This week's syndicated column on Social Security from Tom Margenau is an open letter to President Trump which contains two ideas I strongly agree with: Increase Social Security's administrative funding and either eliminate or increase the lump sum death payment.
Margenau notes that 10,000 people a day are retiring and signing up for Social Security retirement benefits each day and many more are applying for other sorts of Social Security benefits. As he writes to President Trump "Let’s say your steak business was growing by 15,000 new customers every
day. Would you cut funding and staff to all your producers and
suppliers? I doubt it. I am pretty sure you would increase the
resources."
The lump sum death payment is only $255. That's ridiculous. It probably costs more to administer it than is actually paid out in benefits. Either increase it to something meaningful or eliminate it. There's no good reason for it to exist in its current form.
11 comments:
Does anybody actually ever apply for the lump sum death benefit? I've never personally heard of anyone actually doing so
in 2015, the Social Security Administration(SSA)paid $209 million in lump - sum benefits for 800,904 deaths.
Clearly you have no knowledge of SSA operations. Of course people apply for the LSDP. Everyday in every office across the country.
Lots of folks apply for it if they are going to be eligible for it. Spouses do when they apply for widows benefits if they aren't already on the spouses record and an automatic conversion. Disabled adult children file for it. I would say it is much more common than not. It's pretty unusual for someone to come in to file for a survivor benefit (say more than 2 years after a death) without a lump sum death payment application already on the record. In cases where no LSDP claim has been filed, it usually means that the person was not married or separated at the time of his/her death or the deceased is not insured. About 800,000 LSDP claims are paid yearly. https://fas.org/sgp/crs/misc/R43637.pdf
Speaking as a retired minister who still does funerals:
Funeral homes apply with family permission and usually get it.
The only virtue of the $255 benefit is that it causes a quick notification to the SSA that someone has died. This alone is worth it in stopping erroneous or fraudulent payments sooner.Funeral homes used to file for it to at least get some money to pay for funerals. But when the law changed and not everyone still qualified, many stopped doing that.
What most people don't know is that the benefit is actually three months of a monthly benefit due the deceased. The reason it is $255.00 is because the amount is capped at $75.00 per month, an earlier maximum benefit that was never raised.
Perhaps the easiest solution is to just remove that cap and award three months of benefits to a family after a person dies. Or, just set it at an amount, say $1,000 to be adjusted for cost of living in the future.
As it stands, for nearly all people who qualify, the amount is just not enough to matter.
Funeral directors apply for the death benefit. It serves the function that it informs SSA that learns someone is dead and stops benefits. Without it the number of cases of benefits being paid for years after death would increase.
Elimination of the LSDP is highly unlikely. Although the idea has merit, once a benefit is established, taking it away is near impossible. There will be gnashing and wailing about hurting the poor and vulnerable...
Funeral directors DO NOT apply for the lump sum. I wish people would quit telling that lie. Funeral home submit forms to indicate someone has passed away. If someone is receiving a spouse benefit and the primary number holder passes away, the death notification will almost always automatically convert the spouse to widows benefits and include a lump sum payment.
LSDP is not automatic. It is also a fact finding interview for the CR. Looking for Widow/widowers benefits, survivors benefits for children, any DAC or other benefits. It also helps SSA close.
It was NEVER designed to cover the cost of a funeral. That is the responsibility of the deceased or the family. The government doesn't have to pay for EVERYTHING. You don't want the $255, donate it.
OIG prosecutes many cases now in which the beneficiaries die and their checks are not stopped -- such as grandma buried in the backyard and granddaughter continues to get the check. Thousands of dollars are defrauded in each case. Surely reinstating the payment of the LSDP for every beneficiary (done for years until Congress restricted it to widows and survivors eligible on the record) would cost less than these huge losses. And every worker would know that something would be payable upon death.
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