A Question

     I know that many would like to turn over disability determination to artificial intelligence but there’s no gold standard for disability determination so let’s start out a little simpler. Could artificial intelligence be trained to do windfall offset calculations at Social Security? They're the agency's bane. They eat up tons of employee time. I'm sure that everyone familiar with the problem knows that there ought to be some computer fix. The Social Security Administration has tried two different windfall offset software packages in the past. Both cost in the tens, if not hundreds, of millions of dollars and both failed spectacularly. Is AI different?

   

A Modest Suggestion

     Supplemental Security Income (SSI) computation is cash based, rather than what accountants call accrual based. It's a needs based program so benefits are subject to reduction due to income received. Because it's cash based, it's the income you received at the time, rather than what was owed to you at the time. There's one big exception to this, the Windfall Offset. When a claimant is approved for back benefits for both SSI and a Title II Social Security disability benefit, usually Disability Insurance Benefits, the Windfall Offset is supposed to, in effect, reduce the SSI as if the Title II benefit had been paid at the time it was due, that is, for this one exception, to compute benefits based upon the accrual method.

    On its face the Windfall Offset presents obvious difficulties for Social Security but along the way things became Byzantine. Reducing the SSI for the Windfall Offset presented a big potential problem at the time it was passed. If you apply the Windfall Offset to reduce SSI, you often wipe out all SSI benefits. This is a problem because those who are eligible for SSI are categorically eligible for Medicaid. Wipe out the SSI and you've wiped out the retroactive Medicaid entitlement as well. This actually doesn't matter that much for the claimant. They’re never going to be able to pay those bills anyway. However, it matters a lot to hospitals who may be on the hook for hundreds of thousands of dollars of care they've provided the claimant if that claimant doesn't get back Medicaid.

    To prevent this Social Security decided to run the offset in the opposite direction. The Title II benefits are reduced by amount by which the SSI benefits should have been reduced if the Title II benefits were paid at the time due. That sounds complicated but throw in the fact that the field office computes the SSI and a Title II payment center computes the Title II benefit and you've got a much more complicated situation. The field office must compute the amount by which the SSI should have been reduced and communicate that fact to the Title II payment center. In case you don't know, Social Security's components aren't good at communicating with each other. The problems don't end there, though. For historic reasons I'm not going into here, the Title II attorney fee is based upon the amount of back benefits before the Windfall Offset. This means it's an artificial figure. That requires an adjustment in the SSI attorney fee so that fee is artificial as well. It's also complicated because the Windfall Offset is supposed to be based upon the amount of Title II benefits after the attorney fee and that's been difficult for Social Security to do. It's led to a couple of class action lawsuits and I'm not sure that Social Security is getting it right to this day. As I said, it's Byzantine. 

    Isn't it time to cut through this Gordian Knot? By now the vast majority of states have accepted the expansion of Medicaid benefits enacted during the Obama Administration. The rest can do so at any time. This means that the potential for hospitals and providers to be stuck with never being reimbursed for services they've provided is far, far less than it used to be. I say the hell with those benighted states that have refused Medicaid benefits for their low income citizens. Apply the Windfall Offset in a natural way. Reduce the SSI benefits rather than the Title II benefits. This dramatically simplifies Social Security's work. Probably hundreds of thousands of hours of unnecessary work at Social Security each year will end. As far as I'm concerned, the hospitals in the states that have refused the extra Medicaid can complain to their state legislatures rather than Social Security. The agency lacks the resources to protect those hospitals from the folly of their state governments.

    To the best of my knowledge, what I'm suggesting doesn't require legislation or even a change in the regulations. 

    I understand that in theory this could delay first payment of benefits to a claimant from SSI but what I'm seeing now is that those approved for both SSI and a Title II benefit generally receive a monthly Title II payment first anyway. Do as I am suggesting and it's not just one month of benefits paid. It's all the back Title II benefits. That would be far better than the three or four month time frame it's taking Social Security to finish all the Windfall Offset computations in each case. Don't raise any tax issue. The population I'm talking about isn't going to pay taxes on their Social Security benefits anyway.

    By the way, kudos to you if you have read my post about this tedious subject to the end. You're a Social Security pro. You may or may not agree with me but you know what I'm talking about. I wonder whether there are any Congressional staffers who get this far.

A Simple Suggestion

     It's been my impression over the years that Social Security always practices "fast tracking" to some extent. By "fast tracking" I'm talking about processing the simplest things first, the ones that take little time, in order to generate good production numbers. 

    "Fast tracking" seems to be out of hand now. Why is Social Security processing retirement claims almost immediately while taking six months to do windfall offsets? I'm seeing workloads of more complex matters at the field offices and payment centers that have been put off and put off in the apparent hope that there will be time later to work on them. Many of these delayed cases became complicated because someone at Social Security made a mistake that needs to be corrected. These delayed cases are now at crisis levels. I don't see a surge of overtime to take care of these cases anytime in the next two years.

    Isn't it time to say "stop!" Delay the routine processing of easy cases a bit. Take care of the horrible backlogs of more complicated matters and then get back to the routine cases. If a retirement claimant has to wait an extra month for first payment of benefits, so what? Why should that retirement claimant have his or her case processed quickly just because it's easy? You can't keep putting off windfall offsets and other complicated matters forever. Sooner or later the field offices and payment centers will have to take care of them. Quit worrying about the stats and take care of the claimants who have waited the longest.  It's the fair thing to do.

The Clock Is Ticking

     Today's SSI story concerns a claimant who was approved for both SSI disability benefits and Disability Insurance Benefits on June 17. Her monthly checks have started but he's yet to receive any back benefits. The holdup is called the windfall offset, which was designed to pay the claimant SSI benefits as if the Disability Insurance Benefits had been paid when they were due. The windfall offset in practice is bizarrely convoluted. But, still, it's been more than six months. Why haven't they done the windfall offset? We can't get an answer but we know that the underlying problem is understaffing at the field office.

WEP And GPO Hopes And Dreams

     From Federal News Network:

Congress — at least the House side of it — is closer than ever to giving the green light to repeal or reform WEP [Windfall Elimination Provision] and GPO [Government Pension Offset], the so-called “Evil Twins” that eat into, or eliminate, the Social Security benefits of hundreds of thousands of former government employees or their widows. ...

For decades, many whose Social Security benefits have been reduced by WEP or Offset have been pushing Congress to fix them. Backers of WEP and Offset say they prevent former feds under the CSRS retirement plan, and state and local government employees whose jobs were not covered by Social Security for most or all of their careers, from collecting higher benefits based on relatively short employment in a Social Security job. Backers of the laws say they prevent people from using what they call a “welfare tilt” in Social Security toward people with lower lifetime earnings, protecting the program from being ripped off by preventing “excessive” payments to government retirees/survivors who spent the minimal time paying into Social Security. Opponents say it was a cruel way to save money by denying some or all benefits to people who need it most, and that the former government people are the ones being ripped off when their benefits are reduced or simply wiped out. ...

John Hatton, staff vice president for policy and programs at NARFE [National Active and Retired Federal Employees association] said “While NARFE and organizations representing state and local retirees have built significant support for repeal of WEP and GPO over the years, securing floor voters in either chamber of Congress has remained out of reach, perhaps due to the likely costs of the repeal bills and projected solvency challenges for Social Security. But a recent rule change in the House of Representatives allows bills to bypass committee consideration if they receive 290 cosponsors. H.R. 82, the Social Security Fairness Act, which would repeal both WEP and GPO is up to 276 cosponsors, just 14 short of that mark. So we continue to push representatives to cosponsor the bill, and hope for some long-awaited progress on these issues.” …

    In other words, it's extremely unlikely to happen in the House of Representatives. Also, although this article doesn't say so, it's out of the question in the current Senate.

Supreme Court Opinion On Obscure Windfall Offset Issue

      From the syllabus of the Supreme Court's opinion in Babcock v. Kijakazi:

This case concerns retirement benefits due under the Social Security Act for a retired “military technician (dual status)" ... Like all dual-status technicians, Babcock was required to maintain membership in the National Guard. ... Upon retirement, Babcock applied to the Social Security Administration for benefits. The agency granted Babcock benefits but applied a statutory “windfall elimination provision” and reduced the amount of benefits to reflect Babcock’s receipt of civil-service pension payments for his work as a technician. ...

Held: Civil-service pension payments based on employment as a dual-status military technician are not payments based on “service as a member of a uniformed service” ...

     In other words, Babcock loses. Social Security will continue to apply the windfall offset to his Social Security benefits.

     While this seems like an obscure question to me, it probably affects at least hundreds of people, maybe thousands. That's the way it is with Social Security. It's so big that even tiny changes affect significant numbers of people.

SCOTUS To Hear Windfall Offset Case

      Yesterday I posted the news about the Supreme Court agreeing to hear a case concerning whether it is constitutional to deny SSI benefits to disabled individuals who live in a U.S. territory. That was not the only announcement yesterday of a Social Security case that the Supreme Court would hear. The Court also agreed to hear Babcock v. Saul, which presents an issue of more limited importance, "Whether a civil service pension received for federal civilian employment as a “military technician (dual status)” is “a payment based wholly on service as a member of a uniformed service” for the purposes of the Social Security Act’s windfall elimination provision."

Appellate Decision On Application Of Windfall Offset To Canadian Social Security Benefits

      From the Indiana Lawyer:

A split 7th Circuit Court of Appeals panel affirmed a grant of summary judgment to the Social Security Administration on Monday in a class-action suit brought by a Canadian woman with dual citizenship who alleged her U.S. Social Security benefits were wrongly reduced based on similar benefits she receives from Canada.

Lorraine Beeler, a dual citizen of Canada and the United States, has established nearly 20-year careers in both countries and receives monthly retirement benefits from the Canada Pension Plan, that country’s equivalent to U.S. Social Security. She also worked at jobs on which she paid Social Security taxes in the United States.

Beeler’s earnings in Canada were not subject to Social Security taxes, and her earnings in the United States were not subject to Canada Pension Plan taxes. But Beeler ran into a problem after she alleges her Social Security benefits were wrongly withheld. She then sued the Social Security Administration in the U.S. District Court for the Southern District of Indiana in the class action case of Lorraine Beeler v. Andrew M. Saul, 19-2099. 

There, Beeler asserted that the reduction of her U.S. benefits is a violation of two Social Security provisions: The Windfall Elimination Provision and the U.S.-Canada totalization agreement. The class claims that both the statutory language of the WEP and the terms of the agreement prohibit the reduction of Beeler’s benefits. ...

The 7th Circuit Court of Appeals split in affirming the district court’s decision, with the majority concluding the agency correctly ruled that plaintiffs’ Canadian employment was noncovered under the Social Security Act, and thus the provision applied to reduce their Social Security benefits. ...

But Circuit Judge Amy St. Eve dissented from the majority’s opinion, finding that its analysis “rests on an unsupported premise to exclude Beeler’s work from the definition of employment. ...

     I'm a little surprised that we're just now getting litigation on this issue. I suppose the reason there hasn't been litigation is that most of the time the U.S. Social Security Administration cannot apply the offset because it has no knowledge that a claimant is receiving foreign social security benefits.

     By the way, I think it would have been better if this case had not been brought as a class action. When there were more class actions against Social Security than there are now, the practice was to win an individual case and THEN bring the class action in another case with a different named plaintiff so that Social Security could raise nothing other than procedural defenses. Don't put all your eggs in one basket until you have to.

WEP Options

     The Windfall Elimination Provision (WEP) that reduces Social Security benefits because of the receipt of pensions based upon income not covered under Social Security has been receiving a fair amount of attention lately, perhaps because many of those affected are in red states which are more likely to exclude state employee wages from the F.I.C.A. tax, giving them state pensions instead. The Social Security Bulletin, the agency's scholarly publication, has an article on the WEP and options for replacing it.

Endless WEP Problems

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

The Social Security Amendments of 1983 include a provision that eliminates “windfall” Social Security benefits for retired and disabled workers who are receiving pensions from employment not covered by Social Security.  

WEP [Windfall Elimination Provision] applies when the wage earner becomes entitled to both a pension based on non-covered employment and Social Security benefits. Under WEP, SSA uses a modified benefit formula to determine a wage earner’s monthly Social Security benefit. WEP applies to both retirement and disability benefits. However, under certain circumstances, a beneficiary’s payments are exempt from this provision. ...

Of 150 sampled beneficiaries, SSA improperly exempted 26 from WEP. Because of this processing error, the 26 beneficiaries were improperly paid approximately $774,000. Although the Agency was aware these 26 beneficiaries had received pensions, it did not reduce their benefits for WEP. Of these 26 beneficiaries, SSA may not correct the payments for 24 because of SSA’s administrative finality rules. Based on our sample results, we estimate SSA improperly paid approximately 3,600 beneficiaries $118 million. 

Additionally, SSA exempted 28 beneficiaries from WEP where we found the exemptions questionable. If SSA did not apply WEP, but should have, we estimate the Agency paid these 28 beneficiaries approximately $971,000 more than they were entitled to receive. 

Because of its administrative finality rules, SSA may not correct all the payment errors we identified. If it does not take corrective action, we estimate the Agency will improperly pay an additional $140 million in future payments to these beneficiaries.

     I'm not saying we should eliminate WEP but it's a mess to administer and claimants really, really dislike it.

Stay Granted In Steigerwald Class Action

     The U.S. Court of Appeals for the Sixth Circuit has given Social Security a stay in the Steigerwald v. Saul class action lawsuit.

     Steigerwald has to do with the computation of benefits to which a claimant is entitled in a case where Disability Insurance Benefits (DIB) and Supplemental Security Income (SSI) are both approved and the claimant is represented. To oversimplify, the needs based SSI benefits are supposed to be reduced because of the DIB payments. However, a represented claimant does not receive the entire DIB payment because some of it is used to pay the attorney. Should the SSI benefits be reduced by money the claimant never sees because it's used to pay the attorney? The answer is no but Social Security had been failing to do it that way which led to the class action lawsuit.

     The District Court had given Social Security only until September 25, 2019 to do the redeterminations. The Court of Appeals has given Social Security two years. 

     My opinion is that while the September 25, 2019 date was unrealistic, two years is way too long. Social Security should have known that it was going to lose Steigerwald from the day it was filed some two years ago. They had already lost another class action on this issue many years ago. Social Security should have gotten going far earlier. Foot dragging shouldn't be rewarded.

Delay After Delay

     From the Cleveland Plain Dealer:

Today is the day Isaac Everhart has long been waiting for, the day he appears before an administrative law judge with the Social Security Administration in a bid for disability benefits.

Isaac is counting on the benefits to lift his wife, Violet, and daughter, Tiffany, out of their subsistence existence – the result of his inability to work since 2015 because of a back injury. ...

Isaac assumes the hearing is just a formality, that the judge will make an immediate ruling to grant him monthly disability checks and retroactive pay to the date of his fall. But he is mistaken.

At the end of the hearing, the judge informs Isaac that a review of the material in the nearly six-inch binder could take as long as 75 days. If the decision is in Isaac’s favor, it would likely be three to six months before Isaac sees the first check.

The news reduces Isaac to tears.

“I don’t understand how they can make us wait any longer,” Isaac tells his lawyer. ...

      No, it's not likely to take three to six months to get first payment of benefits. In most cases, it's a month. It can certainly take longer to get everything paid, particularly if there's a windfall offset or a workers compensation offset but it doesn't sound like that would be the case here. The 75 days to get an ALJ decision would be on the optimistic side where I practice. There's a big backlog in getting out ALJ decisions nationally. It's good that this article talks about the delays AFTER an ALJ hearing is held. They're significant. Claimants also need relief on that side.

The Never Ending Disaster Of The Windfall Offset

     I'll explain below but this is just awful. It's no surprise to me but it's still awful. From a recent report by Social Security's Office of Inspector General (OIG):

We continue to find that SSA [Social Security Administration] needs to improve controls to ensure it accurately and timely pays OASDI [Old Age, Survivors and Disability Insurance] benefits withheld pending a windfall offset determination. We estimate that 

• 13,141 beneficiaries’ windfall offset actions were not processed and therefore SSA withheld about $113.2 million in OASDI benefits, of which we estimate approximately $ 71.9 million was payable to these beneficiaries, and
• 19,587 beneficiaries’ windfall offset actions were correctly processed but not in a timely manner; therefore, these beneficiaries did not promptly receive about $195.2 million in OASDI ben efits .

In addition, SSA incorrectly processed the windfall offset determinations for five beneficiaries. As a result, SSA improperly withheld $12,775 in OASDI benefits for these beneficiaries. Finally, SSA did not take corrective actions for 50.6 percent of the beneficiaries we identified during our 2011 audit.

     Let me explain. Supplemental Security Income (SSI) benefits are based, in major part, on how much income you had during a month. What about months in which you are approved after the fact for both SSI and Disability Insurance Benefits (DIB) which are not based upon income? You didn't receive the DIB at the time but the law requires that the SSI benefits be reduced as if you had. That's the Windfall Offset. It may not sound that complicated but it is. It's been an enormous mess for Social Security even since it was enacted. The agency has made two separate efforts to implement software to automate the windfall offset. Both were expensive failures. My recollection is that the cost of the last software failure was over $100 million. The process remains a thorn in Social Security's side. It involves co-ordination between Social Security field offices where SSI benefits are computed and authorized and Social Security payment centers where DIB is computed and authorized. The process is tedious and highly error prone as this report shows. How error prone? So error prone that even after OIG pointed out that the agency had made a mistake, that half the time the agency still failed to correct the mistake! Note that the mistake is always to fail to pay claimants all the money they're due in a timely manner.
     I think that agency management has long since thrown up its hands and decided not to even bother to try to improve the situation. Why bother? It's only the claimants that are being hurt. This Congress won't complain about that. Even past Democratic Congresses didn't complain because they didn't understand the problem.
     If you think this is all way too technical to bother thinking about, look at the charts below. Over half the time, Social Security fouls up the windfall offset. Once they foul it up it's often years before they get it straightened out, if they ever do.

Windfall Elimination Provision Problems

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

Our objective was to identify Old-Age, Survivors and Disability Insurance (OASDI) beneficiaries whose payments may have been affected by State or local government pensions. We limited our review to those beneficiaries who may have been receiving State or local government pensions and for whom the Social Security Administration (SSA) had not determined whether the Windfall Elimination Provision (WEP) or Government Pension Offset (GPO) applied. ...

Based on the results of our review, we estimate SSA overpaid about $623.8 million in OASDI benefits to approximately 24,900 beneficiaries because Agency staff did not apply WEP and GPO provisions to the OASDI benefits. If SSA does not take action to identify and correct these payment errors, we estimate it will pay about $869.9 million in future overpayments over the beneficiaries’ lifetimes ...

     This was based upon a small sample. I suppose these auditors know what they are doing but they are basing a projection of almost a billion dollars on 13 or so cases. To a layman, that seems questionable.

Windfall Offsets Remain A Quagmire

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

Our objective was to determine whether the Social Security Administration (SSA) had adequate controls to ensure Old-Age, Survivors and Disability Insurance (OASDI) benefits that had been withheld pending a Supplemental Security Income (SSI) windfall offset determination were paid accurately and timely. ...

Based on our random sample, we estimate that:

• 35,398 beneficiaries had SSI windfall offset actions that were not processed. As a result, SSA withheld about $306 million in OASDI benefits, of which we estimate approximately $232 million is payable to these beneficiaries.

• 17,067 beneficiaries had SSI windfall offset actions that were incorrectly processed. As a result, SSA improperly withheld or overpaid about $51.5 million in OASDI benefits for these beneficiaries.

• 60,051 beneficiaries had SSI windfall offset actions that were correctly processed but not in a timely manner. As a result, these beneficiaries did not promptly receive about $725.9 million in OASDI benefits