I don't bother to post about it since the stories are repetitive and boring but Social Security prosecutes a number of people each year for disability benefits fraud. It's usually recipients who failed to report under the table earnings. In comparison to the number of people drawing benefits it's a small number.
I never hear anything about another similar type of Social Security fraud, one that I'm pretty sure happens regularly. It may even happen at the same rate as that of disability recipients hiding earnings. That's early retiree fraud. We don't have a retirement earnings test for those over full retirement age, currently 66, but we do for those between 62 and 66. Retirement benefits for people in this age group are subject to reduction due to earnings. There are many, many retirees between 62 and 66. Surely, some of them are working under the table and drawing retirement benefits they're not entitled to.
Is Social Security making any effort to root out retiree benefit fraud? The only retirement benefit fraud I ever hear about is concealing a death and continuing to collect the decedent's benefits. That can't be the only fraud going on.
Why all the attention to disability recipients and little or no attention to retiree benefit fraud? Why single out disability recipients?
Squeaky wheel and all that.
ReplyDeleteList all the times Congressmen have given speeches or roasted SSA officials over retiree fraud.
Name all the people who have ever said "I know a guy on Social Security who works."
There are political points to be scored claiming people on disability are deadbeats. The US hasn't quite regressed to being angry about the old age pension... yet.
Not just people working under the table but also people who run small businesses. They "retire' but still continue to call the shots and run the business. It's just virtually impossible to catch retirees who may be working and since they would get they're benefits recomputed at retirement age to adjust the reduction factor, the savings may not be all that great.
ReplyDeleteSSA should *not* waste any time to find these people, and I would not call what they are doing fraud (unless it's tax fraud - see below). When benefits are reduced due to earnings, future benefits are re-calculated to compensate for that reduction. As I understand it, expected total benefits are the same, so SSA isn't losing anything. The rule seems to me just paternalism - SSA wants to prevent people from taking early benefits if they don't need them, so they'll have more when they do.
ReplyDeleteHowever, you state that some of these people are "working under the table," so they might be guilty of tax fraud, which the IRS should handle. If instead they report all their income, their violation of SS rules would be easy to find. However, taking benefits early while working (if you report all income) should result in higher taxes, because other income can easily push you into a situation with 85% of Social Security benefits taxable (so maybe the rule is also to protect people from doing something stupid). For most people far less of their SS benefits are taxable.
I'm willing to be proven wrong, but I believe the earnings test is based in law, so fraud related to this would be breaking a law not a regulation and if it's a law, the paternal title belongs to Congress. I base this on the fact it too a new law in 1999 to eliminate the earnings test for those beyond FRA, something not needed if a reg or rule change would have sufficed.
ReplyDeleteWhat is fraud, is these folks who decide to retire at age 62 from their job and start drawing their retirement from their job, then come in and apply for Disability, claiming they now can't work - just to get the bump up to full SS retirement. This is not what the system was designed for, but you hear the advertisements all over the airwaves: "If you are over 50 years old, there are 'special rules' that will allow you to draw thousands more in SS"
ReplyDeleteI worked a fraud allegation where the person was working part time at a bakery as an employee, but working under the table. Part time employment at a bakery is unlikely to be over the $16,920 earnings test so there was no point in pursuing it. There is some under the table work that pays well but most that I run across is something that doesn't pay well or is not consistent so most cases would not be ones where the person exceeds the earning test.
ReplyDeleteRe self employed folks running businesses while retired--SSA used to try to keep this from happening. These cases were referred to as "questionable retirement." Folks had to prove that they were no longer providing services, receiving substantial remuneration (say higher rent instead of profit, etc.) They were quite a bit of work to develop and seemed like a good number were overturned if appealed to a hearing. But questionable retirement was done away with about 15 years ago. So we don't develop cases where a businessman says he is turning his business over to his wife who doesn't have the licenses to run it.
There's a difference in that someone can work and receive some retirement, even if they exceed the yearly earnings test. A retiree may say he is going to retire and then end up making $30K a year. Possible depending on his benefit amount to be paid several months of benefits. He'd be overpaid $6500 if he received benefits for the entire year. Same person is approved disability and continues to work at $30K a year is fraud. They never would have been paid had we known they were going to continue working way above SGA.
I'm guessing that retirement age people currently lean a bit more right as a group than disability beneficiaries (especially SSI disability beneficiaries). So, if you are a Republican trying not to alienate too many of your supporters, you can kick around the younger people with disabilities, not so much retirement age folks.
ReplyDeleteUnder-reporting income is a widespread problem involving people of all ages. This is true whether or not they are receiving Social Security benefits. The primary motivation is to avoid taxes. They pay the price when it comes time to retire because their benefit amount is based on how much money they (or their employer who pays them in cash for working under the table) reported over the years.
ReplyDelete9:25 anyone who doesn't have several war stories of people getting stuck with only SSI or a very small DIB benefit because they out-witted the system as a younger worker by dodging income taxes is just getting started in the disability system.
ReplyDeleteAgree with 9:25 and 9:32. I once had a couple who lived in a million dollar neighborhood yell at me because the husband had kidney cancer, could no longer work, and was not qualified for Social Security Disability because he had not paid in for years. Why? He owned a very nice restaurant and they lived on the profits. (She was stay at home mom) Now that he was unable to run the restaurant it was in trouble. It was apparently not fair because "they paid taxes."
ReplyDeleteThe Aged have always been united and present a united front when any budget pressure is added. When pressure is added to the disabled there is an immediate fracturing into camps. They fall along the type of disability. Due to the fracturing they are easier to deal with and defeat.
ReplyDeleteExactly what 12:00 stated.
ReplyDeleteThe amount of lifetime benefits that somebody collects when drawing at 62 vs 66 or even 70 is , collectively, equal.
Therefore, why bother pursuing it when it's not going to save any money. Plus, when you consider the cost of enforcement actions, it would be a net loss.