Social Security Fraud: 3 Ways the Government Gets Bilked Out of Billions
Image: SSA via Facebook.
Social Security serves around 60 million Americans, and most of those receiving benefits deserve every penny that they receive. Yet improper payments have drained billions of dollars from the Social Security system over the years, and news items arise all the time about schemes to defraud Social Security in any number of novel ways. Below, you'll discover three of the biggest problems facing Social Security and how some believe they can get fixed.
1. Improper disability payments.
The highest-profile area for Social Security fraud is in the disability arena, in part because the trust fund that supports benefits for disabled recipients is expected to run out of money next year. A report earlier this year from the Social Security Administration's Office of the Inspector General showed that almost half of the 9 million people who received disability benefits got paid too much, and the result was that the program paid out almost $17 billion in improper payments over the past 10 years. The SSA typically succeeded in getting some of that money back, but more than half of it remained lost, and when it did manage to get repaid, it often took a long time to collect.
Perhaps the most common problem with disability benefits is that recipients might not actually suffer from what the SSA considers to be a qualifying total disability. To receive benefits, you need to suffer from a condition that prevents you from doing work that you did before and that makes you unable to adjust to other types of work. In addition, disabilities have to last for at least a year or represent a terminal condition. In other situations, the SSA expects you to use other financial resources rather than Social Security disability for support.
Even if you start out having a qualifying condition, you're not allowed to receive benefits once your condition improves. Yet in countless situations, recipients collect benefits even as they're doing other jobs, collecting income under the table and defrauding the SSA in the process.
Finally, a number of cases have arisen involving alleged improper relationships between disability lawyers and the judges that handle Social Security cases. With so much money at stake, the incentive to try to cheat the system is substantial.
2. Payments received after the death of the recipient.
Social Security benefits end in the month that the recipient dies. The logistical problem, though, is that the SSA has to rely on outside reports of a person's death to verify it. In many cases, a funeral director or other professional will report the person's death. If a surviving family member is entitled to survivors benefits, then that person will typically have the financial incentive to let the SSA know about a person's death.
However, many acts of fraud involve never reporting the death of a recipient and continuing to receive benefits into a joint bank account owned by the recipient and a family member. According to an SSA Inspector General report, Social Security lacks death records from 6.5 million Americans who would be 112 years old if they were still alive. These active Social Security numbers can be used not only for fraudulent benefit payments but also other forms of identity theft, and despite best efforts, the SSA has struggled to update records regularly.
3. Payments received after remarriage.
In a case decided just earlier this week, a Maine woman was sentenced to six months under house arrest and $20,000 in restitution after pleading guilty to charges of Social Security fraud. She was found to have properly received Supplemental Security Income benefits starting in 2002, but she failed to report that she had remarried in 2010, which would have affected her eligibility for continued benefits. The fact that it took nearly five years for the case to come to an end shows just how hard it is to discover situations like this.
Although this case involved SSI, ordinary spousal and survivor benefits can also sometimes be affected by remarriage. When there's a financial incentive to stay quiet, it can be easy for someone not to report getting married and instead hope that a change in marital status will go unnoticed.
The government faces plenty of situations involving people trying to defraud its programs. By working harder to clamp down on these and other types of fraud, the SSA has to understand how important it is to preserve money to pay benefits to all recipients both now and in the future.
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The article Social Security Fraud: 3 Ways the Government Gets Bilked Out of Billions originally appeared on Fool.com.
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