

procedures, applicable laws, regulations, and prior Office of the Inspector General reports.

Reviewed the Direct Express

Financial Agency Agreement and associated amendments

and instructional bulletins.

Interviewed SSA, Department of the Treasury, and Comerica Bank staff to understand their

roles under the Direct Express

Debit Card program.

Randomly selected 45 individuals, from a population of 3.3 million Old-Age, Survivors and

Disability Insurance (OASDI) beneficiaries and Supplemental Security Income (SSI)

recipients with payments deposited into a Direct Express

account established between

January 2015 and September 2020, to test SSA’s process to initiate enrollment in the

Direct Express

Debit Card program. We reviewed SSA records and systems for indication

of a fraudulent enrollment or that the beneficiary did not intend to enroll in Direct Express

Selected 139 OASDI beneficiaries and SSI recipients to test SSA’s manual process to

resolve benefits returned to SSA for the backlog of unfinished enrollments.

From the population of 49,649 backlog cases, we:

Randomly selected 100 OASDI beneficiaries and SSI recipients whose

Direct Express

account balance was greater than $100 but less than $100,000.

Selected all 39 OASDI beneficiaries

with a Direct Express

account balance over

$100,000. There were no SSI recipients with an account balance over $100,000.

Reviewed SSA’s national processing instructions, Unfinished Enrollment Tracking Tool,

and applicable SSA procedures and policy to determine whether SSA appropriately

initiated action to resolve benefits returned to SSA, or properly withheld or reissued

returned benefits.

The Agreement is between the Department of the Treasury and Comerica Bank.

Unfinished enrollments are Direct Express

accounts not activated within 24 months of issuance.

For the 100 randomly selected OASDI beneficiaries and SSI recipients, 77 were alive and 23 deceased as of May

and July 2021.

For the 39 OASDI beneficiaries, 29 were alive and 10 deceased as of May 2021.

SSA’s database for documenting the backlog of Direct Express

returned benefits and actions taken to resolve the

cases.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) B-2

Traced eight unfinished enrollment cases Comerica Bank returned to SSA through the

Automated Clearing House process to gain an understanding of the process.

Reviewed ongoing Direct Express

unfinished enrollment files, submitted quarterly through

the Automated Clearing House process, to identify similarities or differences among the

ongoing and backlog cases.

Mailed a request for an interview to 99 unfinished enrollment beneficiaries and/or their

representative payee to inquire whether they authorized enrollment in the Direct Express

Debit Card program and why the debit card was not activated.

The entities audited were the Offices of Budget, Finance, and Management; Operations; and

Systems. We conducted the audit work between May 2021 and November 2022. We

determined the computer-processed data were sufficiently reliable for our intended use. We

conducted tests to determine the completeness and accuracy of the data primarily by tracing

information in the data to SSA benefit, payment, and Numident records. We also determined

the Direct Express

unfinished enrollment files were sufficiently reliable for our intended use.

SSA must rely on Comerica Bank to identify unfinished enrollment accounts. We confirmed with

Comerica Bank that SSA provided us the complete unfinished enrollment files. We tested the

accuracy of the unfinished enrollment files by tracing the data elements to SSA benefit and

payment records. We determined the data were sufficiently reliable for the purposes of

responding to our objectives.

We assessed the significance of internal controls necessary to satisfy the audit objectives. This

included an assessment of the five internal control components, including control environment,

risk assessment, control activities, information and communicating, and monitoring. In addition,

we reviewed the principle of internal controls associated with the audit objectives. We identified

the following components and principles as significant to the audit objective:

Component 3: Control Activities

Principle 12: Implement control activities

Component 4: Information and Communication

Principle 15: Communicate externally

Component 5: Monitoring

Principle 16: Perform monitoring activities

This process allows for automated recording and reissuing of returned Direct Express

deposits, unlike the backlog

cases that require manual recording and processing.

For the 139 selected records, there were 106 living beneficiaries as of May and July 2021. For the 106

beneficiaries, we mailed a request for a telephone interview to 99 and/or their representative payee and omitted

7 beneficiaries because their death occurred after our sample selection (4), SSA’s record showed a prior fraud

attempt (2), or the beneficiary was in prison (1).

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) B-3

We conducted this performance audit in accordance with generally accepted government

auditing standards. Those standards require that we plan and perform the audit to obtain

sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions

based on our audit objectives. We believe the evidence obtained provides a reasonable basis

for our findings and conclusions based on our audit objectives.

SSA Beneficiaries Who Receive Benefits Under the Direct Express® Debit Card Program (A-04-20-50977) C-1

–AGENCY COMMENTS

SOCIAL SECURITY

MEMORANDUM

Date:

June 5, 2023 Refer To: TQA-1

To:

Gail S. Ennis

Inspector General

From:

Scott Frey

Chief of Staff

Subject:

Office of the Inspector General Draft Report “The Social Security Administration’s Oversight of

Beneficiaries Who Receive Benefits Under the Direct Express Debit Card Program” (A-04-20-

50977)—INFORMATION

Thank you for the opportunity to review the draft report. We agree with the recommendations.

Please let me know if I can be of further assistance. You may direct staff inquiries to Trae

Sommer at (410) 965-9102).

Mission: The Social Security Office of the Inspector General (OIG) serves the

public through independent oversight of SSA’s programs and operations.

Report: Social Security-related scams and Social Security fraud, waste, abuse,

and mismanagement, at oig.ssa.gov/report.

Connect: OIG.SSA.GOV

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