Mary Johnson, Editor
The upcoming Supreme Court decision on President Obama’s immigration action could have significant consequences for Social Security and Medicare. The president’s immigration policy changes would allow an estimated 5 million undocumented immigrants, including parents of U.S. citizens or lawful residents, to obtain temporary deferral of deportation, work authorization, and potential access to Social Security and Medicare benefits.
Changes to federal immigration policy not only affect the revenues that Social Security and Medicare receive, but also increase the number of people eligible for benefits in the future, according to the Congressional Budget Office. Both Social Security and Medicare face solvency and funding challenges.
Concern is growing that undocumented immigrants who illegally worked under fake, invalid, or fraudulent Social Security numbers may at some point receive benefits based on such work. A survey conducted by TSCL found that 82% of respondents opposed the current government policy that allows Social Security to determine entitlement to Social Security benefits based on earnings from jobs worked without legal authorization.
TSCL recently released an in-depth report that looks at Social Security’s policy that allows entitlement based on work performed under invalid and false Social Security numbers. Here are some highlights:
- Current policy benefits undocumented immigrants who have committed document fraud by using stolen, fraudulent, or invalid Social Security numbers (SSNs) to work. Rather than penalizing individuals for the use of fake or invalid SSNs, the Social Security Administration (SSA) uses all reported earnings from covered employment when determining entitlement and benefits—even when earnings are from unauthorized work under fraudulent SSNs, according to the CBO.
- Citizenship is not a requirement to claim Social Security benefits. Undocumented immigrants who receive work authorization at some point, even temporarily, and who also receive a valid SSN, may eventually claim Social Security benefits if other qualifications are met, according to the Congressional Research Service.
- Although law forbids work without authorization, immigrants use invalid SSNs to get jobs. When employers provide W2s in which the name and SSN do not match those in the SSA’s records, the wage report is held in the Earnings Suspense File (ESF) until the discrepancy can be corrected, according to the Social Security Administration’s Office of the Inspector General. This can occur even years later when a claim for benefits is filed.
- Social Security Administration data indicate that, since 2000, the ESF grew at an unprecedented pace. According to TSCL’s new report, since 2000 SSA has received, on average, 8.8 million suspicious wage reports annually. Cumulative wages since 1980 now total more than $1.2 trillion, unadjusted for inflation. Wages are important because Social Security benefits are based on an individual’s earnings record, not the taxes paid in.
“Because earnings are used to determine entitlement, the portion of earnings from jobs worked prior to legal authorization poses a substantial long-term liability to the Social Security Trust Fund that worsens solvency,” says TSCL Chairman Ed Cates. It’s widely anticipated that Congress may cut Social Security benefits, perhaps significantly, at some point in the future. This policy that “pays benefits based on illegal work” raises questions as to whether individuals who worked without authorization and committed document fraud will benefit at the expense of others who paid in under valid SSNs.
TSCL believes that Congress should strengthen Social Security’s protections by enacting legislation to prohibit the use of unauthorized earnings from being counted toward eligibility for Social Security benefits, a change that should be made regardless of the outcome of the Supreme Court decision or whether Congress moves on immigration or Social Security report.
Sources: “The Rising Cost of Unauthorized Work To Social Security: Growth of the Social Security Earnings Suspense File Points To Substantial Long-Term Social Security Costs,” Mary Johnson, Social Security and Medicare policy consultant, The Senior Citizens League, April 2016.