The Earnings Test for Social Security Beneficiaries

HRD-79-89: Published: Jul 2, 1979. Publicly Released: Jul 2, 1979.

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An analysis was made of the procedures used by the Social Security Administration (SSA) in adjusting the benefits of persons who earn more than the allowable amount. The benefits of persons under age 72 must be reduced if they work and have earnings that exceed an annual exempt amount. For beneficiaries age 65 and over, the 1978 exempt amount was set at $4,000, but this will increase by $500 each year through 1982. The 1978 exempt amount for beneficiaries under age 65 was $3,240.

Weaknesses in controls of SSA over earnings enforcement cases resulted in SSA failing to follow through on an estimated 83,000 cases involving about $39 million in overpayments and $5 million in underpayments. About 76 percent of the cases with potential overpayments or underpayments involved beneficiaries still receiving payments in August 1978. Overpayments to such beneficiaries should be readily collectible. An additional $8.9 million in overpayments went undetected because of practices that disregarded enforcement cases involving terminated student beneficiaries. Overall, the Social Security Trust Fund could lose about $43 million because SSA did not take proper action on these earnings enforcement cases.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Health, Education, and Welfare should monitor the efforts of the SSA Commissioner to resolve all uncleared 1974 through 1977 earnings enforcement cases identified by the uncleared earnings enforcement field on the individual beneficiaries' records. Cases involving terminated students should be followed up only if information reported by the employer indicates the student had earnings in a quarter preceding the quarter in which his or her benefits were terminated. The SSA Commissioner should also improve the control system for earnings enforcement cases so that such cases continue to be periodically called up until they are resolved.

    Agency Affected:


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