Social Security Administration: Procedures for Issuing Numbers	 
and Benefits to the Foreign-Born (02-MAR-06, GAO-06-253T).	 
                                                                 
In 2004, an estimated 35.7 million foreign-born people resided in
the United States, and many legitimately have SSNs. Many of these
individuals have Social Security numbers (SSNs) which can have a 
key role in verifying authorization to work in the United States.
However, some foreign-born individuals have been given SSNs	 
inappropriately. Recent legislation, aimed at protecting the SSN 
and preventing fraud and abuse, changes how the Social Security  
Administration (SSA) assigns numbers and awards benefits for	 
foreign-born individuals. The chairman of the Subcommittee on	 
Social Security asked GAO to address two questions. First, how	 
does SSA determine who is and is not eligible for an SSN? Second,
how does SSA determine who is and is not eligible for Social	 
Security benefits?						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-253T					        
    ACCNO:   A48157						        
  TITLE:     Social Security Administration: Procedures for Issuing   
Numbers and Benefits to the Foreign-Born			 
     DATE:   03/02/2006 
  SUBJECT:   Accountability					 
	     Aliens						 
	     Eligibility criteria				 
	     Eligibility determinations 			 
	     Forgery						 
	     Fraud						 
	     Identification cards				 
	     Identity verification				 
	     Immigrants 					 
	     Policy evaluation					 
	     Social security benefits				 
	     Social security number				 

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GAO-06-253T

     

     * Background
          * Citizenship and Immigration Status
               * U.S. Citizens:
               * Noncitizens:
          * Responsibilities for Preventing Abuse of SSNs and Improper S
          * Recent Legislation to Prevent Social Security Fraud and Abus
          * Totalization Agreements
     * Revised Enumeration Procedures for the Foreign-Born Are Expe
          * Foreign-Born may be Eligible for One of Three Types of Socia
          * SSA Has Made Some Progress in Addressing Weaknesses in the E
     * New Procedures for Awarding Benefits to Non-Citizens Protect
          * SSPA Provisions Tighten Restrictions on Benefits to Unauthor
          * Totalization Agreements with Foreign Countries Can Be Mutual
     * Concluding Observations
     * GAO Contacts and Staff Acknowledgements
          * Order by Mail or Phone

Testimony before the Subcommittee on Social Security, Committee on Ways
and Means, House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery Expected at 10:00 a.m. EST

Thursday, March 2, 2006

SOCIAL SECURITY ADMINISTRATION

Procedures for Issuing Numbers and Benefits to the Foreign-Born

Statement of Barbara D. Bovbjerg, Director, Education, Workforce, and
Income Security

GAO-06-253T

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the Social Security
Administration's (SSA) procedures for issuing Social Security numbers
(SSNs) and benefits to foreign-born individuals. In 2004, an estimated
35.7 million foreign-born people resided in the United States, and many
legitimately have SSNs. In light of concern that foreign-born individuals
may have been given SSNs inappropriately as well as recent legislation
that changes how SSA assigns numbers and awards benefits for foreign-born
individuals,1 you asked us to address two questions. First, how does SSA
determine who is and is not eligible for an SSN? Second, how does SSA
determine who is and is not eligible to receive Social Security benefits?

GAO has over the past few years studied several issues related to these
topics. For example, in 2003 we reported on SSA's issuance of SSNs to
foreign-born noncitizens.2 In February of 2005, we reported on SSA's
ability to develop and manage agreements with other nations to avoid
duplicating Social Security and other taxes and benefits for workers who
have been employed both in the U.S. and in another country, commonly known
as totalization agreements.3 In both reports GAO found that SSA was
undertaking improvements in its procedures for issuing SSNs and benefits
to the foreign-born, but that SSA nonetheless remained vulnerable to
errors and fraud. My remarks today are drawn from that past work, updated
for recent changes in law and SSA procedures. We conducted our review in
accordance with generally accepted government auditing standards.

In summary, SSA determines who is eligible for an SSN by verifying certain
immigration documents and determining if an individual's card requires a
work restriction. Some foreign-born individuals are eligible for one of
three kinds of Social Security cards depending in part on their
immigration status: (1) regular cards, (2) those valid for work only with
authorization from the Department of Homeland Security (DHS), and (3)
those that are not valid for work-nonwork cards. As of 2003 SSA had issued
slightly more than 7 million nonwork cards to people who needed them to
receive benefits for which they were otherwise entitled.4 Both SSA's
Inspector General and GAO have identified weaknesses in SSA procedures for
assigning SSNs and issuing cards, also known as enumeration. For example,
working undercover and posing as parents of newborns in 2003, GAO
investigators were able to obtain Social Security cards by using
counterfeit documents. Congress has enacted recent legislation
strengthening the SSN enumeration process and documentation requirements.
SSA is implementing the law and is improving document verification and now
requires third-party verification of noncitizen documents such as birth
certificates and visual inspection of documents before issuing an SSN. SSA
also continues to strengthen program integrity by, for example,
restricting the number of replacement cards it issues.

1The Social Security Protection Act of 2004, Pub. L. No. 108-203 (2004)
and the Intelligence Reform and Terrorism Prevention Act of 2004, Pub. L.
No. 108-458 (2004).

2GAO, Social Security Administration: Actions Taken to Strengthen
Procedures for Issuing Social Security Numbers to Noncitizens, but Some
Weaknesses Remain, GAO-04-12 (Washington, D.C.: Oct. 15, 2003). For
convenience, we use the term "noncitizens" to refer to aliens as defined
by the Immigration and Nationality Act, Pub. L. No. 82-414 (1952). This
act defines an alien as "any person not a citizen or national of the
United States."

3GAO, Social Security Administration: A More Formal Approach Could Enhance
SSA's Ability to Develop and Manage Totalization Agreements, GAO-05-250
(Washington, D.C.: Feb. 28, 2005).

Congress and SSA have also improved laws and procedures designed to
strengthen program integrity in the payment of benefits to the
foreign-born. Due to provisions of the Social Security Protection Act of
2004, some foreign-born individuals who were not authorized to work will
no longer be eligible for benefits. To be entitled to benefits, the law
requires noncitizens originally assigned an SSN after 2003 to have a
work-authorized SSN. Amendments to the Social Security Act in 19965
require individuals to be lawfully present in the U.S. to receive Social
Security benefits, though some noncitizens can receive benefits while
living abroad, such as noncitizens who have worked in the U.S. and in a
country with which the U.S. has a totalization agreement. SSA's
totalization agreements coordinate taxation and public pension benefits.
The agreements help eliminate dual taxation and Social Security coverage
that multinational employers and employees encounter when workers
temporarily reside in a foreign country with its own Social Security
program. Successful implementation of these agreements requires the
countries involved to carefully coordinate and verify data they exchange.
Computer matches with foreign countries, for example, may help protect
totalization programs from making payments to ineligible individuals. SSA
is exploring options for undertaking such exchanges.

4GAO-04-12.

5Illegal Immigration Reform and Immigrant Responsibility Act of 1996, Pub.
L. No. 104-208 (1996).

                                   Background

Originally, SSNs were used to keep track of earnings, contributions, and
old-age, disability, and survivor benefits for people covered by the
Social Security program. Increasingly, however, SSNs have been used for a
wide variety of purposes by private firms and federal, state, and local
governments. Cases in which ineligible foreign-born individuals have
obtained or used SSNs to secure employment and receive Social Security
benefits, and increasing incidents of identity theft, have focused
attention on the need to prevent abuse of SSNs.

An estimated 96 percent of workers in the U.S., including many
foreign-born citizens and noncitizens, are required to pay Social Security
payroll taxes, also called Federal Insurance Contribution Act (FICA)
taxes.6 When workers pay Social Security taxes, they earn up to 4 coverage
credits each year.7 Generally 40 credits-equal to at least 10 years of
work-entitle workers to Social Security benefits when they reach
retirement age.8 Social Security benefits are based on workers' covered
earnings during their career. Different requirements apply in cases where
workers become disabled or die with relatively short work careers.
Although the Social Security Act provides that people meeting the work and
contribution requirements accrue benefits, the act also generally
prohibits payment of benefits to people who are not lawfully present in
the U.S. as specified by DHS regulations.

In fiscal year 2005, SSA assigned about 1.1 million original SSNs to
noncitizens, representing about one-fifth of the 5.4 million original SSNs
issued that year. Fewer than 15,000 of these were cards with "nonwork"
SSNs issued to noncitizens unauthorized to work in the U.S. under
immigration law.9 SSA also issues replacement cards to people who have
already been assigned SSNs, but have lost their card. In fiscal year 2005,
SSA issued over 800,000 such replacement cards to noncitizens, about 7
percent of the 12.1 million replacement cards issued that year.

6Workers who are not covered include some federal employees hired before
1984, some state and local workers, and college students working at their
academic institution.

7The amount of earnings needed for a credit changes from year to year. In
2006, workers earn one quarter credit for each $970 they earn, up to a
maximum of four credits each year.

8Workers born in 1929 or later need a minimum of 40 quarters to become
eligible for benefits. They become eligible for full retirement benefits
from age 65 to age 67, depending on when they were born. Reduced
retirement benefits may be available at age 62.

Citizenship and Immigration Status

SSA uses different procedures for assigning SSNs depending on whether
individuals are born in the U.S. or are foreign-born and depending on
their citizenship or immigration status.

  U.S. Citizens:

           o  Almost all individuals born in the U.S. or in U.S.
           jurisdictions are U.S. citizens at birth;10 however, some
           foreign-born individuals can also become U.S. citizens if their
           adoptive or birth parents are U.S. citizens or if they become
           naturalized citizens.11 Because foreign-born citizens are eligible
           for the same types of SSNs and benefits as U.S.-born citizens, we
           will focus for the remainder of this testimony on noncitizens.

  Noncitizens:

           o  Immigrants are noncitizens who may lawfully reside and work
           permanently in the U.S. About 600,000 to 1.1 million noncitizens
           come to the US each year as immigrants.

           o  Nonimmigrants include noncitizens who come to the U.S. lawfully
           (for example, with temporary visas) and those who reside in the
           U.S. unlawfully (in violation of the Immigration and Nationality
           Act). Nonimmigrants who remain in the U.S. without DHS
           authorization overstay their nonimmigrant visas or enter the
           country illegally. As of 2004, an estimated 10.3 million
           unauthorized noncitizens lived in the U.S., according to the Pew
           Hispanic Center's analysis of March 2004 Current Population Survey
           and other Census data.

9The Immigration Reform and Control Act, Pub. L. No. 99-603 (1986),
requires that individuals provide documents that establish their identity
and eligibility to work in the United States, such as passports, driver's
licenses and the Social Security card, among others. Unauthorized workers
sometimes buy, steal, or produce counterfeit documents or use other
people's legitimate documents to give to an employer in an attempt to
demonstrate, falsely, compliance with the legal requirements.

10This does not apply to people born in the U.S. who were children of
foreign heads of state or children of foreign diplomats.

11Naturalization requires, among other things, a period of continuous
residence in the U.S. and passing a citizenship test.

Responsibilities for Preventing Abuse of SSNs and Improper Social Security
Payments

The State Department, DHS, SSA, and employers have responsibilities to
help ensure that noncitizens who are not authorized to work are denied
employment. The State Department identifies who among people abroad
seeking to come to the U.S. is eligible to enter the U.S. and who is
eligible to work in the U.S. DHS denies entry to people who are ineligible
and enforces immigration requirements in cases where people enter the U.S.
illegally or work without authorization. In cooperation with the State
Department and DHS, SSA assigns SSNs to eligible noncitizens. Employers
are required to inspect employees' work authorization documents.12 A
regular Social Security card can be one of the key documents that
employers use to verify that employees are authorized to work. In some
cases, however it may be difficult to distinguish a regular card from a
nonwork card. Specifically, cards for individuals not eligible to work did
not contain the restriction "NOT VALID FOR EMPLOYMENT" until May 1982.
Finally, the SSA ensures that benefit payments go only to people who have
earned them and who are lawfully present in the U.S. or in another country
with which the U.S. has an agreement for reciprocal cross border payment
of benefits.

Recent Legislation to Prevent Social Security Fraud and Abuse

The Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA) was
enacted in response to the terrorist attacks of September 11, 2001 to
reform our nation's intelligence community and strengthen terrorism
prevention and prosecution, border security, and international cooperation
and coordination. IRTPA included several specific provisions for
strengthening the SSN enumeration process and documentation requirements
for obtaining SSNs and cards. For example, the act required minimum
standards for birth certificates and directed the Department of Health and
Human Services to establish these standards in consultation with DHS, SSA,
and others. IRTPA also required that SSA limit the number of replacement
cards it issues annually; adopt measures to improve verification of
documents presented to obtain an original or replacement Social Security
card; independently verify any birth record presented to obtain an SSN;
prevent the assignment of SSNs to unnamed children and adopt additional
measures to prevent assignment of multiple SSNs to the same child; form an
interagency taskforce to establish standards to better protect Social
Security cards and SSNs from counterfeiting, tampering, alteration, and
theft; and provide for implementation of security requirements by June
2006.

12Employers must complete an Employment Eligibility Verification (DHS Form
I-9) certifying that they have examined documents presented and that the
documents appear genuine and relate to the person presenting them.

The Social Security Protection Act (SSPA) of 2004 imposed new restrictions
on the payment of Social Security benefits to noncitizens.13 Before these
provisions went into effect, all payments into the system would count
toward insured status, regardless of whether or not the noncitizen was
authorized to work by DHS. Under this new law, noncitizens who apply for
benefits with an SSN originally assigned after 2003 must have work
authorization at the time their SSN is assigned or at some later point
before applying for benefits to gain insured status under the Social
Security program. If the individual never had authorization to work in the
United States, none of his or her earnings would count toward insured
status and neither the worker nor dependent family members could receive
Social Security benefits.

Totalization Agreements

SSA also has specific procedures to award benefits for foreign-born
workers who work in both the U.S. and in another country with which the
U.S. has a totalization agreement. These are bilateral agreements intended
to accomplish three purposes. First, they eliminate dual social security
coverage and taxes that multinational employers and employees encounter
when workers temporarily reside in a foreign country with its own Social
Security program. Under these agreements, U.S. employers and their workers
sent temporarily abroad benefit by paying only U.S. social security taxes,
and foreign businesses and their workers benefit by paying only Social
Security taxes to their home country. Second, the agreements provide
benefit protection to workers who have divided their careers between the
U.S. and a foreign country, but do not qualify for benefits under one or
both Social Security systems, despite paying taxes into both. Totalization
agreements allow such workers to combine (totalize) work credits earned in
both countries to meet minimum benefit qualification requirements. Third,
totalization agreements generally improve the portability of Social
Security benefits by authorizing the waiver of residency requirements. The
U.S. has totalization agreements in effect with 21 countries-several
western European countries, and others including Canada, Australia, Japan,
South Korea, and Chile. (See table 4 in App. I for a list of countries
with which the U.S. has totalization agreements.)

13This applies to retirement, survivors, and disability benefits.

Revised Enumeration Procedures for the Foreign-Born Are Expected to Reduce
                              Potential for Abuse

In coordination with the State Department and DHS, SSA determines who is
eligible for an SSN by verifying certain immigration documents and
determining if an individual's card requires a work restriction. Our 2003
report identified improvements SSA had made in its enumeration processes,
but also pointed to continued weaknesses, some of which SSA and the
Congress have since addressed.14

Foreign-Born may be Eligible for One of Three Types of Social Security Cards

Under current law U.S. citizens are eligible for SSNs whether they were
born in the U.S. or elsewhere. Depending on their immigration status,
noncitizens may be eligible for one of three types of Social Security
cards: regular cards, those cards valid for work only with authorization
from the DHS, and nonwork SSN cards.

           1. Regular Social Security card: The first and most common type of
           card is for individuals who are eligible to work. Individuals
           issued these SSNs receive a Social Security card showing their
           name and SSN without marked restriction. To be eligible for this
           card an individual must be one of the following

                        o  U.S. citizen (whether foreign-born or not),

                        o  noncitizen lawfully admitted to the U.S. for
                        permanent residence (an immigrant),

                        o  noncitizen with permission from the DHS to work
                        permanently in the U.S.,15 or

                        o  member of a group eligible to work in the U.S. on
                        a temporary basis (e.g., with a work visa, certain
                        authorized workers in an approved exchange
                        program).16

           2. DHS-authorized work card: A much less common type of Social
           Security card is issued to noncitizens who are eligible to work
           under limited circumstances. They receive a card showing the
           inscription "VALID FOR WORK ONLY WITH DHS AUTHORIZATION." To be
           eligible for these cards noncitizens must have DHS permission to
           work temporarily in the U.S. SSA issues these cards to eligible
           workers, such as certain foreign students and spouses and children
           of exchange visitors.17 
           3. Nonwork card: The third type of card is for people not eligible
           to work in the U.S.18 SSA sends recipients of these SSNs a card
           showing their name, SSN, and the inscription "NOT VALID FOR
           EMPLOYMENT." To be issued these cards, noncitizens who are legally
           in the U.S. and do not have DHS permission to work must have been
           found eligible to receive a federally-funded benefit or are
           subject to a state or local law that requires them to have an SSN
           to get public benefits. Examples include Temporary Assistance for
           Needy Families, Supplemental Security Income, Social Security
           Survivor benefits, Medicaid, and Food Stamps. As of 2003, SSA had
           issued a total of slightly more than 7 million nonwork Social
           Security cards, but in recent years SSA has greatly reduced the
           number it issues.19

14GAO-04-12.

15For example, refugees, people granted asylum and citizens of Compact of
Free Association countries-the Marshall Islands, the Federated States of
Micronesia, and the Republic of Palau.

16Specifically, these include authorized noncitizens working in certain
designated fields including registered nurse; agricultural worker;
nonagrarian seasonal workers and others (with visa status H-1C, H-2A,
H-2B, or H-1B, respectively); authorized foreign students working in
on-campus jobs or in school-approved off-campus jobs providing practical
training that is a part of the educational program; or authorized workers
in approved exchange programs, such as au pair programs (involving work
for a host family); and programs for visiting professors, scholars, and
physicians. Although authorized work for these last two groups is often
not employment covered by Social Security, people in these groups are
eligible for Social Security cards. Additional groups eligible for these
cards include authorized foreign government officials or employees and
foreign government's representatives to international organizations.

17In some cases, for example, SSA issues these cards to foreign students
for optional practical training, an internship with a recognized
international organization, or in cases of severe economic hardship. In
these cases SSA must verify the applicant's documents and see evidence of
a job commitment and specific DHS authorization before issuing a SSN card.

18Whether or not noncitizens are eligible to work in the U.S., their
income from employment and other sources, such as investment income, is
generally subject to the same tax laws that apply to citizens. Individuals
not authorized to work in the U.S. and not eligible for an SSN who owe
federal income taxes can obtain a taxpayer identification number to
conduct business with a bank and file IRS tax returns. An Individual
Taxpayer Identification Number (ITIN) issued by the Internal Revenue
Service is a 9-digit number formatted like an SSN, but with a "9" at the
beginning of the number.

SSA Has Made Some Progress in Addressing Weaknesses in the Enumeration Process

Our 2003 report identified improvements SSA had made in its enumeration
processes, but also pointed to continued weaknesses, some of which SSA and
the Congress have since addressed. We found that SSA has over the years
improved document verifications and developed new initiatives to prevent
the inappropriate assignment of SSNs to noncitizens. For example, SSA
requires third-party verification of all noncitizen documents, such as a
birth certificate, with DHS and the State Department before issuing an
SSN. SSA also requires field staff to visually inspect documents before
issuing an SSN. However, many field staff we interviewed at that time were
relying heavily on DHS's verification and neglecting SSA's standard
inspection practices, even though both were required. We found that SSA's
automated system for assigning SSNs was not designed to prevent issuing
SSNs if field staff bypass required verification steps. We also found that
SSA has undertaken new initiatives to shift the burden of processing
noncitizen SSN applications and verifying documents away from its field
offices. In late 2002, SSA began phasing in a new process for issuing SSNs
to noncitizens, called "Enumeration at Entry" (EAE). Through this
initiative, immigrants 18 and older can visit a State Department post
abroad to apply for an SSN at the same time they apply for a visa to come
to the U.S. The State Department and DHS authenticate the documents and
transmit them to SSA, which then issues the SSN. Also, SSA was planning to
expand the program over time to include other noncitizen groups, such as
students and exchange visitors. In addition, SSA established a specialized
center in Brooklyn, New York, which focuses exclusively on enumeration and
utilizes the expertise of DHS immigration status verifiers and
investigators from SSA's Office of the Inspector General. More recently,
SSA established a similar center in Las Vegas, Nevada.

At the time we did our field work for the 2003 report, SSA had not
tightened controls in two key areas of its enumeration process that could
be exploited by individuals seeking fraudulent SSNs: the assignment of
SSNs to children under age 1 and the replacement of Social Security cards.
SSA requires third-party verification of the birth records for U.S.-born
children age 1 and over, but calls only for a visual inspection of birth
documents for children under age 1. In our field work, we found that this
remains an area vulnerable to fraud. Working undercover and posing as
parents of newborns, our investigators were able to obtain two SSNs using
counterfeit documents. Since then the IRTPA was enacted and requires SSA
to independently verify any birth documents other than for purposes of
enumeration at birth.

19In 1998 alone, SSA issued 128,000 nonwork SSNs, and by fiscal year 2005
the number was fewer than 15,000.

Until the passage of the IRTPA, SSA's policy allowed individuals to obtain
up to 52 replacement cards per year, leaving it vulnerable to misuse.
While SSA requires noncitizens applying for a replacement SSN card to
provide the same identity and immigration documents as if they were
applying for an original SSN, SSA's requirements for citizens were much
less stringent. Individuals could obtain numerous replacement SSN cards
with relatively weak or counterfeit documentation for a wide range of
illicit uses, including selling them to noncitizens.

Our 2003 report contained six recommendations to SSA. As shown in table 1
below, SSA has implemented all, except one concerning enhancement of its
Modernized Enumeration System to prevent issuance of SSNs without use of
required verification procedures. In the interim, however, SSA now
requires staff to use a software tool that documents verification
procedures. Although SSA has implemented our recommendation concerning an
evaluation of the Enumeration at Entry program, the results of the
evaluations prompted the SSA's Office of Inspector General and Office of
Quality Assurance and Performance Assessment to recommend several
additional measures to correct errors during the early implementation of
the program.

Table 1: Status of GAO's October 2003 Recommendations to the Commissioner
of Social Security to Strengthen the Integrity of SSA's Policies and
Procedures for Enumerating Noncitizens

     GAO recommendation                      Status                           
1 Field office document verification:     Implemented                      
                                                                              
     Perform systematic reviews of field     SSA's Inspector General has      
     office compliance with verification     completed such a review and SSA  
     requirements for enumerating            revised guidance on verification 
     noncitizens and to identify corrective  of documents.                    
     actions needed to ensure maximum        
     effectiveness of this process.          
2 Verification procedures:                Not implemented                  
                                                                              
     Enhance the Modernized Enumeration      SSA has yet to fund this effort. 
     System to prevent staff from issuing    In the interim, however, SSA now 
     SSNs without following required         requires staff to use a software 
     verification procedures.a               tool that documents verification 
                                             procedures.b                     
3 Enumeration at Entry (EAE) procedures:  Implemented                      
                                                                              
     Develop and implement a structured      SSA has conducted such an        
     evaluation plan to assess the initial   evaluation and identified        
     operation of the EAE initiative and     several changes needed.c SSA and 
     identify SSA, State Department, and DHS Department of State officials    
     business process changes needed to      agreed to explore expansion of   
     expand EAE to additional groups of      EAE to three additional          
     noncitizens.                            nonimmigrant groups.d            
4 Enumeration centers:                    Implemented                      
                                                                              
     Evaluate the Brooklyn Social Security   SSA completed such evaluations   
     Card Center to assess the feasibility   and opened an additional         
     of expansion to other locations and     enumeration center in Las Vegas. 
     interaction with SSA's other            
     initiatives to improve the integrity of 
     SSN issuance to noncitizens.            
5 Verification of birth records:          Implemented                      
                                                                              
     Revise its requirement for verification Requirement put in place in      
     of the birth records of U.S. citizens   accord with IRTPA. SSA now       
     who apply for an SSN to require         verifies birth records of all    
     third-party verification of the birth   individuals seeking an original  
     records of children under age 1.        or replacement Social Security   
                                             card.                            
6 Replacement cards:                      Implemented                      
                                                                              
     Reassess SSA's policies for issuing     Requirement put in place in      
     replacement Social Security cards and   accord with IRTPA. SSA now       
     develop options for deterring abuse in  limits replacement cards to 3    
     this area.                              annually and 10 over a lifetime. 

Source: GAO, Social Security Administration: Actions Taken to Strengthen
Procedures for Issuing Social Security Numbers to Noncitizens, but Some
Weaknesses Remain, GAO-04-12 (Washington, D.C.: Oct. 15, 2003) p.
24-25,and the Social Security Administration.

aSSA's Modernized Enumeration System is an automated computer system for
assigning SSNs.

bSSA is planning the recommended enhancements to this system as part of
its efforts to redesign its system for issuing SSNs, which is expected to
take several years. This project has not yet been funded, however. In the
interim, SSA requires staff to use a computer program that records the
verification procedures staff use when processing an application for an
SSN.

cBoth SSA's Office of Quality Assurance and Performance Assessment and
SSA's Office of Inspector General (IG) issued reports concerning the EAE
process. The first of these reports noted higher error rates in the EAE
program compared with the regular enumeration process and both made
specific recommendations for improving the EAE process. See SSA, Office of
the Inspector General, Audit Report: Assessment of the Enumeration at
Entry Process, A-08-04-14093, (Baltimore, Maryland: March 15, 2005) and
SSA, Office of Quality Assurance and Performance Assessment, Office of
Statistics and Special Area Studies, Study of the Enumeration at Entry
Process: Final Report (Baltimore, Maryland: June 2005).

dState Department and SSA officials discussed the inclusion of
nonimmigrants admitted with an E, H, or L classification. Noncitizens with
an E classification include treaty traders, treaty investors, and treaty
traders in a specialty occupation. Noncitizens with an H classification
are workers in a specialty occupation (H-1B), registered nurses (H-1C),
agricultural workers (H-2A), non-agrarian seasonal workers (H2B), and
trainees (H-3). Noncitizens with an L classification are intracompany
transferees.

 New Procedures for Awarding Benefits to Non-Citizens Protect Against Abuse and
                   Improve Coordination with Other Countries

To determine whether noncitizens are eligible for SSA benefits, SSA has
implemented new procedures including some required by the SSPA. The SSPA
tightened restrictions on payment of benefits to noncitizens who are not
authorized to work. Generally both citizens and noncitizens in the U.S.
accrue credits through paying Social Security payroll taxes. Noncitizens
must also have authority to work in the U.S., and be lawfully present in
the U.S. at the time they apply for benefits.20 Under some circumstances,
unauthorized workers may receive benefits based on work credits they
accrued while working without an immigration status permitting employment
in the U.S., with a nonwork SSN or without a valid SSN during their work
years. If noncitizens later receive a valid SSN and become eligible to
work, they can show SSA their wage records and request credit for earnings
from prior unauthorized work.21 If they establish legal immigration
status, they may then receive benefit payments based on the earlier
periods of unauthorized work. There are some exceptions for the lawful
presence requirement, such as for workers covered under the terms of a
totalization agreement. However, our work shows that SSA's processes for
entering into totalization agreements have been largely informal and do
not mitigate potential risks.

SSPA Provisions Tighten Restrictions on Benefits to Unauthorized Workers

The enactment of the SSPA in 2004 tightened the eligibility requirements
for paying Social Security benefits to noncitizens. Before SSPA,
noncitizens who worked in covered employment could in some circumstances
eventually earn SSA benefits without obtaining a work-authorized SSN. If
noncitizens had no SSN, but were entitled to benefits, SSA would assign a
nonwork SSN so their Social Security eligible earnings could be recorded.
SSPA provides that in order to accrue benefits noncitizens with a SSN
issued on or after January 1, 2004 must have authorization to work in the
U.S. at the time that the SSN is assigned, or at some later time.22
Without work authorization, noncitizens and their dependents or surviving
family members cannot receive any benefits. See table 2 below.

20SSA pays benefits to a claimant/beneficiary who is present in the U.S.
and who is a U.S. citizen, U.S. national, or lawfully present alien as
determined by DHS. This includes claimants in the U.S. filing for benefits
under a totalization agreement.

21SSA maintains records of earnings reported under an invalid name or SSN
that cannot be assigned to a unique worker's account in its Earnings
Suspense File (ESF). SSA's ESF contained approximately 246 million wage
items totaling about $463 billion in wages related to tax years 1937
through 2002 that could not be posted to individual earnings records. For
more information, see GAO, Social Security: Better Coordination among
Federal Agencies Could Reduce Unidentified Earnings Reports, GAO-05-154
(Washington, D.C.: Feb. 4, 2005).

Table 2: Criteria for Payment of Social Security Benefits to Noncitizens
Before and After SSPA

             When a noncitizen worker was assigned an original SSN
Before January 1, 2004             On or after January 1, 2004             
Noncitizen must have an SSN        Noncitizen must have a work-authorized  
(nonwork or work-authorized) to be SSN at the time he/she is assigned the  
eligible for benefits.             SSN or later to be eligible for         
                                      benefits.a                              
If the noncitizen had a nonwork    SSA no longer assigns a nonwork SSN for 
SSN, Social Security eligible      the purpose of recording earnings and   
earnings could be recorded.        paying benefits.                        

Source: GAO analysis of SSPA.

Note:  Unless noncitizen workers meet these criteria, benefits based on
their earnings records will not be paid, including old age, survivor, and
disability benefits.

aSSPA exempts noncitizens with DHS status as business visitors and crewmen
on certain vessels or aircraft.

22 The SSPA also allows business visitors or crewmen lawfully admitted
temporarily into the U.S. to earn quarters of coverage. A crewman includes
those serving in a capacity required for normal operations on board a
vessel or aircraft, who departs from the U.S. or Guam with the vessel or
aircraft on which he or she arrived.

Nonetheless to receive benefits while in the U.S., noncitizens must be
legally present in the U.S. under immigration law regardless of when they
were first assigned an SSN.23 Previously if noncitizens accrued Social
Security benefits and resided outside the U.S., they could under some
circumstances receive those benefits without ever having been legally
present in the U.S.24 Since SSPA required all noncitizens originally
assigned an SSN on or after January 1, 2004, to have a work authorized SSN
to accrue benefits, those living outside the country must also obtain a
work-authorized SSN. Obtaining a work-authorized SSN requires both lawful
presence in the U.S. and an immigration status permitting work in the U.S.

However, a noncitizen may receive benefits outside the U.S. if he or she
is a citizen of a country that has a social insurance or pension system
that pays benefits to eligible U.S. citizens residing outside that country
or is a worker covered under a totalization agreement. A noncitizen not
meeting any of these exceptions will have his or her benefits suspended
beginning with the seventh month of absence.25

23While there are few restrictions on payments once a worker becomes
entitled to benefits, SSA prohibits the payment of benefits to certain
individuals, including those residing in certain countries, including
Cambodia, Cuba, and North Korea; noncitizens residing in the U.S.
unlawfully; and, in some cases, noncitizens residing outside the U.S. for
more than 6 months at a time. Other individuals that may not be entitled
to benefits include individuals confined to a jail, prison, or certain
other public institutions for commission of a crime and most individuals
removed from the United States (i.e., deported).

24This also applies in cases when a noncitizen resides in a country with a
totalization agreement or a country that has a social insurance or pension
system that pays benefits to eligible U.S. citizens residing outside that
country. This includes Belgium, Canada, Mexico, Sweden, Switzerland, and
the United Kingdom.

25Dependents and survivors of noncitizens may also be able to receive
benefits. For instance, those who lived in the U.S. for at least 5 years
previously (lawfully or unlawfully), and had a family relationship with
the worker during that time may qualify for benefits. There are similar
exceptions for dependents and survivors such as those for the noncitizen
worker listed above.

Totalization Agreements with Foreign Countries Can Be Mutually Beneficial, but
Can Increase SSA Costs

In general, totalization agreements between the U.S. and other countries
provide mutually beneficial business, tax and other incentives to
employers and employees, but the agreements also expose both countries to
financial costs and risk. Our recent reports on totalization agreements
identified two fundamental vulnerabilities in SSA's existing procedures
when entering into totalization agreements.26 First, our analysis
demonstrated that the agency's actuarial estimates for the number of
foreign citizens who would be affected by an agreement (and thus entitled
to U.S. Social Security benefits) have overstated or understated the
number, usually by more than 25 percent. As a result, depending on the
size of the foreign population covered by an agreement, the actual cost to
the Social Security trust fund from a given agreement could be greater or
smaller than predicted. In response to our recommendation to improve its
process for projecting costs to the trust fund from totalization
agreements, SSA responded that it cannot eliminate all variations between
projected costs and subsequent actual experience.

Secondly, our work has shown that SSA's processes for entering into these
agreements have been largely informal and have not included specific steps
to assess and mitigate potential risks to the U.S. Social Security system.
For example, we found that SSA's procedures for verifying critical
information such as foreign citizens' earnings, birth, and death data were
insufficient to ensure the integrity of such information. Inaccurate or
incomplete information could lead to improper payments from the Social
Security trust fund. In response to our recommendations, SSA developed
several new initiatives to identify risks associated with totalization
agreements. For example, SSA developed a standardized questionnaire to
help the agency identify and assess the reliability of earnings data in
countries that may be considered for future totalization agreements. In
addition, SSA is conducting numerous "vulnerability assessments" to detect
potential problems with the accuracy of foreign countries' documents. SSA
is also exploring a more systematic approach for independently verifying
foreign countries' data, such as the use of computer matches. (For a
summary of the status of recommendations, see table 3 below.)

26GAO, Social Security Administration: A More Formal Approach Could
Enhance SSA's Ability to Develop and Manage Totalization Agreements,
GAO-05-250 (Washington, D.C.: Feb. 28, 2005) and Proposed Totalization
Agreement With Mexico Presents Unique Challenges, GAO-03-993 (Washington,
D.C.: Sept. 30, 2003).

Table 3: Status of February 2005 GAO Recommendations to the Commissioner
of Social Security Concerning Totalization Agreements

     GAO recommendation                          Status                       
1 Standardized protocols:                     Not implemented.             
                                                                              
     Develop a standardized set of protocols     Although SSA has not         
     that integrate and formalize the various    developed a standard set of  
     initiatives for verifying foreign           formal protocols, it has     
     countries' data when negotiating future     developed a standardized     
     agreements.                                 questionnaire to help the    
                                                 agency identify and assess   
                                                 the reliability of earnings  
                                                 data in countries that may   
                                                 be considered for future     
                                                 totalization agreements.     
2 Verifying eligibility:                      Not implemented.             
                                                                              
     Explore cost-effective ways to improve the  SSA is, however, exploring a 
     current processes for verifying             more systematic approach for 
     beneficiaries' initial and continuing       independently verifying      
     eligibility for benefits. Such improvements foreign countries' data,     
     may include enhancing the scope of the      such as the use of computer  
     validation studies and assessing ways to    matches.                     
     independently verify the results of         
     questionnaires. Other potential             
     improvements may include enhanced efforts   
     to explore the potential for developing a   
     mechanism-either manual or electronic-to    
     independently verify the death of all       
     foreign beneficiaries living abroad,        
     including totalized beneficiaries.          

Source: GAO, Social Security Administration: A More Formal Approach Could
Enhance SSA's Ability to Develop and Manage Totalization Agreements,
GAO-05-250 (Washington, D.C.: Feb. 28, 2005), p. 16, and SSA.

                            Concluding Observations

Laws and policies are in place to ensure that SSA treats noncitizens
fairly in the issuance of SSNs, the provision of benefits, and in cases
where they are covered under the terms of totalization agreements. Recent
legislation and revisions to SSA policies represent some progress in these
areas.

While SSA is making progress in improving the program's integrity by
strengthening its procedures for verifying documents and coordinating with
other agencies and foreign governments, opportunities remain for
additional progress. SSA plans further enhancements to the Enumeration at
Entry program in order to protect against errors, fraud and abuse. In
addition, a more systematic approach to verifying data from other
countries with which we have totalization agreements can help ensure
proper payments of benefits and prompt notice of the death of
beneficiaries. SSA will, however, continue to face challenges in its
dealings with noncitizens. Changes in immigration laws and shortcomings in
the enforcement of those laws make it difficult for SSA to identify
noncitizens who are eligible for SSNs and for benefit payments. Continued
attention to these issues by both SSA and the Congress is essential to
ensure that noncitizens receive benefits to which they are entitled and
the integrity of the Social Security program is protected.

Mr. Chairman and Members of the Subcommittee, this concludes my prepared
statement. I'd be happy to answer any questions you may have.

                    GAO Contacts and Staff Acknowledgements

For further information regarding this testimony, please contact Barbara
D. Bovbjerg, Director, Education, Workforce, and Income Security Issues at
(202) 512-7215. Blake L. Ainsworth, Assistant Director; Alicia Puente
Cackley, Assistant Director; Benjamin P. Pfeiffer; Anna H. Bonelli; Jeremy
D. Cox; Jacqueline Harpp; Nyree M. Ryder; Daniel A. Schwimer; and Paul C.
Wright also contributed to this report.

Appendix I: Totalization Agreements

Table 4: Existing Totalization Agreements between the US and Other
Countries and the Year the Original Agreements Became Effective

Country        Effective Year of Agreement 
Italy          1978                        
Germany        1979                        
Switzerland    1980                        
Belgium        1984                        
Canada         1984                        
Norway         1984                        
United Kingdom 1985                        
Sweden         1987                        
France         1988                        
Spain          1988                        
Portugal       1989                        
Netherlands    1990                        
Austria        1991                        
Finland        1992                        
Ireland        1993                        
Luxembourg     1993                        
Greece         1994                        
Chile          2001                        
South Korea    2001                        
Australia      2002                        
Japan          2005                        

Source: SSA

Note: In 2004, the U.S. and Mexico signed a totalization agreement, which
must be sent to and reviewed by legislative bodies in both countries
before it becomes effective. Discussions are underway concerning possible
totalization agreements with Denmark and the Czech Republic.

(130537)

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Highlights of GAO-06-253T , a testimony before the Subcommittee on Social
Security, Committee on Ways and Means, House of Representatives

March 2, 2006

SOCIAL SECURITY ADMINISTRATION

Procedures for Issuing Numbers and Benefits to the Foreign-Born

In 2004, an estimated 35.7 million foreign-born people resided in the
United States, and many legitimately have SSNs. Many of these individuals
have Social Security numbers (SSNs) which can have a key role in verifying
authorization to work in the United States. However, some foreign-born
individuals have been given SSNs inappropriately. Recent legislation,
aimed at protecting the SSN and preventing fraud and abuse, changes how
the Social Security Administration (SSA) assigns numbers and awards
benefits for foreign-born individuals. The chairman of the Subcommittee on
Social Security asked GAO to address two questions. First, how does SSA
determine who is and is not eligible for an SSN? Second, how does SSA
determine who is and is not eligible for Social Security benefits?

What GAO Recommends

GAO is making no new recommendations in this testimony.

SSA determines who is eligible for an SSN by verifying certain immigration
documents and determining if an individual's card requires a work
restriction. Some foreign-born individuals are eligible for one of three
kinds of Social Security cards depending in part on their immigration
status: (1) regular cards, (2) those valid for work only with
authorization from the Department of Homeland Security (DHS), and (3)
those that are not valid for work-non-work cards. As of 2003 SSA had
issued slightly more than 7 million non-work cards to people who need them
to receive benefits for which they were otherwise entitled. Both SSA's
Inspector General and GAO have identified weaknesses in SSA procedures for
assigning SSNs and issuing cards, also known as enumeration. For example,
working undercover and posing as parents of newborns, GAO investigators
were able to obtain Social Security cards by using counterfeit documents.
Congress has enacted recent legislation strengthening the SSN enumeration
process and documentation requirements. SSA is implementing the law and is
improving document verification and now requires third-party verification
of noncitizen documents such as birth certificates and visual inspection
of documents before issuing an SSN. SSA also continues to strengthen
program integrity by, for example, restricting the number of replacement
cards.

Congress and SSA have also improved laws and procedures designed to
strengthen program integrity in the payment of benefits to the
foreign-born. Due to provisions of the Social Security Protection Act of
2004, some foreign-born individuals who were not authorized to work will
no longer be eligible for benefits. To be entitled to benefits, the law
requires noncitizens originally assigned an SSN after 2003 to have a
work-authorized SSN. Amendments to the Social Security Act in 1996 require
individuals to be lawfully present in the U.S. to receive Social Security
benefits, though some noncitizens can receive benefits while living
abroad, such as noncitizens who have worked in the U.S. and in a country
with which the U.S. has a totalization agreement. SSA's totalization
agreements coordinate taxation and public pension benefits. The agreements
help eliminate dual taxation and Social Security coverage that
multinational employers and employees encounter when workers temporarily
reside in a foreign country with its own Social Security program.
Successful implementation of these agreements requires the countries
involved to carefully coordinate and verify data they exchange. Computer
matches with foreign countries, for example, may help protect totalization
programs from making payments to ineligible individuals. SSA is exploring
options for undertaking such exchanges.
*** End of document. ***