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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: 

GAO Highlights: 

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

Why GAO Did This Study: 

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 Found: 

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. 

What GAO Recommends: 

GAO is making no new recommendations in this testimony. 

www.gao.gov/cgi-bin/getrpt?GAO-06-253T. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Barbara Bovbjerg at (202) 
512-7215 or bovbjergb@gao.gov. 

[End of section] 

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,[Footnote 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.[Footnote 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.[Footnote 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.[Footnote 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. 

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[Footnote 5] 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. 

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.[Footnote 6] When workers pay Social Security taxes, they earn up 
to 4 coverage credits each year.[Footnote 7] Generally 40 credits-- 
equal to at least 10 years of work--entitle workers to Social Security 
benefits when they reach retirement age.[Footnote 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.[Footnote 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. 

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: 

* Almost all individuals born in the U.S. or in U.S. jurisdictions are 
U.S. citizens at birth;[Footnote 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.[Footnote 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: 

* 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. 

* 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. 

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.[Footnote 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. 

The Social Security Protection Act (SSPA) of 2004 imposed new 
restrictions on the payment of Social Security benefits to 
noncitizens.[Footnote 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.) 

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.[Footnote 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: 

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

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

* noncitizen with permission from the DHS to work permanently in the 
U.S.,[Footnote 15] or: 

* 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).[Footnote 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.[Footnote 17] 

3. Nonwork card: The third type of card is for people not eligible to 
work in the U.S.[Footnote 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.[Footnote 19] 

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. 

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: 

1; GAO recommendation: Field office document verification: Perform 
systematic reviews of field office compliance with verification 
requirements for enumerating noncitizens and to identify corrective 
actions needed to ensure maximum effectiveness of this process; 
Status: Implemented; SSA's Inspector General has completed such a 
review and SSA revised guidance on verification of documents. 

2; GAO recommendation: Verification procedures: Enhance the Modernized 
Enumeration System to prevent staff from issuing SSNs without following 
required verification procedures.[A]; 
Status: Not implemented; SSA has yet to fund this effort. In the 
interim, however, SSA now requires staff to use a software tool that 
documents verification procedures.[B]. 

3; GAO recommendation: Enumeration at Entry (EAE) procedures: Develop 
and implement a structured evaluation plan to assess the initial 
operation of the EAE initiative and identify SSA, State Department, and 
DHS business process changes needed to expand EAE to additional groups 
of noncitizens; 
Status: Implemented; SSA has conducted such an evaluation and 
identified several changes needed.[C] SSA and Department of State 
officials agreed to explore expansion of EAE to three additional 
nonimmigrant groups.[D] 

4; GAO recommendation: Enumeration centers: Evaluate the Brooklyn 
Social Security Card Center to assess the feasibility of expansion to 
other locations and interaction with SSA's other initiatives to improve 
the integrity of SSN issuance to noncitizens; 
Status: Implemented; SSA completed such evaluations and opened an 
additional enumeration center in Las Vegas. 

5; GAO recommendation: Verification of birth records: Revise its 
requirement for verification of the birth records of U.S. citizens who 
apply for an SSN to require third-party verification of the birth 
records of children under age 1; 
Status: Implemented; Requirement put in place in accord with IRTPA. SSA 
now verifies birth records of all individuals seeking an original or 
replacement Social Security card. 

6; GAO recommendation: Replacement cards: Reassess SSA's policies for 
issuing replacement Social Security cards and develop options for 
deterring abuse in this area; 
Status: Implemented; Requirement put in place in accord with IRTPA. SSA 
now limits replacement cards to 3 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. 

[A] SSA's Modernized Enumeration System is an automated computer system 
for assigning SSNs. 

[B] SSA 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. 

[C] Both 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). 

[D] State 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. 

[End of table] 

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.[Footnote 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.[Footnote 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.[Footnote 22] Without work 
authorization, noncitizens and their dependents or surviving family 
members cannot receive any benefits. See table 2 below. 

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: Noncitizen must have an SSN (nonwork or work-authorized) to be 
eligible for benefits; 
When a noncitizen worker was assigned an original SSN: On or after 
January 1, 2004: Noncitizen must have a work- authorized SSN at the 
time he/she is assigned the SSN or later to be eligible for 
benefits.[A]. 

When a noncitizen worker was assigned an original SSN: Before January 
1, 2004: If the noncitizen had a nonwork SSN, Social Security eligible 
earnings could be recorded; 
When a noncitizen worker was assigned an original SSN: On or after 
January 1, 2004: SSA no longer assigns a nonwork SSN for the purpose of 
recording earnings and 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. 

[A] SSPA exempts noncitizens with DHS status as business visitors and 
crewmen on certain vessels or aircraft. 

[End of table] 

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.[Footnote 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.[Footnote 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.[Footnote 25] 

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.[Footnote 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.) 

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

1; GAO recommendation: Standardized protocols: Develop a standardized 
set of protocols that integrate and formalize the various initiatives 
for verifying foreign countries' data when negotiating future 
agreements; 
Status: Not implemented; Although SSA has not developed a standard set 
of formal protocols, it has 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. 

2; GAO recommendation: Verifying eligibility: Explore cost-effective 
ways to improve the current processes for verifying beneficiaries' 
initial and continuing eligibility for benefits. Such improvements may 
include enhancing the scope of the validation studies and assessing 
ways to 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; 
Status: Not implemented; SSA is, however, exploring a more systematic 
approach for independently verifying foreign countries' data, such as 
the use of computer matches. 

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. 

[End of table] 

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. 

[End of section] 

Appendix I: Totalization Agreements: 

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

Country: Italy; 
Effective Year of Agreement: 1978. 

Country: Germany; 
Effective Year of Agreement: 1979. 

Country: Switzerland; 
Effective Year of Agreement: 1980. 

Country: Belgium; 
Effective Year of Agreement: 1984. 

Country: Canada; 
Effective Year of Agreement: 1984. 

Country: Norway; 
Effective Year of Agreement: 1984. 

Country: United Kingdom; 
Effective Year of Agreement: 1985. 

Country: Sweden; 
Effective Year of Agreement: 1987. 

Country: France; 
Effective Year of Agreement: 1988. 

Country: Spain; 
Effective Year of Agreement: 1988. 

Country: Portugal; 
Effective Year of Agreement: 1989. 

Country: Netherlands; 
Effective Year of Agreement: 1990. 

Country: Austria; 
Effective Year of Agreement: 1991. 

Country: Finland; 
Effective Year of Agreement: 1992. 

Country: Ireland; 
Effective Year of Agreement: 1993. 

Country: Luxembourg; 
Effective Year of Agreement: 1993. 

Country: Greece; 
Effective Year of Agreement: 1994. 

Country: Chile; 
Effective Year of Agreement: 2001. 

Country: South Korea; 
Effective Year of Agreement: 2001. 

Country: Australia; 
Effective Year of Agreement: 2002. 

Country: Japan; 
Effective Year of Agreement: 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. 

[End of table] 

FOOTNOTES 

[1] The 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). 

[2] 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). 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." 

[3] 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). 

[4] GAO-04-12. 

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

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

[7] The 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. 

[8] Workers 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. 

[9] The 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. 

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

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

[12] Employers 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. 

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

[14] GAO-04-12. 

[15] For 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. 

[16] Specifically, 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. 

[17] In 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. 

[18] Whether 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. 

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

[20] SSA 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. 

[21] SSA 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). 

[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. 

[23] While 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). 

[24] This 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. 

[25] Dependents 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. 

[26] 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) and Proposed Totalization 
Agreement With Mexico Presents Unique Challenges, GAO-03-993 
(Washington, D.C.: Sept. 30, 2003).