BY Laurence Kotlikoff, PBS Newshour: "MAKING SEN$E", January 23, 2015
Boston University economist Larry Kotlikoff has spent every week, for over two years, answering questions about what is likely your largest financial asset — your Social Security benefits. His Social Security original 34 “secrets”, his additional secrets, his Social Security “mistakes” and his Social Security gotchas have prompted so many of you to write in that we feature “Ask Larry” every Monday. Find a complete list of his columns here. And keep sending us your Social Security questions.
Kotlikoff’s state-of-the-art retirement software is available here, for free, in its “basic” version. His new book, “Get What’s Yours — the Secrets of Maximizing Your Social Security Benefits,” (co-authored with Paul Solman and Making Sen$e Medicare columnist Phil Moeller) will be published in February by Simon & Schuster.
Larry took a break from answering your questions this week to devote his column to a recent, troubling change in Social Security’s manual. The change, while small, and the details, while complicated, are incredibly important because they affect the amount of money Americans who currently receive disability benefits will be able to collect in their lifetimes. And although the Social Security Administration probably never intended to be discriminatory, Larry argues that this rules change treats disabled Americans like second class citizens.
If you are one of the nearly 9 million Americans receiving Social Security disability benefits, you should be personally outraged by the terribly unfair action Social Security bureaucrats took on Dec. 23 [2014].
What happened on that day?
Social Security made it essentially impossible for recipients of disability benefits to collect the same full auxiliary benefits (spousal, widow, divorced spousal, and divorced widow(er)) benefits that the rest of us can collect between full retirement age (typically around 66) and 70, while allowing our own retirement benefits to grow.
Before explaining the precise machination Social Security undertook to discriminate against the disabled, let me provide four background points.
First, disability benefits automatically convert to retirement benefits at full retirement age unless you actively choose to withdraw that conversion.
Second, you can’t get a full auxiliary benefit upon reaching full retirement age if you have filed or have been forced by Social Security to file (through that conversion) for your own retirement benefit.
Third, if you have filed, whether voluntarily or not, you will be given an “excess,” not a full auxiliary benefit.
Fourth, for most workers, including most disabled workers, excess auxiliary benefits will be small or zero.
So what did Social Security do, seemingly in the dead of night, on Dec. 23 [2014] when many Americans were preparing for Christmas? They rewrote a provision of their Program Operating Manual System (POMS). And their rewrite, which is written in as obscure a manner as possible, forces all disabled workers reaching full retirement to file for their retirement benefits unless they pay back every penny they ever received in disability benefits. That’s not something most disabled workers are able, let alone eager, to do.
Is There a Lot of Money at Stake Here?
There can be.
Take Sally, a hypothetical disabled widow just reaching age 66 (her full retirement age). She has a widow’s benefit of $15,000 and a full retirement benefit of $15,000. Under a reasonable reading of the original POMS provision, Sally could withdraw the conversion of her disability benefit into her retirement benefit; in other words, she could avoid being forced to file for her retirement benefit. Doing so would leave Sally free to collect her full widow’s benefit until 70. At that point, she could collect a higher retirement benefit than she could have had she taken it at 66. The benefit would equal $19,800 (measured in today’s dollars) — 32 percent higher thanks to Social Security’s delayed retirement credit.
But under the rewrite of the provision, the only way for Sally, who I’ll assume has been disabled for 20 years, to prevent herself from being forced to file for her retirement benefit at full retirement age is to pay back her disability benefits. That’d come to $300,000 — 20 times her annual $15,000 in benefits.
Now, you might ask, can’t Sally suspend her retirement benefit until 70? Wouldn’t that allow her to collect her full widow’s benefit between 66 and 70? No, she can’t suspend. To suspend a benefit you first need to have filed for it. And, remember, the act of filing for your retirement benefit precludes you from receiving full auxiliary benefits; you’re stuck with only excess auxiliary benefits. And in Sally’s case, her excess widow’s benefit is zero.
Hence, Social Security’s surreptitious move, which occurred with no public debate, no new legislation from Congress, and no public disclosure, will cost Sally $60,000 in benefits she could have been receiving.
This obviously isn’t fair to Sally or anyone else who is now disabled. Nor is it fair to those who may become disabled. That’s all of us.
The Evidence
Now, let me show you precisely what the provision — regulation number 0200206005 — said before and after Social Security changed it.
Here’s the original version:
In cases involving automatic conversion (e.g., DIB [disability insurance benefit] to RIB [retirement insurance benefit] conversion at FRA [Full Retirement Age], wife’s benefits converted to mother’s benefits without an additional application), if the beneficiary requests in writing not to receive the new benefit, treat the request as a request for WD [withdrawal]. Approve the request if the conditions for approval of a WD are met, regardless of whether the conversion has been made.
Here is the rewritten version:
In cases involving automatic conversion (e.g., DIB [disability insurance benefit] to RIB [retirement insurance benefit] conversion at FRA [Full Retirement Age]), if the beneficiary requests in writing not to receive the new benefit, treat the request as a request for WD [withdrawal] of the application (i.e. DIB application for a RIB conversion). Approve the request if the conditions for approval of a WD are met, regardless of whether the conversion has been made. Please note that the condition for repayment of benefits that were awarded before the conversion occurs would apply as per GN 00206.005A.2.
Let me help you see the key change made to this gobbledygook. In the original version, the term WD (wtihdrawal) seems to reference a request to withdraw the conversion. Alternatively, it could be read as the withdrawal of the retirement benefit to which Sally’s disability benefit was being converted. Under either interpretation, Sally collects a full divorcee widow benefit for four years.
But in the rewritten version, WD is interpreted to mean the withdrawal of the disability benefit itself. And withdrawing one’s disability benefit means paying back all disability benefits received to date. That’s the significance of the last sentence.
The new language also says, in effect, that filing for a disability benefit is equivalent to filing for a retirement benefit. How can that be? The Social Security manual (POMS) explicitly denies that receiving disability benefits triggers “deeming” — when filing for one benefit forces you to file for another. And nothing on the application form for disability benefits suggests to applicants that they’re jointly filing for a retirement benefit, even one that will come in the future. Indeed, the official notice that your application for disability benefits has been accepted makes clear that only the disability benefit, and no other benefits, is being awarded.
Why Is Social Security Discriminating Against the Disabled?
Many people, including many people inside Social Security, think that collecting a full auxiliary benefit while letting your own retirement benefit grow is a form of double dipping. I can make that case.
But I can also make the case that we pay (actually, our employer transmits) 12.4 percent of our gross earnings each year we work (up to the $18,500 covered earnings ceiling) to Social Security to provide all sorts of insurance benefits beyond just retirement benefits. These include disability benefits, spousal benefits, divorcee spousal benefits, child benefits, survivor child benefits, mother and father benefits, child-in-care spousal benefits and parent benefits.
The Social Security bureaucrats who doctored the key provision are implicitly claiming that all these other benefits are there for a purpose, while full auxiliary benefits for disabled workers are not allowed, even though the original version of the provision strongly suggested otherwise.
And Now for the Rest of the Story
POMS 0200206005 was written, as it was, to be fair to the disabled. But, as with so much in Social Security, hardly anyone knew the disabled apparently had the same option as everyone else to collect full auxiliary benefits. I personally knew nothing about this provision until I started asking Jerry Lutz, the long-time former Social Security technical expert who reviews all of my columns for accuracy. (Paul Solman and I thank him enormously for that service.)
As soon as Jerry told me that the disabled could withdraw the automatic conversion and take a full auxiliary benefit, I realized it was a big deal and wrote about it.
In March 2013, I heard from a lovely lady from Holyoke, Massachusetts, whom I’m calling Ann to protect her identity. Ann receives disability benefits. She told me she was divorced (after a 10-year-plus marriage) and wanted to withdraw the conversion of her disability benefit into her retirement benefit upon reaching full retirement age in December. Her goal was to collect a full divorcee spousal benefit prior to taking her own retirement benefit at 70.
But when she applied, Social Security’s Holyoke and Springfield offices gave her the run around. I immediately called Jerry, and he suggested having her cite the POMS 0200206005 provision to Social Security. (I wrote about Ann’s situation in this column, and updated readers on her case two weeks later.)
After multiple interactions with Social Security, some unpleasant, the situation seemed to be saved. Ann formally filed on Dec. 12 to withdraw the conversion and requested to receive just her full divorcee spousal benefit.
Eleven days later, someone at Social Security changed POMS 0200206005. Maybe this was in response to Ann’s filing and my columns. Maybe not.
Meanwhile, Ann received her first retirement benefit check at the end of December with no explanation of what had happened to her claim. For all we know, her retirement benefit check may stop. She may now get a bill to repay years of disability benefits since her application to withdraw a conversion is now being construed as an application to withdraw her disability benefit. Remember, that means paying back all disability benefits received, in her case, for decades.
Why Did This Happen?
I wanted to know what was going on here and sought reactions, first from Jerry, the former Social Security technical expert. He knows the POMS and other Social Security rules inside and out. This is what he had to say, via email:
SSA will say that the rewrite is merely a clarification of existing policy. To my mind, there is no justification for the ‘new’ policy that they implemented by the rewrite of POMS GN 00206.005.B.4.
Based on the rewrite, SSA is saying that an application filed for DIB (disability insurance benefit) filed at any age is also an application for RIB (retirement insurance benefit) . In other words, you are ‘deemed’ to be filing for RIB at FRA, even if you file for DIB at age 20, for example. However, section F.2.b of GN 00204.020 specifically states that conversion of DIB to RIB is not a deemed filing situation.
IMHO, the real explanation is that you publicized something that SSA considers to be a loophole, and they took administrative steps to close it by rewriting POMS.
I also sought a response from the Social Security Administration. One of their top policymakers, Marianna LaCanfora, claimed, as Jerry forecast, that the rewrite was just a clarification of existing policy. The key part of her email follows:
The rules on automatically converting an individual from disability benefits to retirement benefits have been in place for decades, and are firmly rooted in statute and regulation, as shown below.
The Act (Sec. 202) clearly states that “Every individual who—
1. is a fully insured individual (as defined in section 214(a)
2. has attained age 62, and
3. has filed application for old-age insurance benefits or was entitled to disability insurance benefits for the month preceding the month in which he attained retirement age, shall be entitled to an old-age insurance benefits.
Our regulation (§404.310) is more specific, it states: “When you attain full retirement age, your disability benefits automatically become old-age benefits”. Therefore the conversion is not optional, as it derives from the DIB application.
Here’s my reaction. Everything Marianna says here about Social Security’s provisions simply verifies that the conversion of the disability benefit to the retirement benefit will occur automatically.
But her last sentence — “Therefore the conversion is not optional, as it derives from the DIB application” — is Marianna’s own interpretation of the law. It’s not the law. There is nothing in the law that explicitly rules out withdrawing the conversion. Nor is there anything in the law that explicitly rules out withdrawing the retirement benefit after the conversion.
So here we have Marianna, a Social Security policymaker, and not actual statute, telling us that the conversion is not optional. But it seems some other Social Security bureaucrat – the one who wrote the original version of the POMS – felt otherwise.
Time for Congress to Step In
Whether today’s Social Security bureaucrats considers this to be a loophole or not, it’s not for them to decide. Last we the people knew, it was Congress, not Social Security bureaucrats, who decided who should be paid what benefits and under what circumstances. The fact that benefits need to be cut or taxes raised, or both, to keep Social Security solvent does not justify treating the disabled like second class citizens.
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Sen. James Lankford (R-Okla.) wants a hearing on the Social Security Administration’s new plan for its disability backlog. Bill Clark/CQ Roll Call via Getty Images.
"Social Security Administration Seeks Shortcut Through Massive Disability Backlog"
Some worry the new policy could cause claimants to miss out on a fair hearing.
By Arthur Delaney, Senior Reporter, The Huffington Post, 5/6/2016
WASHINGTON — The Social Security Administration is quietly changing how it handles some appeals from Americans who’ve sought disability benefits.
The changes are part of an effort to chip away at an unprecedented backlog of unresolved claims, one that’s left some people waiting more than 500 days for a decision.
“With over 1.1 million people waiting for a hearing decision, we are in the midst of a public service crisis,” SSA spokesman Mark Hinkle said in an email. “For some people this results in a wait of over 17 months to receive a hearing decision, which we concede is unacceptable service.”
If someone can’t keep working because of a serious illness or injury, that person can apply for monthly benefits under the Social Security Disability Insurance program. Nearly 9 million disabled Americans receive federal disability benefits, which average $1,022 per month.
The government takes a hard look at new claims, however, and most are denied at first. Any subsequent appeals go to administrative law judges who have a measure of independence from the SSA. From there, dissatisfied claimants can try an appeals council and ultimately a federal court.
It’s the later stages of appeals where the SSA has made changes. Nearly 30,000 disability claims per year get sent back down, or “remanded,” to the appeals council or to administrative law judges for reconsideration. Now, these remands will instead be heard at the council level by administrative appeals judges who don’t have the same independence from the SSA that administrative law judges do.
Another 10,000 or so cases being taken away from ALJs include situations where people have returned to work after receiving disability benefits and the agency believes they’ve been overpaid.
Administrative law judges work for government agencies, though they are supposed to be shielded from agency pressures by a federal law called the Administrative Procedure Act. The law creates a special hiring process and exempts ALJs from performance reviews and bonus evaluations.
The National Organization of Social Security Claimants’ Representatives, a group that advocates for lawyers who represent people seeking disability benefits, is wary of the change.
“We’re supportive of the agency taking steps with the resources they have to address the number of people waiting,” Lisa Ekman, director of government affairs at NOSSCR, said in an interview. “But we’re also very concerned about claimants getting a hearing in front of an administrative law judge that has qualified judicial independence as required by the Administrative Procedure Act.”
Still, Ekman said the 1 million people waiting for the government to decide whether they qualify for benefits shouldn’t be made to wait.
“The backlog and the wait are tremendously detrimental to claimants,” Ekman said. “Claimants die while they’re waiting to get a hearing. Claimants lose their homes while they’re waiting to get a hearing.”
The Association of Administrative Law Judges, meanwhile, is totally against the new policy, which they say is not even legal.
“They have launched an initiative that is not in the best interest of the American public,” Marilyn Zahm, the association’s president, said in an interview. “What the Social Security Administration plans to do now is to divert subsets of cases from hearings before ALJs to hearings before their own handpicked people.”
Hinkle said the SSA owes it to the public to do whatever it can to reduce the wait time, and that administrative appeals judges can help with that.
“This strategy neither favors administrative appeals judges nor disfavors administrative law judges – it favors the many people waiting for a hearing decision,” Hinkle said in an email.
The disability backlog has been made worse by the fact that the working-age population is getting older, and by the Great Recession of 2007-2009, which reduced work opportunities for people who could qualify for benefits.
As part of a general strategy to reduce the backlog, the agency has been trying to hire more administrative law judges. An internal audit published last year found that one factor contributing to the backlog was a decline in the number of people available for the job.
Sen. James Lankford, an Oklahoma Republican who believes the disability program is rife with fraud, will hold a hearing on the new appeals policy next week, his office said.
“These proposed changes break with decades of practice, run contrary to well established interpretation of the Social Security Act, and depart from the SSA’s own regulations,” Lankford said in a letter to the agency last month. “The possibility that such actions could invite large-scale, costly, and protracted litigation from affected claimants is very troubling.”
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"Trump Lies About Social Security And Undocumented Workers"
By Nancy Altman, Founding Co-director, Social Security Works via The Huffington Post, 8/20/2016
In pivoting to the general election, Donald Trump recently proclaimed, “I will never lie to you.” That, of course, is a lie.
Some of Trump’s lies are inconsequential, like his claim to never lie; others, though, are extremely damaging, furthering his political agenda while undermining the security of us all. His recent Social Security lie, embedded in his first general election ad, falls into that latter category.
In that ad, Trump includes a lie that can be found circulating around the internet but contains not one iota of truth. The ad claims that unauthorized workers (people he pejoratively calls “illegal”) receive Social Security. The exact opposite is true.
Millions of undocumented workers, working in jobs where Social Security is automatically deducted from paychecks, contribute billions of dollars to Social Security every year. Yet, by law, they cannot collect a penny of benefits. The Chief Actuary of the Social Security Administration has estimated that undocumented workers have contributed over $100 billion to Social Security in the last decade alone.
Trump’s claim that he will lose Pennsylvania only if the election is rigged seeks to undermine confidence in the integrity of our elections. His lie about undocumented workers receiving Social Security seeks to undermine confidence in another crucial institution, our Social Security system.
Social Security is vital to the economic security of all of us. It provides working families with their most important source of retirement income, life insurance, and disability insurance. It provides these benefits efficiently, fairly, and securely. Less than a penny of every dollar spent by Social Security goes to administration. The remaining more than 99 cents goes directly to the American people in the form of benefits. Without Social Security nearly half of today’s seniors would have incomes below the Federal poverty line. Our nation’s largest children’s program, Social Security provides benefits, either directly or indirectly, to around nine percent of America’s children.
Social Security is not only critically important and extremely well run, it is extremely popular, as well. Overwhelming majorities of Americans, irrespective of Party affiliation, age, race, gender, ethnicity, or economic status support Social Security, believe it is more important than ever, do not want to see it cut, and want to see it expanded.
There, of course, have always been those who dislike Social Security and would like to dismantle it. President Dwight Eisenhower called them a “tiny splinter group.” He added, “Their number is negligible, and they are stupid.”
Today, that tiny splinter group never openly expresses dislike for Social Security. Rather, they seek to undermine confidence in it. President George W. Bush, for example, proposed drastically cutting Social Security and dismantling it through privatization. Yet, he described it as “[o]ne of America’s most important institutions,” and “a great moral success of the 20th century.” He quickly followed those remarks with the comment that it was going bankrupt and unsustainable. This, despite the fact that the United States is the wealthiest nation in the world at the wealthiest moment in its history, and can unquestionably afford Social Security’s modest benefits.
Like Bush, Trump clearly understands the politics of Social Security. In a 2011 interview with Sean Hannity, Trump said he was on board with plans to cut Social Security, Medicare, and Medicaid — but that Republicans should be very careful “not to fall into the Democratic trap” by doing it without bipartisan support, or they would pay the price politically.
Sure enough, during the primaries, Trump claimed he would oppose cuts to Social Security. As soon as he secured the nomination, though, he sent signals both to Party leaders and wealthy donors that he, indeed, would cut benefits, just as he espoused before becoming a candidate. And the Republican Platform, though oblique in its language, makes clear to those who follow the issue closely, that the Party supports cuts and privatization.
While not likely to make his true position on Social Security known before Election Day, Trump, in his just released ad, seeks to undermine confidence in the integrity of Social Security by spreading the lie that undocumented workers receive Social Security. The obvious implication is that the earned Social Security benefits of hard working Americans are being diverted to those who don’t deserve them.
This subtle undermining of confidence in our Social Security system should not be a surprise. Before becoming a candidate, Trump called Social Security a Ponzi scheme, darkly hinting that it was on the verge of collapse.
In stark contrast, Secretary Hillary Clinton is a champion of Social Security. She fought hard to defeat President Bush’s reckless privatization scheme in 2005. Today, she stands firmly and clearly in favor of expanding, not cutting, Social Security. She sees expanding Social Security as a solution to serious challenges facing the nation, including our looming retirement income crisis, the continuing perilous growth in income and wealth inequality, the financial squeeze on working families, and the need to support those among us who take time out of the paid workforce to undertake the essential and demanding job of care-giving. The Democratic Platform includes a powerful plank advocating expanding, not cutting, Social Security.
Many foreign policy experts have warned that Trump is unfit to be commander in chief or have control of our nuclear codes. He is a threat to our physical security. His lies about Social Security make clear he is a threat to our economic security, as well.
Though Trump is seeking to pivot to the general election in order to become more acceptable to a broader group of voters, his latest ad, sowing fear and misinformation, is revealing. It is not only an attack on immigrants and refugees. It is an attack on the economic security of us all.
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“'A National Disgrace': Trump Proposes Social Security Change That Could End Disability Benefits for Hundreds of Thousands”
By Common Dreams, December 16, 2019
"Donald Trump and his advisers know that this will kill people, and they do not care. Every current and future Social Security beneficiary must band together to defeat this horrific proposal, or else all of our earned benefits will be next."
By Jake Johnson, staff writer
Activists are working to raise public awareness and outrage over a little-noticed Trump administration proposal that could strip life-saving disability benefits from hundreds of thousands of people by further complicating the way the Social Security Administration determines who is eligible for payments.
The proposed rule change was first published in the Federal Register last month but has received scarce attention in the national media. Last week, the Social Security Administration extended the public comment period on the proposal until January 31, 2020.
Alex Lawson, executive director of the progressive advocacy group Social Security Works, told Common Dreams that the rule change "is the Trump administration's most brazen attack on Social Security yet."
"When Ronald Reagan implemented a similar benefit cut, it ripped away the earned benefits of 200,000 people," Lawson said. "Ultimately, Reagan was forced to reverse his attack on Social Security after massive public outcry—but not before people suffered and died."
Patient advocate Peter Morley, who lobbies Congress on healthcare issues, called the proposal "a national disgrace."
"This is not over," said Morley. "We will all need to mobilize."
The process for receiving Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) is already notoriously complicated, and the Trump administration is attempting to add yet another layer of complexity that critics say is aimed at slashing people's benefits.
As The Philadelphia Inquirer reported last week, "those already receiving disability benefits are subject to so-called continuing disability reviews, which determine whether they are still deserving of compensation for an injury, illness, or other incapacitating problem as their lives progress."
Currently, beneficiaries are placed in three separate categories based on the severity of their disability: "Medical Improvement Not Expected," "Medical Improvement Expected," and "Medical Improvement Possible." People with more severe medical conditions face less frequent disability reviews.
The Trump administration's proposed rule would another category called "Medical Improvement Likely," which would subject beneficiaries to disability reviews every two years.
According to the Inquirer, "an estimated 4.4 million beneficiaries would be included in that designation, many of them children and so-called Step 5 recipients, an internal Social Security classification."
Step 5 recipients, the Inquirer noted, "are typically 50 to 65 years of age, in poor health, without much education or many job skills [and] often suffer from maladies such as debilitating back pain, depression, a herniated disc, or schizophrenia."
Jennifer Burdick, supervising attorney with Community Legal Services in Philadelphia, told the Inquirer that placing Step 5 recipients in the new "Medical Improvement Likely" category and subjecting them to reviews every two years would represent "a radical departure from past practice."
Lawson of Social Security Works said "Donald Trump and his advisers know that this will kill people, and they do not care."
"Every current and future Social Security beneficiary must band together to defeat this horrific proposal," added Lawson, "or else all of our earned benefits will be next."
In addition to lack of coverage from the national media, most members of Congress have also been relatively quiet about the Trump administration's proposal.
Two Pennsylvania Democrats—Sen. Bob Casey and Rep. Brendan Boyle—condemned the proposed rule change in statements to the Inquirer.
The proposal, said Casey, "appears to be yet another attempt by the Trump administration to make it more difficult for people with disabilities to receive benefits."
Boyle said the "changes seem arbitrary, concocted with no evidence or data to justify such consequential modifications."
"This seems like the next iteration of the Trump administration's continued efforts to gut Social Security benefits," Boyle added.
"Every current and future Social Security beneficiary must band together to defeat this horrific proposal, or else all of our earned benefits will be next."
—Alex Lawson, Social Security Works
"This seems like the next iteration of the Trump administration's continued efforts to gut Social Security benefits."
—Rep. Brendan Boyle (D-Penn.)
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“White House weighing proposal to tighten eligibility for disability benefits”
BY J. EDWARD MORENO – The Hill - 01/10/2020
The Trump administration is working toward a plan that would tighten eligibility requirements for Americans to claim disability benefits, The Wall Street Journal reported Friday.
The proposal by the Social Security Administration will narrow eligibility based on age, education and work experience. According to the documents and data collected by the Wall Street Journal, these factors determined eligibility for 500,000 people in 2017.
The move comes as part of a broader White House initiative to lower federal welfare spending.
The proposal seeks to address the major economic and demographic shifts that the country has experienced in the last few decades, as less people are employed at physically dangerous occupations like mining and factory work. Americans are also better educated and employed at retailers, hospitals and schools.
The administration has also endorsed stricter rules for food stamp benefits and Medicaid, arguing they would draw more Americans into the labor force.
Currently, people seeking disability benefits must be diagnosed with something on a list of impairments recognized by the agency. If they don’t meet that standard, age is the next qualification. Under the new rules, age will play a less significant role in deciding if somebody is eligible for benefits, according to the report.
The SSA presented Congress with rule proposals that would increase the standard disability benefits last year.
House Ways and Means Chairman Richard Neal (D-Mass.) sent a letter in December warning the Social Security Administration urging them to reconsider the rule they presented the committee.
“We are concerned that under the proposed rule, some individuals subject to review will be simply unable to navigate the process and, as a result, lose their benefits even though there is no medical improvement,” the letter read.
According to the Social Security Administration, over 8.5 million people receive disability benefits.
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“Trump administration cuts to Social Security disability benefits among the cruelest”
By Rebecca Vallas, Opinion contributor, USA Today, January 27, 2020
Hardly a day goes by without the Trump administration finding a new way to slash the safety net.
But its latest proposal — which would cut Social Security disability benefits by $2.6 billion over 10 years — is one of the cruelest. It would require millions of beneficiaries to re-prove their disability — and navigate a complex web of red tape and paperwork — every two years. Hundreds of thousands of people could lose benefits even though their condition has not changed.
We’ve seen this movie before, when the Reagan administration implemented a similar policy. People with Down syndrome, cerebral palsy, serious mental illness and even terminal cancer were notified they were “no longer disabled” and their benefits terminated. All told, half a million people lost benefits. Thousands died, many by suicide. President Ronald Reagan’s “disability purge” caused such suffering, it sparked a bipartisan revolt by 18 states that refused to implement it. Ultimately, a rare unanimous vote by Congress ended the nightmarish policy in 1984.
Proving eligibility for benefits is an arduous process that can take months if not years, and numerous pages of medical evidence. America has among the strictest eligibility standards in the world. Over 60% of applications are denied, and tens of thousands of people die each year waiting for benefits.
While vital, benefits are so modest — averaging roughly $1,200 per month for Social Security Disability Insurance and $536 for Supplemental Security Income — that many beneficiaries live in poverty. Unspeakable hardship will result if this proposal takes effect.
The Trump administration — like Reagan’s — claims that the proposal is about efficiency. But that’s hard to square with the administration’s own accounting, finding that the new policy would cost nearly as much to administer ($1.8 billion) as it would “save” over 10 years by taking away survival benefits. But as with the rest of the Trump safety net cuts, the cruelty seems to be the point.
Rebecca Vallas, a senior fellow at the Center for American Progress, is a former legal aid lawyer who represented people with disabilities.
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"How a Social Security program piled huge fines on the poor and disabled: The remarkable penalties led to tumult inside the office of Inspector General Gail Ennis, where a whistleblower was targeted for retaliation, an administrative judge found"
By Lisa Rein, The Washington Post, May 20, 2022
Four years after her longtime partner died of kidney cancer, federal agents knocked on Gail Deckman’s door outside Chicago and told her she was in trouble: She had kept thousands of dollars in Social Security disability benefits that should have stopped when he died.
Deckman told the agents she thought the $1,400 check deposited each month into an account to which she had access was a payment for land her partner had sold in Michigan. She spent the money on rent and clothes and gifts for her grandchildren, she said.
The inspector general’s office, which investigates disability fraud and tries to recoup money for the government, ultimately charged her $119,392 — nearly three times what she received in error.
Deckman didn’t have the money. So the Social Security Administration garnished the entire $704 check she was going to receive every month when she retired from her minimum-wage job flipping burgers at the convenience store in her local Rebel gas station. She can apply for retirement in 2032 — when she’s 83.
“I’m going to be dead by then,” Deckman said. “They’re taking away my Social Security. They’re charging me so much. Do they think I can afford a lawyer to fight this?” At 73, she continues to work, because she says she has to.
The inflated fees were set in motion during the Trump administration, when attorneys in charge of a little-known anti-fraud program run by the inspector general’s office levied unprecedented fines against Deckman and more than 100 other beneficiaries without due process, according to interviews, documents and sworn testimony before an administrative law judge. In doing so, they disregarded regulations and deviated from how the program had recovered money since its inception in 1995, failing to take into account someone’s financial state, their age, their intentions and level of remorse, among other factors.
The sums demanded by the government stunned those accused of fraud. The unusual penalties were not the only break with how the Civil Monetary Penalty program had previously been conducted: Unlike in the past, the chief counsel also directed staff attorneys to charge those affected as much as twice the money they had received in error, on top of the fines, interviews and court testimony show.
The escalating penalties created a giant jump — at least on paper — in the amount of money the inspector general could show lawmakers it was bringing in, according to interviews and sworn testimony obtained by The Washington Post. Fines as high as hundreds of thousands of dollars were imposed on poor, disabled and elderly people, many of whom had no hope of ever being able to pay.
A Chicago woman was fined $132,000 after wrongly receiving as much as $10,618 in benefits, according to internal data of penalties and assessments obtained by The Post. A Denver woman was sanctioned $168,000 after cashing as much as $14,960 in wrongly received checks. A New Jersey woman is on the hook for nearly $435,000 after she accepted about $47,000 in benefits but failed to report a $120,000 house she inherited from her father and car loans she co-signed for her children, on what she said was a lawyer’s advice.
Rep. Gerald E. Connolly (D-Va.), who leads the government operations panel on the House Oversight and Reform Committee, called the penalties “a cheap, easy way of getting enforcement up.”
“These cases are not willful crimes,” he said. “Shouldn’t the punishment fit the crime?”
Over a seven-month period ending in mid-2019, 83 people were charged a total of $11.5 million, the documents obtained by The Post show — a jump from less than $700,000 for all of 2017. It is not clear whether that is a full accounting of those affected by the practice of imposing stepped-up fines, which was halted by the inspector general’s office last year amid ongoing whistleblower complaints.
This account is based on interviews with 18 current and former Social Security employees, congressional officials, advocates for the disabled and beneficiaries, some of whom spoke on the condition of anonymity because they were not authorized to speak publicly.
The remarkable penalties led to tumult inside the Office of Inspector General Gail Ennis, where a whistleblower was targeted for retaliation, according to a ruling this month by the administrative judge at the Merit Systems Protection Board.
Ennis, who was sworn in as a Trump appointee in January 2019, declined an interview request but said in a written statement that her office is “unaware of any basis that supports the statement that unprecedented fines have been imposed.”
Ennis wrote that the civil monetary program is administered by “the Counsel to the Inspector General, not the Inspector General.” She said no penalty in recent years has been reduced or overturned by an internal appeals board for being excessive. However, cases rarely make it to the board, the last resort when an appeal to an administrative law judge fails.
Inside Ennis’s office, two officials raised concerns about the fees to her and her top staff, according to interviews and court testimony: Deborah Shaw, considered the program’s most knowledgeable, experienced attorney, who testified in September that she was directed by her bosses to issue penalties she found unconscionable; and veteran senior executive Joscelyn Funnié.
Ennis told them that she would not renegotiate any cases because she did not want to draw attention to the program and worried that Social Security would take it away from her office, according to testimony and four people familiar with her comments during a staff meeting.
After they repeatedly pressed to have cases reexamined and the penalties lowered, Shaw and Funnié were escorted out of the agency’s headquarters in Woodlawn, Md., in September 2019 and placed on paid leave. Ennis then fired Funnié, who had also raised separate concerns to her about what she believed were improper hiring actions she took and directed that Shaw, who was also threatened with suspension, be demoted, according to hearing transcripts and people familiar with their cases.
Social Security Inspector General Gail Ennis (Social Security Administration)
In a May 6 ruling, Judge Craig A. Berg found that Shaw was the victim of a “prima facie case of whistleblower reprisal” by Ennis’s office and ordered the agency to restore back pay and benefits and reinstate her as a supervisor.
Shaw “has shown that she had a reasonable belief she was disclosing an abuse of authority when she raised issues with the drastic increase in penalties the [Civil Monetary Penalty] program was assessing ...” Berg wrote in a 68-page decision. He found “significant evidence” that Ennis and her top staff “had motive to retaliate” against Shaw as she became a “vocal advocate” to reopen 83 cases whose penalties she believed were excessive.
In a statement before the ruling, Ennis said she had never retaliated “against any employee.” After the judge’s decision, her spokeswoman, Rebecca Rose, said in an email, “We disagree with the decision and we are evaluating options for next steps in this case.”
In a email to The Post, Shaw said, “As a 27-year public servant who cares deeply about the Inspector General’s oversight mission, I had no choice but to speak up when I witnessed the corruption of an anti-fraud program I helped build.”
“While I strongly believe that those who commit fraud against public entitlement programs deserve to be held accountable, I also believe that each person accused of misconduct deserves due process,” she added.
Shaw testified that she was shocked when she was directed in early 2019 to issue a penalty of $176,000 to a woman who had already written a check for $26,000 to repay the government the entire amount she had wrongly received in disability benefits. Before she was placed on leave, Shaw was able to dismiss or settle about 23 cases with high proposed fines that were already in the appeals process. But that left at least 83 cases that she thought merited review, interviews and testimony show.
The week after her hearing before the merit board, Shaw learned that a file she was ostensibly put on leave for losing was never misplaced at all, but had reappeared in the mailbox of the inspector general’s Office of Investigations, according to two people familiar with the incident.
Funnié was out of work for almost two years before she settled a similar claim of retaliation late last year with Ennis’s office, which had originally told her she was being fired for asking for a postponement in a court case. She is now back as a special adviser, but her duties have been restricted to tasks below her experience level, according to two people familiar with her situation. Funnié declined to comment.
Ennis’s staff issued new guidelines for the fraud program beginning late last year after the whistleblowers lodged their concerns, recommending a single fine of $2,300 to $7,000 in cases where the accused settle. But scores of those who came under scrutiny in 2018 continue to owe disproportionately high fines.
Advocates for those fined said they could not fathom how the government expected to recoup such large sums of money from people who generally live below the poverty line.
“Any penalties that impact poor people that don’t take into account their circumstances are unfair, particularly when there are policies in place that require this,” said Jonathan Stein, a longtime disability advocate who is of counsel to Philadelphia-based Community Legal Services.
The troubled anti-fraud program is one in a multitude of controversies roiling Social Security’s 500-person internal watchdog division, charged with oversight of the agency that distributes retirement benefits to 69 million Americans and monthly disability checks to about 15 million others.
Ennis’s office, with a $112 million budget, published 46 staff audits and reports of Social Security operations and performance in 2021, interviews and records show — less than two-thirds of its output in 2017 and 2018. Some early pandemic oversight work took a year to get underway.
Dozens of senior auditors, investigators and other staff have quit or retired, many in frustration with what they describe as Ennis’s mercurial leadership and lack of focus on the office’s mission, according to current and former staff members. The Office of Audit has lost 35 auditors since March 2019, almost double the number who resigned in the prior three years. In recent months, multiple supervisory law enforcement agents and the heads of investigations and digital evidence units quit, following an exodus in which some took demotions to accelerate their departures.
Ennis, in her statement, said she is committed to addressing issues affecting employee morale, which dipped to its lowest point since 2014 in a new survey of the federal workforce. She cited expanded recruitment efforts, particularly to find diverse job candidates, regular meetings to foster informal engagement and other efforts. Her spokeswoman, in an email, blamed the departures on a “normal and expected increase in attrition” as a result of leadership changes and the shift to remote work during the pandemic.
Ennis, a former WilmerHale attorney, also wrote that the number of audits “does not sufficiently capture the value the OIG provides to taxpayers” and said her office’s productivity has remained consistently above the average for the federal watchdog community.
Congress created the civil penalty program with bipartisan support to help Social Security recover benefits paid in error in its two antipoverty programs for low-income elderly Americans and those with disabilities. These have long been considered vulnerable to fraud since they rely on beneficiaries to report any changes that would disqualify them.
Civil fines provide an alternative when fraud is considered too insignificant to warrant criminal prosecution by the Justice Department. The fines act, in theory, as a deterrent to misconduct. Starting in 2015, Congress allowed the office to update the maximum penalties by a small amount each year in line with inflation. By 2018, the cap was $8,250, meaning that someone could be charged that amount for each wrongly received benefit check. But until the Trump administration, the full amount was rarely — if ever — imposed, according to people familiar with the program. Doing so was viewed as excessive punishment for a low-income and disabled population, according to current and former employees.
Twice a year, the inspector general reports to Congress how much money it has assessed to those it has accused of wrongdoing. By 2017, the amount had plummeted to less than $1 million from a peak of $20 million years earlier, according to the reports.
At the time, the program was run by Ennis’s predecessor, acting Inspector General Gale Stone, a career auditor. Stone asked her chief counsel, Joseph Gangloff, how he planned to reinvigorate the program, according to Gangloff and another person familiar with the conversation.
Gangloff directed his staff to increase penalties, attributing the demand to pressure from Stone and from lawmakers on Capitol Hill, according to current and former employees, who said they did not have any indications that lawmakers were concerned about how much the program was recovering. Stone declined to comment.
The counsel also did away with the financial disclosure forms the office had sent for two decades to those it accused of fraud in order to determine how much they would be charged. Deckman, for example, said she did not receive a form asking her to list the details of her finances, even though the final letter she received in July 2018 laying out what she owed said it was taken into account.
Gangloff also stopped issuing notices of any payments due by certified mail, a practice designed to ensure that people were properly notified of what the government claimed they owed and could appeal, according to interviews and testimony.
In an interview, Gangloff said the program suffered from a “lack of consistency” when he arrived as chief counsel in 2015 and that by raising penalties, “we tried to create a very transparent, consistent process.”
“I think there was a significant pressure both from Congress and the inspector general to increase the fines. … I thought congressional oversight would focus on this issues,” he said.
The higher fines were still “well below” the maximum set by Congress, Gangloff said. He did not think that notifying beneficiaries by certified mail was mandated by regulation, he said. In fact, the regulation does call for such notification. Gangloff said he stopped sending financial disclosure forms because someone filling them out could easily omit something and “be criminally liable.” He retired at the end of 2019.
Those accused of fraud have 60 days to file an appeal. Most of the 83 did not or contacted the office past the deadline, records show. Six people reached by The Post had missed the deadline and said they didn’t know they could appeal or were told they had forfeited that right.
One was Lynda DePiero, the New Jersey woman who was told in December 2018 she owed $434,935 — nearly 80 percent of it in fines to compensate the government for several years of benefits to which the agency said she was not entitled.
“I feel like I got thrown in a pot of boiling water,” DePiero said of her reaction to the demand she received, signed by Gangloff. “I’m twisted in something I can’t get out of.”
DePiero, 55, said she has learning disabilities and back pain stemming from a leg damaged from birth. A single mother of five children, she had fought through eight years of appeals to win a $1,600 monthly benefit. Soon before her final appeal was heard, her parents died, DePiero said, and she asked the lawyer she had hired on contingency if inheriting their homes would put her benefits in jeopardy. He told her not to worry about it, she said. But while inheriting one house did not count against her benefits, the second did, along with several vehicles for which DePiero said she was signatory for car loans for her children.
“I know it all falls on me, even though he told me not to worry about it,” she said.
DePiero made several calls to the inspector general’s office before her appeal window closed, phone records show. But by the time she connected with an attorney there, it was two days after the deadline. She said she was told it was not possible to appeal the charges.
Her disability checks were diverted to pay her debt. DePiero found work during the pandemic in warehouses loading boxes, but back pain caused her to quit. She now lives on a monthly $1,502.70 disability check from UPS, she said. It will take her more than 22 years to pay back what the inspector general’s office told her she owes the government.
Alice Crites and Jennifer Jenkins contributed to this report.
Lisa Rein covers federal agencies and the management of government in the Biden administration. At The Washington Post, she has written about the federal workforce; state politics and government in Annapolis, and in Richmond; local government in Fairfax County, Va.; and the redevelopment of Washington and its neighborhoods.
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"'Full investigation' pledged of vast fines imposed by Social Security"
By Lisa Rein, The Washington Post, May 21, 2022
The acting Social Security commissioner will launch a "full investigation" on Monday of Inspector General Gail Ennis's oversight of an anti-fraud program that imposed extensive penalties on disabled and elderly people, a senior agency official said Saturday.
The action follows a Washington Post report that revealed how attorneys in charge of a little-known program run by Social Security's watchdog division issued unprecedented fines starting during the Trump administration.
More than 100 people who received disability benefits to which they were not entitled were hit with penalties as high as hundreds of thousands of dollars. Those fines were imposed on poor, disabled and elderly people, many of whom had no hope of ever being able to pay.
The acting commissioner "has very serious concerns about the issues raised by The Washington Post about the inspector general's oversight of this program," Scott Frey, chief of staff to Kilolo Kijakazi, said in an interview. Kijakazi has scheduled a meeting with her senior staff on Monday "to discuss how to proceed," Frey said.
Top House Democrats with oversight of the Social Security Administration and its watchdog also called on President Biden to investigate, calling the penalties an "apparent abuse of authority."
"We are outraged by this stunning report," Ways and Means Committee Chairman Richard Neal, D-Mass.; Social Security subcommittee Chairman John Larson, D-Conn.; and worker and family support subcommittee Chairman Danny Davis, D-Ill., wrote in a statement late Friday.
The lawmakers called on the president and Kijakazi to "swiftly investigate this apparent abuse of authority, to put in place safeguards to prevent future abuse, and to provide relief to any individuals wrongfully victimized."
A White House official said in an email, "We are aware of the reporting but have no further comment at this time."
A spokesman for the Senate Finance Committee, which also has jurisdiction over Social Security, said the committee is "evaluating a number of steps" in response to the article.
The remarkable penalties issued by the Civil Monetary Penalty Program started in 2018 as the program was floundering. Attorneys went against federal regulations and deviated from how the program had recovered money from those accused of fraud for more than two decades.
The inspector general's office failed to take into account recipients' financial state, their age, their intentions and level of remorse, among other factors, according to interviews, documents and sworn testimony before an administrative law judge. Staff attorneys were directed to charge those affected as much as twice the money they had received in error, on top of the fines.
Over a seven-month period that ended in mid-2019, 83 people were charged a total of $11.5 million, the documents obtained by The Post show — a jump from less than $700,000 for all of 2017.
It is not clear whether that is a full accounting of those affected by the practice of imposing stepped-up fines, which was halted by Ennis's office last year amid ongoing whistleblower complaints.
Two senior officials who raised repeated concerns about the fees to Ennis and her top staff after Ennis took office as a Trump appointee in 2019 — were abruptly placed on administrative leave. Ennis then fired one official and directed that her staff demote the other, Deborah Shaw, an attorney who was found by an administrative law judge at the Merit Systems Protection Board in May to have been the victim of a "prima facie case of whistleblower reprisal" by Ennis's office. The office was ordered to restore Shaw's back pay and benefits and reinstate her as a supervisor.
Ennis had told Shaw and the other official, senior executive Joscelyn Funnié, that she would not renegotiate the penalties because she did not want to draw attention to the program and worried that Social Security would take it away from her office, according to testimony and four people familiar with her comments during a staff meeting.
Ennis spokeswoman Rebecca Rose said in an email Saturday that the civil monetary program imposes penalties on those who commit fraud against the Social Security Administration and its trust fund. "The ultimate victims are taxpayers and future, rightful beneficiaries," she said.
Rose wrote that the inspector general "is committed to ensuring that penalties and assessments are imposed fairly, consistently and in accordance with the law." She said Ennis will be responsive to "any Congressional inquiries" and will keep the acting commissioner "informed" about the program's operations.
Inspectors general at large agencies have broad autonomy over their operations once the Senate confirms them. Ennis reports both to Congress and the Social Security commissioner, but neither engages directly in hiring or policy decisions.
Federal watchdogs also are monitored by the Council of the Inspectors General on Integrity and Efficiency (CIGIE), which sets government-wide policies and investigates complaints of misconduct against them.
The group's chairwoman, Allison Lerner, also the watchdog for the National Science Foundation, said in an interview that "while I cannot comment on any specific inspector general, we have a time-tested process for handling allegations of misconduct against inspectors general or their direct reports."
Ennis was named earlier this year to the council's Integrity Committee, which is in charge of any investigations. Any member who is the subject of an inquiry must recuse themselves, Lerner said.
The Washington Post's Magda Jean-Louis contributed to this report.
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"Social Security may get 10.5% raise in 2023 as prices surge. But don't party yet, some say."
By Medora Lee, USA Today, July 14, 2022
Key Points:
Based on hot inflation, social security beneficiaries may get a huge cost-of-living raise in 2023.
Some estimate 10.5% COLA but warn that many won't get the full increase.
With higher COLAS may come higher taxes and fewer income-based benefits.
Social security beneficiaries could get one of the largest cost-of-living raises since 1981 next year if inflation remains hot, but some analysts are warning people not to get too excited yet.
The annual cost-of-living adjustment (COLA) for social security benefits is based on the consumer price index for urban wage earners and clerical workers (CPI-W), a subset of the overall consumer price index.
In June, CPI-W rose 9.8% from a year ago for the largest increase since October 1981 and outpacing the broader headline gain of 9.1%. Based on that, COLA could be 10.5% next year, up from 5.9% this year, Mary Johnson, policy analyst at The Senior Citizens League, estimates. A 10.5% COLA would increase the average retiree benefit of $1,668 by $175.10, she said.
While any COLA increase would be welcomed by retirees, especially those suffering as the highest inflation in 40 years is already well above their 5.9% raise this year, Johnson warns retirees won’t be getting the full raise and could end up with less in the end.
Medicare Part B
Most retired and disabled Social Security recipients have Medicare Part B, but CPI-W doesn’t account for increases in Medicare Part B premiums and so it’s not included in COLA either.
So, while COLA rose this year by 5.9%, which was the largest increase since 1982, Part B increased a whopping 14.5%, among the largest jumps in the program’s history.
“The Part B premium is automatically deducted from Social Security checks, and in 2022 beneficiaries are still smarting from this,” Johnson said.
Higher income can mean higher taxes
A higher social security payout may sound great, but remember, those dollars might be taxable if you have provisional income above $25,000 or $32,000 for a married couple. The IRS calculates provisional income by adding the recipient’s adjusted annual gross income, plus any other tax-exempt income, plus 50% of all Social Security benefits.
“Over time more seniors are hit with the tax for this reason,” Johnson said. “High COLAs will hurry this along.”
The U.S. Social Security Administration estimated in a 2022 report that 40% of all U.S. retirees pay taxes on their benefits.
Johnson estimates “tens of thousands” of retirees who haven’t paid taxes on benefits in the past may discover they must start doing so in 2022 taxes because of the 5.9% increase and even more if COLA sees another huge jump in 2023.
“Because the income thresholds are not adjusted like ordinary tax brackets, these once-in-a-lifetime COLA increases could lead to permanently higher taxes for many retirees,” she said. “We strongly urge Social Security recipients to consider having money withheld from their Social Security benefits if they think they will be affected, especially because of this large increase we expect for 2023 as well.”
Recipients can do this online by setting up a “my Social Security account.”
Higher income can mean fewer benefits
Because people’s incomes can get a boost with higher social security benefits, people might be disqualified from certain benefits. These include adjusted Medicare health and prescription drug benefits for low-income beneficiaries. A larger income can end up pushing you up into a higher bracket that comes with higher Medicare Part B and Part D premiums.
“So, while a high COLA is better than no COLA at all, there are consequences that boosted Social Security income can have that affect overall financial security,” Johnson said.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
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