Impact on Social Security During Government Shutdown

October 11, 2013
E-Newsletter
Dear Constituents,

Many constituents, especially seniors, have been asking questions about what effect the government shutdown will have on Social Security operations. Here's an update for you.

Social Security benefits will be paid on time, and Social Security offices will be open to take new benefit applications. As a result, the public may not notice a difference in service. (By contrast, if the United States were to reach the debt ceiling and default in mid-October, millions of Americans might not get their checks as scheduled on October 23.)

However, the Social Security Administration (SSA) has shut down some services and about 18,000 employees will be furloughed, so there will be some disruptions. As with past shutdowns, SSA will likely develop a backlog of unprocessed work that will take significant time and money to clear.

Social Security's website has a useful list of which services will continue and which will not be available during a shutdown.

Functions that will not be disrupted:

  • Social Security benefit payments will be made on time and in full.

  • Local Social Security offices will be open to the public in order to accept benefit applications and address problems with receiving benefits for current beneficiaries (e.g. change of address request, lost checks, etc.)

  • Social Security's 800-number will be operating on a normal schedule.

Functions that may be disrupted:

  • Processing of disability applications (Disability Insurance and Supplemental Security Income disability benefits) is likely to be delayed, particularly if the shutdown continues. This is because SSA contracts with states to evaluate disability claims, and the states cannot be paid for this work during a shutdown. SSA hopes states will keep the offices open and accept a delay in their reimbursement, but some states may need to furlough their disability examiners, especially if the shutdown is lengthy.

  • Social Security offices will continue processing new benefit applications, but processing time could be affected for complicated cases, because most regional and central office supports will be shut down.

Functions that will be shut down or disrupted:

  • SSA will not issue new or replacement Social Security and Medicare cards or verify Social Security numbers. During the 1995-1996 shutdowns, SSA was forced to turn away 212,000 applicants for new or replacement Social Security cards, and 80,000 student loan applications were delayed because SSA couldn't verify SSNs and INS couldn't verify immigration status.

  • Some already-scheduled disability appeals hearings may take place, but processing of appeals and decisions will be delayed, and no new hearings will be scheduled until after the shutdown. Both waiting times and the backlog of pending appeals will grow. There are currently almost 850,000 Americans waiting for an appeals hearing, and the average waiting time is over a year.

  • Although some staff at the Inspector General's office will be allowed to work, all routine program integrity work, including case reviews that are estimated to save $6 to $9 for every dollar we invest, will be stopped. SSA's Office of Quality Control, which plays a key role in identifying fraud and also prevents billions of dollars in waste, will largely be shut down.

Background: The Anti-Deficiency Act, which prohibits federal agencies from spending money or incurring obligations without an appropriation from Congress, includes exemptions to protect health, safety, and federal assets. More importantly for Social Security, the Justice Department has always interpreted the law to allow agencies to continue to pay benefits that have ongoing appropriations which have not lapsed (Social Security benefits are permanently appropriated) – even if the agency staff are paid with annually-appropriated funds, as SSA's are.

There has been some variation in how the exemption to administer already-appropriated benefits was interpreted. For example, during the first Clinton Administration shutdown, SSA's exemption was narrowly interpreted, and SSA shut down all functions except making sure current beneficiaries got paid (furloughed all but about 5,000 employees). During the second shutdown, it was decided that the initial interpretation was too narrow, and SSA offices remained open to take and process new applications for benefits (over 40,000 employees went to work). The Obama Administration is following the more recent precedent.

Should you have any questions, let me hear from you.

Sincerely,

Anna G. Eshoo

Member of Congress