From a recent report by Social Security's Office of Inspector General (OIG):
Objective: To determine whether the Social Security Administration (SSA) had adequate controls to inform widow(er) beneficiaries of their option to delay their application for retirement benefits.
Background: An application for retirement or widow(er)’s benefits is an application for both benefits, unless it is restricted. When a widow(er)’s benefit is higher, claimants may delay filing their retirement application up to age 70 to increase their retirement benefits.
Claimants may limit the scope of the application to exclude retirement benefits to maximize the amount of future benefits, including the effect of delayed retirement credits before age 70.
Findings: SSA employees must explain the advantages and disadvantages of filing an application so claimants can make an informed filing decision. However, the decision to file belongs solely to the claimant. SSA employees must discuss and document any unfavorable filing decisions. ...
SSA needs to improve controls to ensure it informs widow(er) beneficiaries of their option to delay their application for retirement benefits. Based on our random sample of 50 beneficiaries, we estimate 11,123 would have been eligible for a higher monthly benefit amount had they delayed their retirement application until age 70. Of these, we estimate SSA underpaid about $131.8 million to 9,224 beneficiaries who were age 70 and older. In addition, we estimate SSA will underpay an additional 1,899 beneficiaries who were under age 70 about $9.8 million, annually, beginning in the year they attain age 70.
We did not find any evidence SSA had informed claimants of the option to delay their retirement application when they applied for benefits, as required. We also found that SSA did not have systems controls in place to alert its employees when they should inform widow(er)s of their option to delay their applications for retirement benefits. ...So, what are we going to do about this, Social Security? No, I don't mean what you're going to do about future cases. I'm asking what you're going to do about all these cases where beneficiaries have already been underpaid because they weren't properly advised?
4 comments:
Well, if it was an over payment situation we know what they would likely do.
Ex-claims rep - and I think this is primarily a reflection of the staff crunch that lets folks who know the rules and regs well enough but not really expertly, do the job without adequate office review. The holes in the levels of knowledge is sometimes scary and it is frankly a result of too few staff and a push to clear the tally. Much like the discussion of month of election, it's kind of been unstated that it's not our job to tell people when to file. That just makes the interview longer and messes up the plans for everyone being able to file on their own on the internet. Too many messy hard to explain details, you know? It streamlines the whole thing yo just not do it.
If you file retirement online, forget it as far as being contacted to file widows instead and delaying your own retirement. When claimants pick option C for their month of entitlement, it says on the app that it may be disadvantageous but the person chooses that month anyway and almost all claims under FRA end up with a "C" MOE.
Aside--this is something that should be done away with as the whole idea of delayed retirement credits is NOT receiving benefits until an age after FRA, up to 70. When a widow is receiving widow's benefits, she or he is not delaying receiving benefits, only delaying retirement. Loophole that should have been closed when the one for filing spouses benefits at FRA and waiting until later to file on own retirement with DRCs was recently.
FYI,
The underpayment identified in the OIG audit will only be paid by those OIG or SSA contacts within 12 months of filing to secure a RIB withdrawal. There have been several reconsideration determinations that went to an ALJ that were favorable reversed allowing untimely claim withdrawals only to be unfavorably reversed by the Appeals Council.
The basis? Misinformation is a legal remedy specified in the S.S. Act Sec 202(j) that only creates a filing date. It does not create a date of withdrawal for applications. So, most of the people in this audit universe will be out of luck on claiming any underpayment.
Please note that withdrawals are not explicitly authorized by the Act, only by regulation. And although the regulation has since been amended for time limits on retirement claim withdrawals (not survivors or spouse withdrawals), it was previously upheld by the USDC ED NY in 1985. Refer to SSR 86-15c. It reasoned that the result of an inequity that would result from following the regulation alone was not a basis to disregard it.
In the end, I would imagine OACT will consider the effect of doing away with delayed retirement credits or restricting applications to one type of cash benefit (not restricting just to health insurance).
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