More COLA Numbers

     Social Security has published its complete Cost Of Living Adjustments. There's more than individual COLA adjustments to be computed. Here's some key numbers for 2023:

• Attorney user fee: $113
• FICA wage base: $160,200
• Quarter of coverage amount: $1,640
• Substantial gainful activity amount (non-blind): $1,470
• Trial work period threshold: $1,050
  

And Now The Problem Will Be Solved In 24 Hours

     From Forbes:

Mrs. Jimmy Rogers of Houston, Texas, was disabled in 1996 in an aircraft accident while working for American Airlines. To this day she is unable to sit, stand, or walk for more than thirty minutes without extreme pain. After the accident, she applied for and received Social Security disability benefits. Four years later, she was able to work a few hours per day in her husband’s business doing some administrative tasks, always earning less than the substantial earnings amount that would disqualify her for receipt of those benefits. 

Starting in 2007 and for four of the following five years, Jimmy received [A1] shareholder distributions from her ownership of stock in her husband’s company. As Social Security Administrative Law Judge Timothy Suing recently confirmed, these payments were not labor income, but simply income from assets – no different than income Jimmy might have received had she owned government bonds.  

But in 2007, Social Security mis-instructed Jimmy, who understood very little of the distinction between asset income and labor income, to revise her tax return and report these shareholder distributions as taxable labor earnings. Jimmy did as she was ordered, but, on the advice of her husband, filed an appeal. 

Compliance with Social Security’s incorrect order triggered an unbelievable bureaucratic nightmare that is surely causing Franz Kafka to writhe in his grave.  

Over the past 13 years, Jimmy and her husband, Larry, have, thanks to Social Security’s acknowledged mistake, been deprived of tens of thousands of dollars in Social Security disability and spousal benefits. Jimmy has been forced to pay extra Social Security payroll taxes she didn’t owe. Jimmy has been forced to pay extra federal income taxes she didn’t owe. Jimmy and Larry’s company has been forced to pay extra FICA taxes they didn’t owe[LR2] . Jimmy retroactively lost her Medicare healthcare coverage and is now being told to pay for years of healthcare treatment coverage. But the icing on the cake is that Social Security has been and is still, to this day, sending Jimmy and her husband a bill for over $120,000 for disability and spousal benefits that they rightfully received (before their benefits were incorrectly terminated), but were falsely told that shouldn’t have received, even though Social Security’s own Administrative Law Judge says the benefits were properly paid (although slightly higher than what they should have been due to the downward adjustment in Jimmy’s income after the shareholder distributions were no longer included in her earnings record). ...

2020 Social Security And SSI Rates And Limits

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Kotlikoff Interacts With The Real World And Is Shocked By Its Harshness

     Laurence Kotlikoff is a columnist on Social Security issues for Forbes. Mostly he writes about claiming strategies that almost no one uses and oddball rules that he finds outrageous. Mostly, I tune him out because I don't think he's writing about real world problems. If you're a Social Security professional and have read many of his columns I think you understand why. 

     As a welcome change, Kotlikoff is now writing about two problems from the real world. First, he's shocked to discover that Supplemental Security Income's (SSI's) resource limits are draconian. Second, he's shocked to discover that a claimant on Social Security disability benefits who tries to park his income below the agency's Substantial Gainful Activity (SGA) limits can easily end up with a large overpayment. I wish I was shocked by either of these situations but they are an everyday part of my work life. SSI recipients should never accumulate even modest sums of money because the rules are insanely out of date. Social Security disability recipients shouldn't try to park their income below SGA because they almost always screw it up and the consequences of a screw up can be severe.

     What gets me about Kotlikoff's column is that he's appealing to Social Security Commissioner Andrew Saul to do something about these problems but Saul can't. I suppose he could recommend that Congress update the SSI income and resource limits but he can't change them unilaterally and Mitch McConnell won't be doing any favors for SSI recipients. Saul could try to increase the SGA limits but that takes changes in regulations which would require the approval of the Office of Management and Budget which is currently headed by a Director who isn't exactly sympathetic to disabled people. An increase in the SGA limits wouldn't solve the parking problem anyway. As a practical matter, there's nothing Saul can do. Kotlikoff ought to know that.

OIG Report On Use Of Averaging When Determining SGA

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

When a disabled beneficiary has earnings from work activity, SSA conducts a work continuing disability review (CDR) to determine whether the beneficiary engaged in SGA. SGA describes a level of work activity and earnings. Work is “substantial” if it involves significant physical or mental activities and earnings exceed the SGA threshold. The Code of Federal Regulations states SSA can average earnings for a period of work when it determines whether a disabled beneficiary engaged in SGA. During the period for which SSA averages earnings, the beneficiary must have worked continuously, without a significant change in work pattern or earnings. SSA has not established a monetary earnings amount that represents a significant change. However, policy directs staff to consider whether the beneficiary changed positions, job duties, or hours when determining whether a significant change occurred. If SSA finds the beneficiary’s monthly earnings average is below the SGA threshold, it pays benefits for all months. ...

Of the 200 sampled beneficiaries, we identified 58 for whom SSA applied averaging inconsistently or incorrectly when it made SGA determinations. Of these, SSA made questionable payments to 51 based on its SGA determination. SSA issued or withheld payments totaling over $651,000 because it did not apply averaging provisions consistently. As a result of the questionable determinations, SSA

• paid benefits, totaling more than $607,000, to 40 beneficiaries and
• withheld benefits, totaling more than $44,000, from 7 beneficiaries. 

SSA’s policy allows employees to exercise their own judgment and discretion when deciding whether to average earnings. As a result, the policy for averaging earnings results in decisions that are not consistent and equitable among beneficiaries.We estimate SSA applied averaging provisions inconsistently tomore than 30,000 beneficiaries. This led to questionable benefit payments or withholding totaling almost $419 million.

     I'm sympathetic to the agency on this one. I don't see how they can come up with truly objective standards nor how they can ensure completely consistent application of any standard. These are just difficult to do. Almost always you have limited information about the exact dates of earnings. The earnings are often highly variable. The regulations have to give agency employees discretion to deal with the million and one situations that come up but whenever you give discretion you're going to have people applying the rules in differing ways. OIG can come in after the fact and say that you should have done something different in many cases but it's not like OIG's judgment is the gold standard. If anything, I'd trust the field office staff to make the right judgment calls more than I'd trust OIG personnel who don't do this kind of work on a regular basis.

All The COLA Adjustments

     Some excerpts from Social Security's notice of cost of living and other adjustments for 2017, which will appear in the Federal Register tomorrow:

• The maximum Federal Supplemental Security Income (SSI) monthly benefit amounts for 2017 under title XVI o f the Act will be $735 for an eligible individual, $1,103 for an eligible individual with an eligible spouse, and $368 for an essential person;
• The dollar fee limit for services performed as a representative payee remains at $41 per month ($78 per month in the case of a beneficiary who is disabled and has an alcoholism or drug addiction condition that leaves him or her incapable of managing benefits) in 2017;
• The dollar limit on the administrative-cost fee assessment charged to an appointed representative such as an attorney, agent, or other person who represents claimants remains at $91 beginning in December 2016;
• The Old-Age, Survivors, and Disability Insurance (OASDI) contribution and benefit base will be $127,200 for remuneration paid in 2017 and self-employment income earned in taxable years beginning in 2017;
• The monthly exempt amounts under the OASDI retirement earnings test for taxable years ending in calendar year 2017 will be $1,410 for beneficiaries who will attain their Normal Retirement Age (NRA) ... after 2017 and $3,740 for those who attain NRA in 2017;
• The taxable earnings a person must have to be credited with a quarter of coverage in 2017 will be $1,300;
• The monthly amount deemed to constitute substantial gainful activity (SGA) for statutorily blind persons in 2017 will be $1,950. The corresponding amount for non-blind disabled persons will be $1,170;
• The earnings threshold establishing a month as a part of a trial work period will be $840 for 2017;
• The cost-of-living increase is 0.3 percent for benefits under titles II and XVI of the Act. Under title II, OASDI benefits will increase by 0.3 percent for individuals eligible for December 2016 benefits, payable in January 2017.