Today, we begin with a report that may have you asking, who do federal agencies really serve? In this story, elderly widows are being victimized by the very agency that’s supposed to help provide them with financial security. And the only reason we know is because of one employee at the Social Security Administration who’s blowing the whistle.
A Michigan widow loses $30,000 to Geek Squad imposters. A Florida man defrauds a widow of $1 million in insurance money.
And then there are the romance scams.
AARP video: They might share a hard luck story and ask you to send money or perhaps a gift card to help pay a bill.
The image of widows getting cheated is a stereotype for good reason. But wait until you hear who’s been cheating thousands of widows out of millions of dollars, according to John McAdams.
John McAdams: My mother was an elderly widow, how can you knowingly cheat elderly widows?
McAdams says it starts when the Social Security Administration, where he’s a claims authorizer, makes contact with a new widow.
McAdams: A person calls up, or meets in person at the time, for their survivor benefits, and it sounds like a good thing: "Hey, I can sign you up for your retirement benefits and your widow's benefits."
A widow signing up for survivor's benefits and her own retirement benefits at the same time is called “dual enrollment." And too often, McAdams says, it’s not a good thing.
McAdams: It could be men, but it's typically widows — women — who applied for survivor benefits, and their claims were set up incorrectly. And, as a result, they've lost money for years, and they continue to lose hundreds of dollars every month.
How the Social Security Administration, which is supposed to help give financial security for America’s elderly, could be cheating widows, is complicated.
The way Social Security works, if a husband and wife are both collecting Social Security and one of them dies, the survivor gets the bigger of the two checks. But what if the surviving spouse wasn’t on Social Security? What if they were waiting? After all, for every year you wait after you’re eligible, your future benefit grows in the background by 8% until you're age 70.
For many, the best financial decision is for a widow to take her deceased spouse’s check, while letting her own future payment grow in the background, and then switch over when it's maxed out.
Sharyl: What happens when that person — who's getting the benefit of their passed away loved one — when that person reaches, say, age 70?
McAdams: They can check if their own retirement benefit is higher than what they're getting as a survivor. And if it's set up correctly, they can apply for it and enjoy those benefits for the rest of their life.
Sharyl: Is that often the case, where a widower or a widow is taking a surviving benefit, but is actually due more money when they turn 65 or 70 years old than what they were getting?
McAdams: It's becoming more often with women having worked more, more recently.
But almost a decade ago, McAdams discovered some of his colleagues at the Social Security Administration doing something that hurts their customers: dual-enrolling widows for survivor benefits and their own Social Security, which froze the value of their Social Security.
McAdams says when he flagged the issue with a supervisor, he was unprepared for the response.
McAdams: And she was like, "Just do your job. That's outside the scope of everything, just do your job.” When I got off training, saw another case. Took it to my technical expert, and he said, "Yeah, that's wrong. Let's fix it. Let's change it." We moved her retirement benefits up to age 70. She's been getting hundreds of dollars more per month ever since. I started to see more. Eventually, they said, "No, stop. Don't change anything else. Just leave them the way they are. Do your job.”
Sharyl: When supervisors are saying, "Do your job," that implies your job isn't to help the customer?
McAdams: Exactly. That's how I thought of that statement.
It adds up. One widow can lose out on tens of thousands of dollars, hundreds of dollars a month for the rest of their life. When he was told to ignore such cases, McAdams says his labor union eventually gave him the green light to go public.
Forbes and PBS did stories on the many widows getting defrauded by the Social Security Administration.
Sharyl: How did those articles get published?
McAdams: Just because I knew it was wrong, and I wasn't allowed to fix them, and I didn't want to see these people continue to lose benefits. So, I asked the union. They said, "Yeah, if you can get it published somewhere, go for it." And I thought that maybe that would spur the agency to take action, but it didn't. So I asked the union again, and they said, "If you really want to follow up on this, you can take it to the Office of Special Counsel." And I did.
Henry Kerner: If those people who were dually-enrolled had waited, they would've been eligible for a higher benefit amount based on their age.
Henry Kerner heads up the Office of Special Counsel, which protects whistleblowers like McAdams. Kerner says McAdams’ information proved so serious and compelling, it was sent to the Inspector General, or IG, for investigation. And in 2018, the IG released disturbing findings.
Kerner: They took a sample of this universe of 13,500 people, and they found that a sample, about 82%, would've benefited if they hadn't been dually enrolled, by waiting until at least age 70 to get these retirement insurance benefits.
The IG “did not find any evidence [the Social Security Administration] had informed claimants of the option to delay their retirement applicationas required.”
It estimated “11,123 [widows] would have been eligible for a higher monthly benefit amount had they delayed their retirement application until age 70” and were “underpaid about $131.8 million” so far and when others in the group reached age 70, they’d be underpaid “about $9.8 million” a year.
The Social Security Administration promised to take action. Finally, everyone seemed to agree the widows should be notified and paid. If that had happened, it might have been the end of the story.
McAdams: It's like $10,000 per victim. And they made a long report, and in it, they recommended that Social Security fix the situation for all the victims. And now it's three and a half years later, and Social Security has not fixed the situation for any of the victims.
Sharyl: Do you still see cases like that coming through?
McAdams: I saw one last week.
Unbelievably, says Kerner, the Social Security Administration has now closed the case without paying any of the widows.
Kerner: And so that was pretty disappointing, because that's approximately 13,500 people that could be entitled to damages up to $140 million, and there had been a commitment that they would look into those cases, and then we learned that actually, they're not going to revisit those beneficiaries.
Sharyl: Why wouldn't they want to?
Kerner: Well it's a lot of money, for one thing.
Sharyl: Can you explain why the Office of Special Counsel, or the Inspector General for that matter, how they can make findings like you did, and yet not force the Social Security Administration to follow through on making that right?
Kerner: The Office of Special Council has certain limited powers. We don't have any particular power to enforce a judgment, because there is no judgment.
We wanted to hear from the Social Security Administration, but they declined our interview request. On the agency’s website, it says, “We are passionate about supporting our customers by delivering financial support, providing superior customer service,” and “SSA has achieved a level of world-class customer service about which we can all be proud.”
Today, McAdams is still trying to get the word out. Due to privacy laws, he’s not allowed to contact the widows or give their names to anyone to help.
Meantime, he says the whole saga has impacted his own retirement.
Sharyl: What's your comment, your sort of overarching comment about this whole experience that you've been through?
McAdams: It's frustrating, but it gives me a purpose to keep going to work. I mean, I could retire now, but I don't want to until these people get paid.
Sharyl (on-camera): McAdams says he’s created a form that can help widows or their families figure out if they are part of the group that’s been cheated. It’s at millionwidowmarch.com.