Review of Child Adoption Practices under Title II of the
Social Security Act - A-09-96-51001 - 8/29/97
This management advisory report responds to a request by
the former Deputy Commissioner for Human Resources to determine
the extent of Old-Age, Survivors, and Disability Insurance (OASDI)
program abuse by beneficiaries receiving retirement benefits who
adopt children to obtain additional benefits.
During May 1996, the former Deputy Commissioner for Human
Resources visited the Atlanta Region and spoke to employees about
potential areas of program abuse. A specific concern raised by
field office (FO) staff involved alleged cases in which: 1) grandparents
receiving retirement benefits adopted their minor grandchildren
as dependents to obtain additional benefits; 2) the natural parents
became the adopted childrens representative payee; and 3)
the adopted grandchildren purportedly lived with, and were supported
by, their natural parents.
Dependency requirements under the Social Security Act (the
Act) allow this practice to occur. Section 10301 of the Omnibus
Budget Reconciliation Act of 1989 amended section 202(d) of the
Act by stating that a minor child (less than 18 years old)
adopted after a worker becomes entitled to retirement or
disability benefits would be eligible for childs benefits
regardless of whether he or she was living with, and dependent
on, the worker prior to the workers entitlement. The legislative
history showed that the congressional intent in enacting the amendments
was to eliminate a disparity between the eligibility requirements
for natural and adopted children.
Prior to the 1989 amendments, section 202(d) of the Act stated
that a child adopted before a worker becomes entitled to
retirement or disability benefits is eligible for childs
insurance benefits. A child (other than the workers natural
or stepchild) adopted after a workers entitlement
is ineligible for Social Security benefits unless he or she was
living with, and dependent upon, the worker for one-half or more
of his or her support for the year prior to the workers entitlement.
In contrast, the natural child or stepchild of a disabled or retired
worker is eligible for benefits regardless of when the relationship
was established. Congressional intent behind enacting these dependency
requirements was to prevent a beneficiary from adopting a child
solely to supplement benefits.
We reviewed provisions of the Act and relevant procedures
from the Program Operations Manual System to determine dependency
requirements for adopted children. We spoke with OASDI program
staff from the Social Security Administration (SSA) and obtained
two legal opinions from the Office of Counsel to the Inspector
General (OCIG). In addition, we obtained and analyzed a data extract
from SSAs Master Beneficiary Record (MBR) containing all
identified adopted children (totaling 11,552) who had been awarded
OASDI benefits as of October 1996.
RESULTS OF REVIEW
Existing SSA data does not contain sufficient information
to determine the number of children adopted by OASDI beneficiaries
for the purpose of increasing benefits. However, out of the 11,552
adopted children awarded OASDI benefits, we found 117 situations
where: 1) the child was adopted the same year the beneficiary retired
or after the beneficiary became eligible for retirement benefits;
and 2) the child was reported as not living with the retired beneficiary.
These combined factors could raise questions as to intent of the
Furthermore, based on legal opinions from OCIG, SSA has no
legal recourse even if the alleged program abuses had occurred.
The law allows individuals entitled to OASDI benefits to increase
the amount of benefits by adopting children who may neither live
with nor be dependent on the individuals for support. Based on
the 117 cases we labeled questionable, there is no evidence that
this legal provision has resulted in a significant number of suspicious
adoptions by OASDI beneficiaries.
Based on our preliminary review, we cannot conclusively say
that OASDI grandparents are adopting children for the purpose of
obtaining additional benefits. However, if SSA decides to further
explore this specific area of concern, we suggest SSA develop criteria
to help identify adoption cases that may potentially lead to OASDI
program abuse. Once criteria are established, FO staff could annotate
beneficiary records and the MBR of these suspicious cases. After
sufficient additional data is gathered, SSA can then determine
if there is a significant number of cases to warrant further study.
David C. Williams
LIST OF CONTRIBUTORS
Office of the Inspector General
Bill Fernandez, Director, Program Audits (West)
Jimmie Harris, Auditor
Leigh Andrews, Auditor