SOCIAL SECURITY

Office of the Chief Actuary

June 16, 2015

The Honorable Vern Buchanan

House of Representatives

Washington, D.C. 20515

Dear Mr. Buchanan:

I am writing in response to your request for estimates of the financial effects on Social Security 

of H.R. 2774, introduced yesterday. Section 1 of the Bill would prohibit recovery of 

overpayments to children under age 18 from tax refunds. Under current law, overpayments to 

children made (debt incurred) under age 18 that are not ascertained or “established” by the Social 

Security Administration until after the age of 18 are generally referred to the Department of the 

Treasury for recovery of this debt from any Federal income tax refunds that may be due to them. 

It would not prohibit recovery of overpayments by other means. Section 2 of the Bill would 

prohibit earnings test reductions based on earnings by child beneficiaries. Changes in this Bill 

would apply for tax years ending after December 31, 2015. 

The estimates and analysis provided in this letter reflect our careful analysis of this Bill, with 

assistance from Chris Netram of your staff as well as Amy Shuart and Ted McCann. Many in

the Office of the Chief Actuary contributed to the development of these estimates, most 

particularly Karen Glenn and Chris Chaplain.

We estimate that enactment of this Bill would increase Old Age, Survivors, and Disability 

Insurance (OASDI) program cost by $37 million in total for years 2015 through 2024, assuming 

enactment of the Bill on July 1, 2015. Estimates of cost effects on an annual basis for this period 

are provided in the enclosed table for the Bill as a whole and for each section separately. For the 

long-range actuarial status of the overall OASDI program, we estimate that enactment of the Bill 

would increase the actuarial deficit by a negligible amount (less than 0.005 percent of taxable 

payroll) for each section and for the Bill as a whole. All estimates are based on the intermediate 

assumptions of the 2014 Trustees Report.

Over the past year, referral of some Social Security benefit overpayment debt for collection from 

federal income tax returns has been temporarily suspended pending clarification of policy. 

Under enactment of this Bill, we are assuming that all policy on child beneficiary overpayments 

would be clarified and that the referrals that have been suspended would be referred shortly after 

July 1, 2015, making them eligible for collections in 2016 from income tax refunds for tax years 

ending on December 31, 2015 or earlier. 

For the prohibition from applying the retirement earnings test based on earnings by child 

beneficiaries, we assume this would apply for earnings paid after December 31, 2015. 
Page 2 – The Honorable Vern Buchanan

SOCIAL SECURITY ADMINISTRATION BALTIMORE, MD 21235-0001

We hope these estimates will be helpful. Please let me know if we may provide further

assistance.

Sincerely,

Stephen C. Goss

Chief Actuary

Enclosure
Page 3 – The Honorable Vern Buchanan

SOCIAL SECURITY ADMINISTRATION BALTIMORE, MD 21235-0001

Section 1 Section 2

Calendar Prohibit Tax Prohibit Earnings Total

Year Refund Offsets Test Reductions for the Bill

2015 $0 $0 $0

2016 $0 $1 $1

2017 $2 $2 $4

2018 $2 $2 $4

2019 $2 $3 $4

2020 $2 $3 $4

2021 $2 $3 $5

2022 $2 $3 $5

2023 $2 $3 $5

2024 $2 $3 $5

 2015-24 $15 $23 $37

Based on Intermediate Assumptions of the 2014 Trustees Report

Office of the Chief Actuary, SSA

June 16, 2015

Estimated Change in OASDI Program Cost for (1) Prohibiting the Use of Tax Refund Offsets

for Tax Years Ending After December 31, 2015 to Recover Overpayments to Beneficiaries

Who Were Under Age 18 at the Time of Payment, and (2) Prohibiting the Use of the Earnings Test

Based on Earnings of Child Beneficiaries in Tax Years Ending after December 31, 2015