Audit Finds Improper Payments to Retired Beneficiaries Who Worked Before Full Retirement Age

Dec 22, 2020 / Amanda Chase, Horsesmouth Assistant Editor

SSA did not properly adjust the benefit amounts for 53 of the 100 beneficiaries in a sample taken by the Office of the Inspector General. Based on our sample results, we estimate SSA improperly paid 3,963 beneficiaries approximately $6.9 million. If SSA does not take corrective action for the remaining beneficiaries, we estimate it will improperly pay them approximately $1.4 million over the next 12 months. As of January 2020, SSA had taken corrective action for 13 of the 53 beneficiaries we identified.

Social Security benefits are intended, in part, to replace earnings lost when an individual retires. When a recipient who has not attained full retirement age earns wages or self-employment income that exceed certain amounts, SSA must reduce his/her benefits to account for these excess earnings. At full retirement age, a beneficiary may earn any amount of wages or income without a reduction to his/her benefits.SSA must adjust the monthly benefit amount for any beneficiary who attains full retirement age and whose monthly benefits it had reduced because of his/her excess earnings. This adjustment of the reduction factor (ARF) provides a credit for each month a beneficiary does not receive his/her full benefit before full retirement age.

We identified 7,477 beneficiaries who, according to their Master Beneficiary Record (MBR), had a monthly benefit reduced for work on or after January 2000 and whose monthly benefit amount was not adjusted when they attained full retirement age.

We recommend SSA:

  1. Take corrective action for the remaining 40 beneficiaries identified by our audit.
  2. Based on the results of its corrective actions for the 53 beneficiaries, take corrective action for the remaining population of 7,477 beneficiaries.
  3. Ensure it generates and resolves alerts for beneficiaries whose ARFs and/or benefit amounts should be adjusted in accordance with its current policies. For example, the Agency could retain alerts until they have been resolved or it could issue follow-up alerts to management when pending alerts are not resolved timely.

You can find the audit summary here.

 

IMPORTANT NOTICE
This material is provided exclusively for use by individuals with an active license to the Savvy Social Security Planning Program. Use of this material is subject to the Social Security Planning Program Agreement and applicable copyright laws. Unauthorized use, reproduction or distribution of this material is a violation of federal law and punishable by civil and criminal penalty. This material is furnished “as is” without warranty of any kind. Its accuracy and completeness is not guaranteed and all warranties express or implied are hereby excluded.

© 2021 Horsesmouth, LLC. All Rights Reserved.