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SSA Paid $1 Billion To People With No SSN

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SSA Paid $1 Billion To People With No SSN

SSA Paid $1 Billion To People With No SSN
October 04
16:26 2019

The Social Security Administration was born after President Franklin D. Roosevelt signed the Social Security Act into law on August 14, 1935, as part of his New Deal for Americans. The nation was in the throes of the Great Depression, ten years of economic misery after the stock market crashed in 1929.

At that time, about half of the senior citizens living in the U.S. dwelled in poverty. The original purpose of the Social Security program was – and remains – to ease the crisis of poverty in old age:

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The Social Security Act (Act of August 14, 1935) [H. R. 7260]

An act to provide for the general welfare by establishing a system of Federal old-age benefits, and by enabling the several States to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemployment compensation laws; to establish a Social Security Board; to raise revenue; and for other purposes.

The Social Security Administration (SSA) was originally called the Social Security Board but was renamed in 1946. SSA headquarters, known as Central Office, is in Woodlawn, Maryland, just west of Baltimore. The Central Office directs 10 regional offices, eight processing centers, about 1,300 field offices, and 37 Teleservice Centers. In 2018, approximately 60,000 people were SSA employees.

The Social Security program has been successful in that today, the rate of poverty in the elderly population has fallen to 10 percent from 50 percent in 1935. Social Security payments give some 22 million Americans enough extra income to rise above the federal poverty level.

Social Security benefits are paid from federal FICA (Federal Insurance Contributions Act) taxes which are assessed on every form of reported earnings, bar none. The agency distributes over $1 trillion in payments annually.

Although many people believe that the money they pay in over a lifetime career is returned to them as SSA benefits, the money actually comes from present-day contributors. That pool of employees is growing smaller compared to the aging Baby Boomers who stop making FICA contributions when they stop working in retirement.

The 2019 annual report< of the Social Security Board of Trustees projected that the trust funds that issue disbursements to eligible retirees, disability and other Social Security benefits will run out of money by 2035.

One trust fund is called “Old-Age and Survivors Insurance” while the other holds revenues for disability benefits.

If and when the Social Security trust funds become financially depleted, the system will have no extra reserves to boost FICA pay-ins. The American Association of Retired Persons (AARP) predicted that U.S. retired and disabled workers would receive only 80 percent of their benefits after the reserves run dry.

This news is not new. Financial analysts have warned for decades that the SSA will be unable to afford paying out full benefits to all surviving Americans born between 1946 and 1964.

U.S. workers who are eligible to file for Social Security benefits must provide administrative paperwork before receiving any payments. The first document listed on the SSA web page titled “What Documents Will You Need When You Apply?” is a Social Security card or a record of the Social Security Number (SSN).

Yet, a February 17, 2017, audit of the SSA performed by the U.S. Office of the Inspector General (OIG) discovered that people with no recorded Social Security Number were being paid benefits amounting to $1 billion.

The problem involved representative payees, people who receive retirement or disability payments on behalf of another person who is incapable of managing her/his own benefits. It turned out that SSNs were missing from thousands of SSA records.

Based on a random sample, OIG analysts estimated that “150,257 beneficiaries had an individual representative payee who had a valid SSN that SSA should have recorded on the MBR [Master Beneficiary Records] / SSR [Supplemental Security Records]. Of these, 26,912 beneficiaries had representative payees whom, according to eRPS [Electronic Representative Payee System], SSA had terminated or not selected. From October 2004 to September 2016, SSA paid these representative payees about $853.1 million.”

The OIG report went on to estimate that SSA “will pay these representative payees about $189.6 million in benefits annually.”

Another estimated 22,426 beneficiaries “had an individual representative payee who did not have an SSN, and SSA had not followed its policy to retain the paper application,” and were not listed in the eRPS.

OIG also reported that the retirement organization paid $853.1 million in benefits since 2004 to people whom the SSA itself had terminated as representative payees.

The federal audit stated that, between April 2006 and September 2016, SSA paid people with no SSN about $1 billion. Furthermore, without corrective action, the OIG expected that SSA will pay these ineligible representative payees about $182.5 million a year in benefits.

Based on its findings, the OIG made three recommendations to SSA, all of which met the agreement of SSA:

  1. Take appropriate action for the 77 beneficiaries whose representative payees’ SSNs are not on the MBR/SSR, as identified by our audit.
  2. Evaluate the results of its actions for the 77 beneficiaries and determine whether it should review the remaining population of 224,164 beneficiaries we identified.
  3. Improve controls to ensure (a) it records representative payees’ SSNs on the MBR/SSR and (b) its systems generate alerts when there is a discrepancy between representative payee information in eRPS and the MBR/SSR.

Although a billion dollars doesn’t sound like that much compared to a trillion dollars in annual disbursements, “that ain’t chump change,” as the saying goes. Has the SSA fixed its leaky bucket?

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Jean B

Jean B

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2 Comments

  1. Phil in TX
    Phil in TX October 06, 18:47

    No, the SSA has not “fixed it’s leaky bucket”. the biggest leak in the bucket is congress itself. Congress, under Lyndon Johnson, raided the Social Security Trust Fund during the Vietnam conflict in order to pay for that war. They have not repaid those STOLEN funds. If those STOLEN funds were to be repaid, the SSA would NEVER run out of money to pay beneficiaries. That is a FACT. Congress needs to correct this situation and repay the money it STOLE from the Social Security Trust Fund, and make so this can NEVER happen again. I’m not holding my breath. Phil in TX

    Reply to this comment
  2. Franklin54
    Franklin54 October 08, 19:38

    What they need to do is cancel all payments to individuals with no SSN and see how many actually come forward to dispute these actions

    Also there are probably millions of individuals in the US using SSN’s over 120 years (and the oldest person is under that) so those people should be actively investigated and see who is actually using those SSN’s

    Reply to this comment

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