Know Someone Committing Disability Fraud? What Should You Do?

You may have heard rumors that the federal fund that helps the government make Social Security Disability (SSD) payments is beginning to run dry. Some government analysts predict that the fund will be exhausted within the next year or two. Unfortunately, the biggest drain on the Social Security fund is false or fraudulent disability claims. Read on to learn more about some of the common types of disability fraud and what you should do if you know someone who is gaming the system.

Why should you help combat and report disability fraud?

Whether you're applying for SSD, already receiving it, or aren't disabled at all, disability fraud can affect you. This type of fraud not only diminishes potential benefits for current SSD recipients, it increases the legal and logistical hurdles for future beneficiaries, many of whom may be denied benefits because they could not obtain legal counsel to help them navigate these hoops. 

Even if you're not currently disabled, you may plan on receiving Social Security retirement benefits in the future -- and if funds must be shifted from Social Security retirement to cover the disability funding shortfall, you could find yourself facing reduced retirement benefits after you've stopped working. You may also find yourself facing a higher tax bill if the government chooses to raise FICA taxes to fill the funding gaps.

What types of disability fraud are the most common?

  • Unemployment claims

During the Great Recession, applications for Social Security Disability benefits skyrocketed. Since 2003, there has been nearly a 50 percent increase in benefit applications from those who were formerly employed. Although some of these claims are legitimate, others are a last-ditch effort for unemployed individuals to obtain household income when they can't find work (but are capable of working). 

In some cases, individuals may apply for and receive unemployment benefits (UI) at the same time they are receiving SSD benefits. Because one of the eligibility factors for UI is the ability to seek and accept employment, disability benefits (for which you are eligible only if you are too disabled to find work) and UI are mutually exclusive. However, state unemployment agencies may not openly communicate to the Social Security Administration regarding an individual's application for or receipt of UI. 

  • "Murky" diagnoses

Although disability is available for a wide range of ailments, some of these are more rife for abuse than others. In particular, complaints of back pain and depression can be hard to substantiate -- in many cases, there may be no clear physical cause of the disability, and attorneys and Social Security personnel may be left to only take the claimant's word that he or she is unable to work. 

In some cases (particularly with depression that is being treated with medication and/or counseling) the claimant may later be able to hold down a job, but continues to receive benefits instead. Once a claim is approved, it may not be revisited for a number of years -- allowing individuals to continue to receive claims for old injuries and illnesses.

How can you report suspected disability fraud?

If you know someone you believe to be abusing the SSD system, there are a few ways you can take action. 

The Social Security Administration's Office of the Inspector General has a fraud hotline that will allow you to anonymously report your suspicions. You can communicate with the OIG by filling out an online form, sending the information by US Mail or fax, or calling their telephone hotline. 

Many states have a similar service through the state Attorney General's office. You may wish to report this fraud to both your state agency and the Social Security Administration's OIG to ensure that you've done all you can to notify the relevant parties.

If you want more information about how social security disability works, click this link