Social Security paid a billion dollars to people with no SS numbers

Here's a tale of government waste involving all the usual suspects: incompetence, indifference, and laziness.

The inspector general for the Social Security Administration discovered that a billion dollars in benefits was paid to people who had no Social Security numbers.  The benefits were paid to "representative payees" – people who were accepting benefit checks on behalf of another because the beneficiary was unable to manage his Social Security payments by himself.

Seventeen percent of these representative payees were illegal aliens, according to the audit.

Washington Times:

Over the last decade, the agency paid $1 billion to 22,426 representative payees who "did not have an SSN, and SSA had not followed its policy to retain the paper application."

"Furthermore, unless it takes corrective action, we estimate SSA will pay about $182.5 million in benefits, annually, to representative payees who do not have an SSN or paper application supporting their selection," the inspector general said.

The inspector general also found the agency paid $853.1 million in benefits since 2004 to individuals who had been terminated as representative payees by the agency.

The inspector general said the errors occurred because the agency did not keep paper applications supporting an individual's case to receive benefits on behalf of another and did not update its system if their status was terminated.

Only six percent of representative payees had SSNs that were properly recorded, based on the audit's sample of 100 beneficiaries.

Government benefits are also going to illegal aliens through the representative payee system. 17 percent of representative payees in the sample did not have an SSN recorded because they were undocumented noncitizens, the inspector general said.

Illegal aliens without SSNs are allowed to receive benefits from the government when acting as representatives for their minor children.

In response to the audit, the SSA said it switched to a new Electronic Representative Payee System last year, and transferring representative payee information "may have resulted in applications showing as terminated or not selected."

The government defended the issuance of benefits to noncitizens and persons without an SSN.

"Representative payees play a significant role in many beneficiaries' lives," the SSA said. "We have approximately 5.7 million representative payees managing annual benefits for approximately 8 million beneficiaries. When appointing representative payees, we adhere to guidance in the Social Security Act (the Act)."

"Specific to this audit, the Act permits us to appoint, in certain circumstances, an undocumented alien, or applicant who resides outside the United States without a Social Security number (SSN) to serve as payee," the agency said. "Specifically, the Act states we should verify a person's SSN (or employer identification number) in our investigation of the payee applicant. However, the Act does not state that the applicant must have an SSN to serve as a payee."

The "absence of an SSN is not a criterion preventing an individual from serving as payee," the agency added.

How many of these checks end up in the "representative payee's" bank accounts and not the actual beneficiary's?  How many are completely fraudulent, in that the beneficiary exists only on paper?  It sounds like a perfect scheme to rip off the Social Security system.

I can see where a husband or a son or daughter could act responsibly as a representative payee, and perhaps another relative or close friend.  But the problem is significant enough that verification procedures must be changed to reflect the reality that a hole has developed through which fraudsters can bilk the taxpayer for large amounts of money.

Although the audit doesn't indicate where the fraud is most prevalent, it is logical that the finger of blame is pointing once again at the Social Security disability program – a prime target for fraudsters in the past.  Congress should take another look at this program and either eliminate it or fix it.

Here's a tale of government waste involving all the usual suspects: incompetence, indifference, and laziness.

The inspector general for the Social Security Administration discovered that a billion dollars in benefits was paid to people who had no Social Security numbers.  The benefits were paid to "representative payees" – people who were accepting benefit checks on behalf of another because the beneficiary was unable to manage his Social Security payments by himself.

Seventeen percent of these representative payees were illegal aliens, according to the audit.

Washington Times:

Over the last decade, the agency paid $1 billion to 22,426 representative payees who "did not have an SSN, and SSA had not followed its policy to retain the paper application."

"Furthermore, unless it takes corrective action, we estimate SSA will pay about $182.5 million in benefits, annually, to representative payees who do not have an SSN or paper application supporting their selection," the inspector general said.

The inspector general also found the agency paid $853.1 million in benefits since 2004 to individuals who had been terminated as representative payees by the agency.

The inspector general said the errors occurred because the agency did not keep paper applications supporting an individual's case to receive benefits on behalf of another and did not update its system if their status was terminated.

Only six percent of representative payees had SSNs that were properly recorded, based on the audit's sample of 100 beneficiaries.

Government benefits are also going to illegal aliens through the representative payee system. 17 percent of representative payees in the sample did not have an SSN recorded because they were undocumented noncitizens, the inspector general said.

Illegal aliens without SSNs are allowed to receive benefits from the government when acting as representatives for their minor children.

In response to the audit, the SSA said it switched to a new Electronic Representative Payee System last year, and transferring representative payee information "may have resulted in applications showing as terminated or not selected."

The government defended the issuance of benefits to noncitizens and persons without an SSN.

"Representative payees play a significant role in many beneficiaries' lives," the SSA said. "We have approximately 5.7 million representative payees managing annual benefits for approximately 8 million beneficiaries. When appointing representative payees, we adhere to guidance in the Social Security Act (the Act)."

"Specific to this audit, the Act permits us to appoint, in certain circumstances, an undocumented alien, or applicant who resides outside the United States without a Social Security number (SSN) to serve as payee," the agency said. "Specifically, the Act states we should verify a person's SSN (or employer identification number) in our investigation of the payee applicant. However, the Act does not state that the applicant must have an SSN to serve as a payee."

The "absence of an SSN is not a criterion preventing an individual from serving as payee," the agency added.

How many of these checks end up in the "representative payee's" bank accounts and not the actual beneficiary's?  How many are completely fraudulent, in that the beneficiary exists only on paper?  It sounds like a perfect scheme to rip off the Social Security system.

I can see where a husband or a son or daughter could act responsibly as a representative payee, and perhaps another relative or close friend.  But the problem is significant enough that verification procedures must be changed to reflect the reality that a hole has developed through which fraudsters can bilk the taxpayer for large amounts of money.

Although the audit doesn't indicate where the fraud is most prevalent, it is logical that the finger of blame is pointing once again at the Social Security disability program – a prime target for fraudsters in the past.  Congress should take another look at this program and either eliminate it or fix it.

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