With little public discussion, the Social Security Administration (SSA) implemented several changes to the application process for retirement and other benefits. The financial press and Congress have not yet picked up on these new rules, but they will have important effects on those seeking benefits.
The new rules have been sold as a way of allowing advocates (third parties), often working with individuals with low income and health problems, to better assist clients applying for Social Security. These third parties can now establish “protective filings” on behalf of their clients, ensuring that benefits are paid from that point forward should the application be approved (SSA may not finish processing an application until months after filing).
Advocates deserve credit for helping to bring this change about, but behind the scenes SSA used this as a fig leaf to make changes affecting all applicants and not just the small number being helped by third parties.
The new rules are, for lack of a better word, patriarchal. Social Security rules are gender neutral, but family benefits (spouse and child benefits) are very generally paid based on a husband’s or father’s work in Social Security covered employment. To illustrate, 95 percent of spouse beneficiaries are women and 67 percent of child beneficiaries receive a benefit based on a father’s work in covered employment. Using the technical language of the “proper applicant,” the new rules give, in general, the husband or father primacy over the family benefits.
To illustrate, under the new rules, the husband will be asked to express in writing for which family benefits there is an intent to file. Wives, on average, are two years younger than their husbands. It is not hard to imagine cases where a husband will want his wife to take benefits early and retire with him. He could then say his wife intends to file. SSA would contact his wife and say it has written intent for her to file for spouse benefits (the wife would also have to claim her own retirement benefits if she elected to take the spouse benefits).
Will the wife feel added pressure to apply early and receive reduced monthly benefits? Quite possibly. Much of the research from behavioral economics suggests subtle framing of the retirement decision has large effects on behavior.
Conversely, the new rules discourage receipt of benefits from individuals who should file for benefits immediately. This will occur when children are eligible for family benefits. Child benefits, which can be paid when the child is a minor or has a severe disability, are not reduced due to age at claiming. Hence, claiming immediately makes sense. But, under SSA’s new model, the father, for example, is the “proper applicant” for the family and will pick which of his children have an intent to file. He may say a child in his current household intends to file but ignore a disfavored child in the household of an ex-wife.
In the past, SSA policy specifically directed technicians to seek applications for all children. Not anymore.
Beyond the new protective filing policies, SSA – using bureaucratic subterfuge – dropped a program called the leads program. The leads program required a good-faith effort on the part of the agency to find and pay individuals who might be unaware of their eligibility for benefits. The best example would be a case where a funeral home realizes an elderly widow may be due benefits and passes her information on to SSA using an agency form. SSA will no longer pursue this lead for benefit eligibility, and the widow may never receive her survivor benefits.
The bureaucratic subterfuge involved SSA asserting that, with the new protective filing policy, the leads program was obsolete. There is no link between the two and SSA simply dropped a workload that helped the public access benefits.
Further, there is evidence these new rules were written too hastily. Most retirement and disability applications are now filed online. A reader of the rules, however, will eventually find this statement: “Currently, there is no mechanism to collect intent to file for … spouse, child(ren)… named on an [Internet Claim]”. So, SSA rushed out the rules before it had the technology to support them.
How should Congress respond? Since the policy was done at the sub-regulatory level, it never received the public discussion and vetting that legislative and regulatory policy receives. A good start would be for Congress to ask the Congressional Research Service to issue a report documenting the changes and their implications. Then, Congress should ask the bureaucracy some questions.
