Widows Still Being Underpaid

From a report of Social Security's Office of Inspector General(OIG):

Some individuals are dually entitled to both disability benefits based on their own earnings history and widow's benefits based on their deceased spouse's earnings. Although disability benefits are generally not reduced based on the beneficiaries' age, widow's benefits are reduced when beneficiaries elect to receive them before they reach FRA [Full Retirement Age]. However, if the widow's benefits started when the disability benefits began or later, the widow's benefits are adjusted and the reduction for age is eliminated when disability benefits end and retirement benefits are awarded. Usually, this occurs when the beneficiaries attain FRA. In December 2006, about 3.6 million beneficiaries were dually entitled to both retirement benefits and widow's benefits.

SSA technicians are instructed to prepare manual diaries to control cases in which disability beneficiaries become entitled to reduced widow's benefits, to ensure the appropriate adjustments are made when disability ends and retirement benefits are awarded. In addition, SSA's Title II Redesign system produces alerts when these beneficiaries attain FRA. SSA technicians then determine whether adjustments to the widow's benefits are needed. Because the Agency does not have an automated system to make the necessary adjustments, employees must take manual actions to ensure these beneficiaries are paid correctly.

In May 2007, we issued a report on Adjustment of Widow's Insurance Benefits at Full Retirement Age (A-01-07-27122). Based on the results of our audit, we estimated that about 9,751 beneficiaries were underpaid approximately $113.7 million through November 2006. In May 2008, SSA reported these widow's records were reviewed and corrected in Fiscal Year 2007. Because SSA corrected the benefits for these widows, they will receive about $137.8 million in additional payments over the rest of their lives. ...

Because the population used for our May 2007 audit was identified in 2004, we indicated in that report that we would conduct additional analysis to identify a more recent population of widows who may have been underpaid. Therefore, we identified 9,603 widows who were not in the prior audit population but appeared to be underpaid. In March 2008, we referred these new cases to SSA's Office of Operations for review and corrective action. SSA informed us it began working these cases in April 2008 and expects to complete them all in Fiscal Year 2008.

We selected a random sample of 200 cases from this new population for detailed analysis. (See Appendix A for additional information about our scope, methodology and sample results.)

Results of Review
Based on the results of our review, we estimate that about 8,403 beneficiaries were owed approximately $95 million through February 2008. In addition, if SSA does not take action to correct the benefits paid to these widows, we estimate they will continue to be underpaid about $211 million over the rest of their lives.