Statement of Martin Gerry
Deputy Commissioner for Disability and Income Security Programs
Testimony before the House Committee on Ways and Means
Subcommittee on Social Security
March 2, 2006
Mr. Chairman and Members of the Subcommittee:
Thank you for inviting me today to discuss the Social Security Administration’s (SSA) management of the assignment of Social Security Numbers (SSN) and the payment of benefits to foreign-born individuals. I will also discuss the criteria for considering countries for new totalization agreements and initiatives to assure the integrity of other countries’ data in foreign claims, including totalization claims.
Before I begin, Mr. Chairman, I want to thank you and the members of the Subcommittee for holding this series of hearings examining SSN high-risk issues. These hearings have helped shine a light on issues of document fraud, identity theft, the earnings suspense file, and fraudulently obtained or misused SSNs. As you know, we have made many improvements in the SSN issuance process to reduce the risk of fraud and misuse. We know that we can and must continually improve the administration of the program in order to assure the integrity of the Social Security programs and to maintain public confidence in the system.
Legends on the SSN Cards
Let me begin by discussing the relationship between the Social Security card and work authorization. The Immigration Reform and Control Act of 1986 (IRCA) makes it illegal for an employer to knowingly hire anyone not legally permitted to work in the United States. Under IRCA, all employers are required to verify the identity and employment eligibility of all new employees regardless of citizenship or national origin.
There are a number of documents specified in the law and in Department of Homeland Security (DHS) regulations which may be used for this purpose. Some documents, such as a U. S. passport, establish both employment eligibility and identity. Others, including a Social Security card without a restrictive legend, can be used to establish employment eligibility, but do not establish identity and must be accompanied by an identification document, such as a State driver’s license.
It is important to note that, just as the Social Security number or card does not establish identity, neither does it always reflect an individual’s current work authorization status. The SSN card only reflects an individuals’ work authorization status at the time the card was issued—it is a snapshot in time. An individual’s work authorization status may change and the DHS has sole jurisdiction over work authorization determinations for noncitizens.
Regular Cards—Valid for Work
The vast majority of original Social Security cards are issued to United States citizens, or to permanent resident non-citizens who are authorized to work in the United States. These cards show only the name and SSN of the individual.
Unlike the cards issued to U.S. citizens, or to non-citizens who have permanent work authorization, cards issued to non-citizens who are not authorized to work or who are only temporarily authorized to work bear one of two legends describing work authorization status at the time the card was issued.
"Not Valid for Employment”
Initially, SSA issued the same type of Social Security card to everyone, whether or not the individuals were authorized to work. In 1974, SSA began assigning SSNs for non-work purposes, but the cards were not specifically annotated. Beginning in May 1982, SSA started issuing cards printed with the legend “Not Valid for Employment” to non-citizens not authorized to work. This was due to the increasing need for individuals to have SSNs for nonwork purposes (e.g., needed to receive payment of a benefit) and concerns that such individuals might use the SSN for unauthorized work. With this restrictive legend appearing on a card, employers were able, for the first time, to determine whether the individual to whom the card was issued was authorized to work. Of course, an employer could not rely solely on the Social Security card to establish that the person presenting the card was the person to whom the SSN was assigned.
Cards containing this legend are often referred to as “nonwork SSNs.” In October 2003, SSA significantly tightened the rules for issuing nonwork SSNs. SSA only issues such an SSN when 1) a Federal statute or regulation requires an SSN to receive a particular benefit or service, to which an alien has otherwise established entitlement; or 2) a State or local law requires an SSN to get public assistance benefits, to which the legal alien without work authorization has otherwise established entitlement and for which all other requirements have been met.
“Valid for Work Only with DHS Authorization”
Beginning in September 1992, SSA began issuing cards with the legend “Valid for Work Only with INS Authorization” to noncitizens lawfully in the United States with temporary authorization to work. This legend has been changed to “Valid for Work Only with DHS Authorization” to reflect the change from “INS” (the Immigration and Naturalization Service) to “DHS”. In these cases, employers must examine other acceptable documentation for the employment eligibility verification process (Form I-9), which normally would be the non-citizen’s DHS documentation.
In Fiscal Year (FY) 2005, SSA issued approximately 5.4 million original cards. Of these, 4.3 million were issued to U. S. citizens. Approximately 1.1 million cards were issued to non-citizens with temporary or permanent work authorization and fewer than 15,000 cards were issued to aliens not allowed to work.
Totalization Agreements More about these
I would like to turn now to a discussion of totalization agreements. These agreements protect the benefits of workers who pay into the social security systems of two countries but do not earn sufficient credits to receive full benefits from one or both countries. Workers may become eligible for pro-rated benefits based on their combined periods of coverage from both countries. U. S. totalization agreements include Old Age, Survivors and Disability Insurance (OASDI) programs.
Totalization agreements have three main purposes. First, they eliminate dual Social Security taxation, which is the situation that results when a worker from one country works in another country and is required to pay Social Security taxes to both countries on the same earnings. Second, they help fill gaps in benefit protection for workers who have divided their careers between the United States and another country. Third, they remove restrictions that either country imposes on benefit payments to residents of the other country.
In addition to Social Security taxes, foreign workers are exempted from Medicare contributions and U.S. workers can be exempted from health insurance and other taxes related to employment imposed by a foreign country in which they temporarily work. Individuals from a foreign country who are hired in the United States or are sent to the United States for more than a temporary period continue to pay U.S. Social Security and Medicare taxes on their remuneration for services performed in the United States.
The United States has totalization agreements with 21 countries, including Australia, Canada, Chile, Japan, South Korea and most Western European countries.
Before SSA can begin to develop an agreement with another country, we meet with the Departments of State and Commerce to discuss countries that have raised interest in entering into totalization agreements with the United States. The issues discussed at these meetings include: the advantages proposed agreements could have to U.S. citizens, residents and businesses; benefits to U.S. foreign policy; and program and administrative costs of the agreements. Following these discussions, the Department of State provides SSA with a list, in priority order, of countries with whom we might begin discussions and/or negotiations.
SSA then looks at the accuracy and reliability of each country’s vital statistics records (such as birth, death, and marriage certificates), which will be submitted in connection with claims for benefits under totalization agreements.
After a totalization agreement is negotiated, SSA’s General Counsel reviews the proposed agreement to ensure that it is fully consistent with U.S. law. The State Department also reviews the proposed agreement to ensure that it conforms to U.S. policy priorities and treaty protocols and that any translation of the agreement is the same in both languages. If the agreement is cleared by the State Department, it is then formally signed by representatives of the two governments.
After the agreement has been signed, SSA forwards a transmittal package for the agreement to the Secretary of State. Once the Secretary of State reviews the agreement, the Secretary will determine whether to recommend it. If so, the agreement is sent to the President for consideration. If the President approves the agreement, it is transmitted to Congress. Congress has 60 session days to review the agreement. When this process is complete and the partner country has completed its necessary clearances, notes are exchanged between the two governments indicating their readiness and legal ability to fully implement the agreement.
Typically, the agreements take effect three to four months following the exchange of notes; in practice most agreements have become effective about 12 months following submission to Congress. Congress has never voted to disapprove a totalization agreement.
Common Misconceptions of Totalization
I’d like to discuss some misconceptions about the impact of totalization agreements. Many people believe that these agreements change existing immigration policy. The truth is that totalization agreements do not deal with immigration laws. The President’s authority to enter into these agreements has nothing to do with immigration policy. The Social Security Act authorizes totalization agreements to change U.S. law in only three specific ways: first, to eliminate dual Social Security coverage and taxation; second, to allow totalization of U.S. and foreign work credits so that workers with insufficient credits can become eligible for prorated benefits, and third, to remove restrictions on benefit portability. All other agreement provisions must be consistent with title II of the Social Security Act.
Another common misconception is that totalization agreements allow SSA to pay Social Security benefits to undocumented or illegal aliens. In reality, totalization agreements cannot change U.S. law except for the three narrow areas I have already mentioned and, as a result, have no effect on the prohibition against payment of benefits to illegal aliens.
Finally, some people believe that totalization agreements allow non-citizens who work in the United States for a very short time to receive full American Social Security benefits. Let me emphasize that benefits paid under a totalization agreement are pro-rated. The agreements provide that the United States will pay pro-rated U.S. Social Security benefits to those workers who: (1) have at least 6 quarters of coverage with the U.S. system, but not enough to qualify for benefits; (2) the combined work record in the United States and a partner country enable the worker to meet minimum U.S. coverage requirements; and (3) meet all other factors of entitlement. Benefits paid under totalization agreements are NOT full benefits.
Benefits Paid to Foreign-Born Individuals
Now I would like to turn our focus to the other topic of this hearing, benefits paid to foreign-born individuals. As you know, current law explicitly prohibits the payment of benefits to individuals not lawfully present in the United States. Totalization agreements do not affect this provision.
A noncitizen who is outside the United States could be paid benefits only if he meets the applicable statutory requirements.
Impact of the Social Security Protection Act of 2004 (SSPA)
A person covered by the SSPA may only become entitled to Social Security benefits if the worker on whose record the entitlement is based is a U.S. citizen or a non-citizen who was authorized to work in the United States when the worker was issued a Social Security number, or any time thereafter. (This change became effective with regard to workers who were issued an SSN on or after January 1, 2004.) Consequently, a non-citizen worker must meet this requirement to become eligible for benefits, or for the worker’s family members to become eligible for benefits as dependents or survivors of the worker. Totalization agreements do not change this requirement.
In general, the alien nonpayment provision (section 202(t) of the Act) provides for nonpayment of benefits to aliens who are absent from the United States for more than 6 consecutive calendar months, unless they meet one of several exceptions in the law that permit payment to continue. The primary exception is that the alien beneficiary is a citizen of a country which has a social insurance system of general application and which pays benefits to U.S. citizens while they are outside that country.
Benefits that have been stopped because the beneficiary is outside the United States will resume when the beneficiary has returned to the United States and has remained here in lawful presence status for one full calendar month and will continue until the beneficiary is absent from the United States for longer than 6 consecutive calendar months.
In addition, in many cases, aliens entitled to dependents’ or survivors’ benefits must also meet a U.S. residence requirement to be paid outside the United States. The dependent or survivor beneficiary must have resided in the United States for 5 years, during which time the family relationship on which benefits are based must have existed. This 5-year residence requirement can be removed for dependents or survivors who are citizens or residents of a country with whom the United States has a totalization agreement.
Other Events That Result in Nonpayment of Benefits to Noncitizens
The Social Security Act prohibits the payment of Social Security benefits to alien workers (and their dependents or survivors, in certain cases) who are removed from the United States under specific provisions of the Immigration and Nationality Act.
The Treasury Department prohibits unauthorized payments of any kind to Cuban nationals residing outside the United States, and prohibits the sending of U.S. Treasury checks to Cuba and North Korea. When a beneficiary who is a U.S. citizen or national leaves one of these countries, benefits may be resumed, depending on the destination country, and the accrued benefits are paid. Accrued benefits are not paid to non-citizens.
Exclusions from Coverage Under Social Security
Over the years, Congress has enacted legislation regarding the coverage status of work performed by non-citizens. In some cases the work is covered by Social Security, and in others it is not covered. For example, temporary agricultural workers admitted to the United States with an H-2A visa are not covered and do not pay FICA taxes. Other examples of excluded work include services performed by academic students (F-1 visas), exchange visitors (J-1 visas), vocational or non-academic students (M-1 visas), and international cultural exchange visitors (Q-1 visas).
However, certain individuals, such as temporary visitors for business (B-1 visas) in very limited situations involving certain personal servants or airline crew members and family members of foreign government officials (A-1 and A-2 visas) may have their work covered under Social Security if they have been issued an “Employment Authorization Document” by the Department of Homeland Security.
The provisions affecting the coverage status of different groups of noncitizens were enacted at various times over the past several decades. In most cases, the legislative history does not explain why Congress chose to cover, or not cover, a specific group under Social Security. Presumably, certain groups were not covered under Social Security because they are only temporarily in the United States, and there is no expectation that they would become insured and collect benefits. However, there has not always been consistency in the application of this practice. For example, while individuals admitted with an H2A visa to perform temporary or seasonal agricultural employment are not covered under Social Security (as noted above), individuals admitted with an H2B visa to perform skilled or non-skilled non-agricultural employment which is temporary or seasonal are covered by Social Security.
Oversight of Payments to Foreign Beneficiaries
Before I describe our oversight of payments to foreign beneficiaries, Mr. Chairman, I would like to acknowledge the work of the Government Accountability Office (GAO) in this area. As you are aware, in February 2005 GAO issued a report that reviewed SSA’s policies and procedures to verify information from foreign countries. We agree with GAO’s findings and will continue to consider their suggestions for improvement as we work to strengthen program integrity abroad.
Our commitment to making timely benefit payments in the correct amount encompasses beneficiaries in foreign countries, including those receiving totalized benefits. We conduct a very extensive and thorough integrity program abroad. This program includes a number of activities which, when viewed collectively, constitute a comprehensive effort to assess potential risks posed by inaccurate or unreliable foreign data, and to identify and prevent fraud.
Our foreign enforcement program requires beneficiaries living abroad (or their representative payees) to periodically complete a questionnaire. If SSA does not receive a properly signed and completed questionnaire, benefits are suspended until identity is verified.
Our validation surveys are an effective method of monitoring program integrity. We have been conducting these surveys for over 30 years to identify irregularities in the foreign program and to initiate corrective action as necessary. When SSA examiners conduct validation surveys, they personally contact a sample of beneficiaries and representative payees in the survey area to verify their existence, identity, and continuing eligibility for benefits.
SSA periodically conducts validation surveys in the foreign agencies that are responsible for maintaining vital statistics records to determine the validity of foreign evidence used to establish age, marital status, relationships, and the like.
We also operate “aged beneficiary” contact programs. We personally contact each beneficiary residing abroad when they reach age 97, and again at age 100. These contacts allow us to verify that the beneficiary is still alive and assess the need for a representative payee.
In addition to the initiatives I’ve already discussed, SSA reviews foreign claims and enumeration-related inputs to ensure that proper documentation was submitted. Regional Federal Benefit Officers initiate integrity studies as a means to identify fraud and misuse. Some of these reviews involve looking at claims-related actions, others involve personal contacts. Finally, we conduct onsite management reviews at Foreign Service Posts to ensure that foreign operations are efficient, economical, and provide for effective program integrity.
Integrity of Foreign Data in Totalization Agreements
As you see, Mr. Chairman, SSA has a number of initiatives to oversee payments to foreign beneficiaries and assure the integrity of payments made to individuals residing outside the United States. These procedures apply equally to all foreign beneficiaries, whether they are receiving a regular Social Security benefit or a totalized benefit.
SSA’s procedures for assessing the accuracy and reliability of foreign data, such as medical evidence and birth, death and marriage certificates, are the same for claims with totalized benefits and regular, non-totalization claims. While totalization agreements increase the number of benefit claims that are filed and, therefore, the amount of evidence that must be evaluated, they do not introduce new elements of risk in connection with the evaluation of evidence.
Under some totalization agreements, SSA and the other country’s agency have agreed to use each other’s verification of certain eligibility factors, such as a claimant’s date of birth. However, this is done only in cases where years of pre-agreement experience and an examination of the other country’s system of records during implementation meetings has indicated that evidence from that particular country is accurate and reliable. This policy eliminates the duplication of effort that would result if the agencies of both countries were required to verify the same information.
However, each agreement includes a provision that makes clear that SSA remains the final judge of the probative value of any evidence it receives from any source. SSA is, therefore, able to verify the accuracy of the other country’s certification by obtaining original or certified copies of documents and by contacting the claimant directly.
In addition, SSA conducts validation surveys when we become concerned that document fraud may be becoming a problem in a country. Each year we select three countries from a rotating list to conduct “identity and existence” surveys. We train the foreign-service nationals to be vigilant for fraud when examining documents and instruct them to check primary and secondary sources to verify the accuracy of documents.
SSA has recently developed a standardized set of protocols that integrate and formalize the various initiatives we have already undertaken for verifying foreign countries’ data. These protocols will be used when negotiating future totalization agreements.
We will continue to explore ways to improve existing processes for verifying beneficiaries’ initial and continuing eligibility for benefits, and we appreciate GAO’s input in this area.
SSA is committed to administering all of its programs – whether they involve benefit payments to U.S citizens or to noncitizens, or the assignment of Social Security numbers – accurately and efficiently. We value your input as we look at ways to keep our programs strong and make them better.
I again want to thank you Chairman McCrery and members of the Subcommittee for inviting me here today. I look forward to working with you to continue to improve SSA’s processes.
I will be happy to answer any questions you might have.