Benefits For Illegal Work A Growing Liability To Social Security

Benefits For Illegal Work A Growing Liability To Social Security

TSCL Calls On Congress To Close The Loop Hole

It’s a seldom-acknowledged fact. Yet it has growing repercussions for U.S. senior citizens. Immigrants who worked here illegally can claim Social Security benefits based on those illegal earnings. Illegal workers often supply employers with fake, or invalid, Social Security numbers (SSNs) that are not authorized for work. When the Social Security Administration receives wage reports under a name and/or SSN that does not match the records, the wage reports accumulate in an “Earnings Suspense File.” Later, the illegal worker can file a claim for benefits based on those earnings if he or she can show evidence (like a W2) of employment and earnings.

In recent years the Earnings Suspense File has been growing at an unprecedented pace. A spokesman for the Department of Homeland Security, Russ Knocke, was recently quoted as saying that, last year, as many as 10% of the wage reports received by the Social Security Administration (SSA) belonged to employees whose name and Social Security number did not match those of SSA.

Under a 2004 law, non-citizens who apply for benefits with a SSN assigned in 2004 and thereafter must have legal work authorization at some point in order to file a claim for benefit. But the law does not apply to aliens who received a SSN prior to January 1, 2004. Those non-citizens may be able to claim Social Security benefits without ever having legally worked. In fact, our government already pays Social Security disability and retirement benefits to non-citizen aliens and their dependents based on illegal earnings. The cost to Social Security of those payments was recently estimated to be $966 billion through 2040, according to Advisor editor and Social Security policy analyst Mary Johnson.

Here are two actual cases from the Social Security Administration’s Office of Inspector General, and estimates of what the cost would be over a 20-year period by Advisor editor, Mary Johnson.

• Case #1—A woman who was born in Mexico worked illegally under an invalid SSN for 6 years. Later when she received a work authorized SSN, she had the earlier wages, earned while illegal, transferred to her record and then filed for Social Security disability benefits. From 1999 to 2002 this woman collected approximately $26,990 in disability benefits, including benefits for dependents based on her account. Estimated benefits over 20 years — $234,275.

• Case #2— A man born in Mexico worked under his father’s SSN for 9 years and then had these wages transferred when he acquired his own SSN before collecting retirement benefits. From 1999 to 2002 he collected approximately $11,441 in retirement benefits, including benefits for dependents based on his account. Estimated benefits over 20 years — $73,300.

TSCL is calling on Congress to close this loophole, and endorses the “No Social Security for Illegal Immigrants Act of 2007” (H.R. 736), introduced by Representative Dana Rohrabacher (CA). The legislation would close the loophole by excluding earnings of any wages for unauthorized work.

Sources: “Social Security Benefits Related to Unauthorized Work,” SSA Office of the Inspector General, March 2003, A-03-03-23053. “Illegal Immigrant Crackdown Looms,” Nicole Gaouette, The Los Angeles Times, August 3, 2007.