Plan To Add $9,000 Covid Funeral Expense Benefit Administered By FEMA

      The Biden Administration plans to have the Federal Emergency Management Agency cut $9,000 checks to the survivors of Covid-19 deaths to pay funeral expenses. That's nice but I have a better idea. Why don't we do something about Social Security's absurdly low $255 death benefit? It's so low it probably costs more to administer than is paid in benefits. Covid survivors aren't the only ones facing difficulties paying funeral expenses. It's a common problem.

     Let me make it clear to any unsophisticated reader of this blog that it isn't the Social Security Administration's choice to pay only a $255 death benefit. That was passed by Congress many, many years ago and the agency has no authority to deviate from it. The $255 payments were inadequate at the time Congress added the benefit to Social Security and they were never indexed for inflation.

Time To Raise The LSDB?

     David Weaver argues in The Hill that the Covid-19 pandemic is good reason to update Social Security’s Lump Sum Death Benefit (LSDB). Weaver thinks it should be increased from the absurdly low amount that is now paid, $255, to something that comes closer to the costs of a funeral, $2,500 and that it should be available not only to surviving spouses, as it mostly is now, but to any survivor handling the disposition of the earthly remains. I don’t think he goes far enough. I think the LSDB should be raised to $5,000 or even $10,000. There’s little point in the current LSDB. It probably costs more to administer than is paid out as benefits.

Two Good Ideas

     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.

They've Got Opinions And Some Facts

     Here's a roundup of today's columnist pieces on Social Security:

• Michael Hiltzik on the lack of a confirmed Commissioner of Social Security
• Tom Margenau on the Lump Sum Death Payment (LSDP)
• Laurence Kotlikoff and Robert Pozen on how the retirement earnings test for those between age 62 and full retirement age discourages people from working

Government Shutdown Averted -- At What Cost For Social Security?

A we all know by now, a government shutdown was averted at the last minute. The cost was agreement to massive cuts in appropriations for government operations. Probably, we will not know until early next week what the cost will be for the Social Security Administration. Let us hope that cost will be minor.

I would suggest that eliminating lump sum death benefits would save money. The minuscule $255 payment is not worth administering. If that is not enough, eliminate parents benefits, the benefits that go to the dependant parents of decedents and Social Security recipients and make the change prospective. It is such an obscure benefit that eliminating it would cause little damage to the social safety net. Supplemental Security Income would always be available. Do people who qualify for parents benefits really deserve anything more than SSI?

Raise The Death Benefit?

From The Sun of San Bernardino, CA:

Americans who lose a spouse would get more money from Social Security under a bill introduced by Rep. Joe Baca, but critics worry the plan would put more pressure on an entitlement system already on the verge of going broke.

When a Social Security recipient dies, their surviving spouse receives a one-time payment of $255, but they miss out on their spouse's regular Social Security check for that month.

Baca, D-San Bernardino, wants to change that, giving surviving spouses a larger "death payment" and a check for the deceased's final days. ...

Baca's bill - called the Benefit Adjustment of Social Security Income Compensation, or BASIC - calls for increasing the size of the death payment from $255 to 47 percent of the deceased person's typical monthly Social Security income, with $255 as the minimum payment.

The bill also calls for paying Social Security benefits for each day - not just each whole month - a recipient lives. At present, Baca's office said, the spouse of a Social Security beneficiary who dies May 15 will not receive their spouse's check for May. Baca's plan would send a check for half the month, on top of the death payment.

I have no idea whether this has a chance but we ought to do something about the death benefit -- either abolish it or make it more meaningful. At the moment, it probably costs about as much to administer it as it does to actually pay the benefits. My opinion is that if we are going to have a death benefit that it ought to be several times the Primary Insurance Amount (PIA), that is the monthly amount paid to the primary beneficiary on an account.