74M Social Security Recipients Told Payments Will Continue Despite Government Shutdown – But Services Could Stall

The US government has shut down for the first time since 2019 after Congress failed to agree on a funding deal as Republicans and Democrats clashed over additional subsidies for Obamacare.

In 2019, the government shutdown lasted a record 35 days due to a standoff over funding for the border wall during US President Donald Trump's first term. This time, the Democrats are demanding the rollback of healthcare cuts that were imposed over the summer. As a result of the government shutdown, over 100,000 federal employees face layoffs, and regular services, such as passport and federal loan offices, are likely to be disrupted. However, essential services will continue as usual.

Concerns are also emerging about the operations of agencies like the Social Security Administration (SSA), as a majority of the 74 million beneficiaries rely on their monthly benefits to get by. The good news is that all SSA recipients will continue to receive their funds on time during the shutdown.

The reason is that benefits for retirees and disabled Americans are covered by mandatory spending, meaning that the program is approved by Congress without an expiry date.

However, several experts are worried that customer service at the SSA could be disrupted during the shutdown, making it difficult for recipients to connect with an official for query resolution.

'The system hasn't missed a payment in its entire 90-year history and won't start now,' said Max Richtman, CEO of the National Committee to Preserve Social Security & Medicare. 'But customer service at the SSA may be disrupted, including benefit verifications, earnings record corrections and updates, overpayments processing, and replacing Medicare cards.'

Federal agencies have contingency plans for shutdowns. For instance, some workers are expected to work without pay as they are offering essential services. In order to gauge the potential impact on SSA operations due to the current shutdown, it is necessary to understand how many workers are deemed essential.

The SSA published a contingency plan in September, noting that around 45,000 workers would continue to work in the event of a shutdown, while nearly 6,200 would be furloughed.

'We will continue activities critical to our direct-service operations and those needed to ensure accurate and timely payment of benefits,' according to the plan. 'We will cease activities not directly related to the accurate and timely payment of benefits or not critical to our direct-service operations.'

Some of the non-critical operations include Freedom of Information Act requests and overpayment processing. Note that the shutdown could also delay the announcement of the cost-of-living adjustment (COLA), which is an annual increase in Social Security benefits to help recipients keep up with inflation.

The SSA announces the COLA raise every year when the US Labor Department releases the Consumer Price Index data for October, which is scheduled for 15th October this year. In case the shutdown continues till then, the announcement of the inflation print could be postponed, which could in turn delay the COLA announcement. This would make it difficult for millions of Americans to plan their finances and budgets for next year.