Statement of the Honorable Jo Anne B. Barnhart
Social Security Administration
Testimony before the House Committee on Ways and Means
July 26, 2006
Mr. Chairman and Members of the Committee:
The President has proposed a comprehensive approach to immigration reform that addresses the need to secure our borders, enforce worksite employment practices, and address the economic issues of immigration. This approach calls for the creation of a true temporary worker program that allows individuals to achieve legal status by paying their taxes, learning English and gaining employment in our society.
Within this context I appreciate your invitation to appear before you to discuss how and when we assign Social Security numbers and issue Social Security cards to non-citizens, as well as issues relating to benefit eligibility for non-citizens. In my testimony today, I will describe SSA’s current responsibilities and activities to safeguard the integrity of the Social Security system, including our work with Department of Homeland Security (DHS) and the Internal Revenue Service (IRS).
Currently, as required by the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, we provide DHS extensive information about every “nonwork SSN” where earnings were reported. “Nonwork SSNs” are issued to individuals who are not authorized to work in the U.S. but have a valid reason for obtaining an SSN. These cards include the legend, “Not Valid for Employment”.
SSA is also an integral part of the DHS Basic Pilot program which allows employers to verify both the Social Security numbers and work authorization status of persons they hire. Of course, SSA continues to provide SSN verification services to employers, including our web-based Social Security Number Verification System (SSNVS)
SSA currently has the authority to use information from Forms W-2 only for the purpose of determining eligibility for and the amount of Social Security benefits. The Administration supports allowing disclosure of this data in the interests of national security and for law enforcement purposes.
At SSA, we have a proven performance record and can and will do what we are called upon to do. But I would be remiss if I did not mention that, as this Committee well knows, every new responsibility we are given, without adequate funding, will affect our ability to provide our core mission service to the American public.
This year alone, we will process over 6.7 million claims for benefits; process almost 245,000 Medicare Part D low income subsidy applications; make decisions on over 575,000 hearings; issue 18 million new and replacement Social Security cards; process 265 million earnings items for workers’ earnings records; handle approximately 59 million transactions through SSA’s 800-number; serve 42 million visitors to our field offices; process millions of actions to keep beneficiary and recipient records current and accurate; and conduct 1.6 million continuing disability reviews (CDR’s) and over 1 million non-disability Supplemental Security Income (SSI) re-determinations.
I have worked closely with the Social Security and Human Resources subcommittees in our efforts to improve service, most notably through the Disability Service Improvement initiative and related improvements to the disability process. I know that this Committee is well aware of the challenges we face.
From my perspective as Commissioner of Social Security, I am concerned that reductions of $200-$400 million in the President’s budget request for SSA administrative costs that have been proposed by the House and Senate appropriators would jeopardize our ability to improve service and eliminate backlogs, even without new responsibilities. I might note that the President’s budget for FY 2007, and for the past few years, included modest increases in SSA’s administrative budget.
ENUMERATION AND BENEFITS FOR NON-CITIZENS
Enumeration of Non-Citizens
Under current law, Social Security numbers can be issued to non-citizens when they are lawfully admitted to the United States for permanent residence, if they are otherwise authorized to work in the United States, or, under limited circumstances, where an individual is not authorized to work, but has a valid need for an SSN.
The vast majority of original Social Security cards are issued to United States citizens, or to permanent resident non-citizens. Since these individuals are authorized to work without restriction in the United States, these cards show only the name and SSN of the individual and can be used as evidence of authorization to work in the U.S.
However, cards issued to non-citizens who are not authorized to work (at the time of application for a Social Security number) 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” or “Valid for Work only with DHS Authorization”.
“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” , often referred to as nonwork SSNs,” to non-citizens not authorized to work. This was due to the increasing need for individuals to have SSNs for nonwork purposes (e.g., to receive payment of a government benefit, to open a bank account, or to get a drivers license) 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 then as now, an employer could not rely on the Social Security card alone to establish that the person presenting the card was the person to whom the SSN was assigned. The Social Security card is not, and never has been, an identity document, which is why it must be presented in conjunction with an identity document to prove work authorization under immigration law.
In October 2003, I significantly tightened the rules for issuing nonwork SSNs. No longer do we issue SSNs to non-citizens just so they can obtain a driver’s license. Instead, 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. This action reduced the number of “nonwork SSNs” we issue each year from 72,000 to 15,000.
“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 non-citizens 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), normally 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.
Social Security Benefits for Non-Citizens
As you know, current law explicitly prohibits the payment of benefits to individuals in the United States who are not lawfully present here. A non-citizen who is outside the United States can be paid benefits only if he or she meets the applicable statutory requirements.
Impact of the Social Security Protection Act of 2004 (SSPA)
Under SSPA, Social Security benefits are not payable on the record of a non-citizen worker unless the worker 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.
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 eligible United States 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 six 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 five years, during which time the family relationship on which benefits are based must have existed. This five 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 Non-citizens
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.
Crediting Unauthorized Work Towards Social Security Benefits
There have been a number of proposals to eliminate Social Security credit for earnings that are posted to a noncitizen’s record during periods when the person is not authorized to work. You may recall that when the SSPA was enacted, consideration was given to a similar proposal, which ultimately was not included in the law.
We understand the rationale behind this proposal. However, to administer such a change, we would have to know exactly which periods in the past a person was authorized to work and not authorized to work. We defer to DHS on the specifics of availability of data, but we understand that DHS does not have the data readily available at this time to reconcile earnings and work status.
“HARDENING” THE SOCIAL SECURITY CARD
As you are aware, the expertise of counterfeiters and the wide availability of state-of-the-art technology make it increasingly difficult to develop and maintain a Social Security card that cannot be counterfeited, despite best efforts to guard against such incidents. Therefore, SSA will continue to evaluate new technology as it becomes available to determine if additional features should be included.
As provided in the IRTPA, we, in consultation with the Secretary of Homeland Security formed an interagency task force to establish requirements for improving the security of Social Security cards and numbers. Because current law requires the card to be printed on banknote paper, the taskforce was limited to consideration of improvements to this type of card. In addition to representatives from SSA and DHS, the task force included representation from the Federal Bureau of Investigation, the Department of State and the Government Printing Office. I share Congress’ concern abut the security of the Social Security card and am committed to doing what I can to make improvements in this regard. The taskforce has completed its work and I provided this Committee with a report a few days ago on how its recommendations can be implemented. We have decided to delay moving forward with the production of the improved Social Security card pending resolution of the immigration reform debate because the final law may include provisions that affect the Social Security card.
There are several proposals before Congress to create a different kind of Social Security card. The immigration and welfare reform legislation passed in 1996 required us both to conduct a study and to develop a report on different methods for improving the Social Security card process, including prototypes of several kinds of new cards. This report, “Options for Enhancing the Social Security Card,” was issued in 1997.
We know from the 1997 effort that should SSA be required by Congress to replace all SSN cards the main costs associated with replacing the current SSN card are those associated with reinterviewing individuals and reverifying documents, while the additional costs of the card itself—even with additional security features—are minimal. Thus, the feasibility of a “hard” card depends on who would receive it over what period of time.
The most important factor affecting the total cost is the requirement to verify the identity of the person applying for the card and, in the case of non-citizens, determining the immigration status and work authorization. Other factors must be taken into account as well. For example, the cost of equipment that might be needed in SSA field offices to work with the new cards and the cost to SSA to notify number holders who might need to obtain a new SSN card would have an impact on total outlays.
Currently, most original SSNs (and cards) for United States born individuals are issued through the Enumeration at Birth (EAB) process in which parents apply for their child’s SSN at the hospital as part of the birth registration. The vast majority of replacement SSN cards, and a relatively small number of original SSN cards for U.S. born individuals, are issued by SSA field offices where evidence is reviewed and verified. The majority of original SSN cards issued through SSA field offices are for individuals who recently arrived in the United States and whose immigration status permits assignment of an SSN.
Last year, we estimated that a card with enhanced security features would cost approximately $25.00 per card, not including the start-up investments associated with the purchase of equipment needed to produce and issue this type of card. According to estimates made last year, reissuance of all new cards for the 240 million cardholders over age 14 would cost approximately $9.5 billion. We know that, since we made that estimate, the cost of issuing SSN cards has increased by approximately $3.00 per card due to new requirements for additional verification of evidence, so we anticipate an increase in the total cost estimate when we update our figures to reflect current dollar costs. I hasten to add that the Administration is not seeking to replace all cards. The number of workers who would have to obtain a new card varies from proposal to proposal.
Currently, each year staff of the agency devotes approximately 3,300 work years of effort to the SSN card issuance process. Because of the need to interview everyone receiving a new card, and examine original documents, last year’s estimate indicates that we would need an additional 67,000 work years to issue everyone a new card. This would require hiring approximately 34,000 new employees if we were required to complete the work within two years and 14,000 new employees to complete the work in five years. As noted, this estimate assumes replacing cards for 240 million individuals, which the Administration has not proposed. An approach that would mandate new tamper resistant cards to be issued only during the normal course of initial issuance and reissuance would involve significantly less additional costs. For a phased approach that limited new cards to only the approximately 30 million people who change jobs at least once during a year and the additional five million young people reaching age 14, the cost would be approximately $1.5 billion per year, using last years cost numbers.
SSA HELPS IDENTIFY UNAUTHORIZED WORKERS
SSN Verification Services
Over the years, we have worked to offer employers alternative methods to verify SSNs. One of those methods is the Employee Verification Service (EVS). EVS is a free, convenient way for employers to verify employee SSNs. It provides employers with several options depending on the number of SSNs to be verified. For up to five SSNs, employers can call SSA’s toll-free number for employers (1-800-772-6270) weekdays from 7:00 a.m. to 7:00 p.m. Eastern Standard Time. Employers may also use this number to get answers to any questions they may have about EVS or to request assistance. In FY 2005, SSA responded to nearly 1.5 million calls.
Employers also have the option to submit a paper listing to the local Social Security office to verify up to 50 names and SSNs. In addition, employers may use a simple registration process to verify requests of more than 50 names and SSNs or for any number of requests submitted on magnetic media. Currently, almost 17,000 employers are registered for this verification service.
To further increase the ease and convenience of verifying employee SSNs, we developed the Social Security Number Verification Service (SSNVS). After obtaining a PIN and password in a simple registration process, employers can use the internet to get immediate verification of the accuracy of employees’ names and SSNs. This service was expanded to all employers in June 2005.
I announced the nationwide rollout last year at the SSA sponsored National Payroll Reporting Forum, and we continue to promote SSNVS. For example, an article on SSNVS appeared in the SSA/IRS Reporter that is sent to over 6.6 million employers. It was also featured in the SSA wage reporting email newsletter, W2News. We have also highlighted SSNVS in our many speaking engagements before the employer community. There is a special section on SSA’s website for employers that highlights and explains the use of SSNVS. This site recently ranked third in the American Customer Satisfaction Index survey, which asks users to rate the content, usefulness and functionality of applications on both public and private sector sites. Through SSNVS, we processed over 17 million verifications for 21,000 employers in the first six months of 2006.
As I mentioned earlier, employers in all 50 states may participate in the Basic Pilot program, an ongoing voluntary program in which SSA supports the Department of Homeland Security (DHS) in assisting employers confirming employment eligibility for newly hired employees. Participating employers register with DHS to use the DHS’ automated system to verify an employee’s SSN and work authorization status. The information the employer submits to DHS is sent to SSA to verify that the Social Security number, name, and date of birth submitted match information in SSA records. SSA will also confirm US citizenship, thereby confirming work authorization; DHS confirms current work authorization for non-citizens. DHS will notify the employer of the employee’s current work authorization status. In December 2004, the Basic Pilot was expanded to all 50 states. As of July 17, 2006, DHS and SSA had signed agreements with over 10,000 employers, representing about 36,000 employer sites. For FY 2005, SSA received approximately 100,000 Basic Pilot queries each month. So far, for FY 2006, SSA is receiving an average of 150,000 Basic Pilot requests a month. In June 2006, we received over 182,000 queries.
In 2005, through the EVS, SSNVS, and Basic Pilot programs, we estimate we provided a total of 67 million employer verifications, up from 62 million in 2004.
Earnings Suspense File (ESF)
The Earning Suspense File is an electronic holding file for W-2s (wage items) that cannot be matched to the earnings records of individual workers. It does not represent nonpayment of Social Security payroll taxes, nor is it a repository for actual wages.
There are approximately 255 million wage items in the ESF through Tax Year (TY) 2003, the last year for which data is available. This represents about $519.6 billion in wages. That sounds like a large number, but during that period, we have successfully recorded $73.8 trillion in wages, or more than 99 percent of the total.
SSA does not have data on the number of wage items in the ESF that are attributable to unauthorized work by non-citizens. SSA’s source of information about earnings is the Form W-2, and there is no citizenship or immigration status information on that document. While some percentage of name and SSN mismatches are attributable to fraud by unauthorized workers, such mismatches also can occur for a variety of other reasons, including typographical errors, unreported name changes and incomplete or blank SSNs.
As you know, SSA processes wages reported by employers on Forms W-2. We pass this information on to the Internal Revenue Service for income tax purposes, and we record the earnings to each worker’s account so that they are considered in determining eligibility for benefits and the level of benefits to be paid.
We send “no match” letters to employers who submit more than 10 wage items when more than 0.5 percent of the items in a wage report consist of an SSN and name combination that does not match our records. The employer ‘no match’ letters include a list of up to 500 SSNs submitted by the employer in wage items that SSA could not post to a worker’s record. In 2005, we sent approximately 127,000 employer ‘no match’ letters, which covered 7.3 million mismatched records. For privacy reasons, the letter lists only the SSNs, not the name/SSN combination.
The only source of information that SSA receives about a taxpayer’s employer and earnings is tax return information on the Form W-2. We receive and process this information as an agent for the Internal Revenue Service. Use of and disclosure of tax return information is governed by section 6103 of the Internal Revenue Code. SSA currently has the authority to use this information only for the purpose of determining eligibility for and the amount of social security benefits. The Administration supports allowing disclosure of this data in the interest of national security and law enforcement purposes.
Before I close, let me say again, that SSA strongly supports the President’s comprehensive immigration reform approach and is ready, willing, and able to do its part to provide support for DHS in its immigration enforcement activities. The men and women of Social Security are dedicated, hardworking, and productive public servants who will do everything they can to carry out SSA’s responsibilities, whatever they may be.
I want to publicly thank this Committee for your support for SSA and its programs over the years. I look forward to continuing to work with you as we serve the American people.
Thank you again for the opportunity to appear before you today. I look forward to working with you, and will be happy to answer any questions you may have.