Social Security Paid 740 Dead People At Least $17.1 Million

OIG: ‘These results are likely understated’

March 13, 2015

The Social Security Administration (SSA) paid at least 740 dead people $17.1 million in benefits, according to an audit by the Office of Inspector General (OIG).

The audit, released Wednesday, found that the federal agency did not try to recover direct deposit payments that went into deceased persons’ bank accounts, and that the number of benefit payments to the dead is likely much higher.

The OIG based its results on the bank records of 58 deceased individuals, finding that the SSA had put $1,111,000 into their accounts. The agency only was able to recover $35,000 and "did not attempt to recover payments from the other beneficiaries." Family members or others can withdraw the funds if they have access to the dead individual’s account.

Expanding their results to the entire beneficiary population, the OIG determined that a low estimate for improper direct deposit payments to dead people amounts to $17,103,880.

"We estimate SSA improperly paid 740 beneficiaries about $17 million after their deaths," the audit said. "SSA would likely not recover these funds because of the delay in developing these cases."

The OIG said "these results are likely understated."

"We estimate there is at least $17,103,880 in outstanding payments deposited into bank accounts of beneficiaries in suspense status after the death of the beneficiary," they said. "However, we believe the actual figure is likely higher because we limited our review to individuals in suspense for fewer than 7 years, residing in the United States, and those with higher monthly benefit amounts."

Of the OIG’s sample, the SSA only terminated benefits for six individuals, leaving the "remaining 52 in a suspended payment status."

"When benefits are suspended instead of terminated, SSA cannot reclaim payments through the reclamation process," the OIG said.

The problem of issuing benefit payments to the dead is not new. The OIG referenced a 2004 audit that found the agency gave more than $1 million to 15 deceased individuals, and a recent discovery that the SSA deposited $2.7 million into bank accounts for 28 beneficiaries they were "unable to locate."

In addition, the SSA gave $3 million to dead Californians last year. Another audit released this week found that the agency has active social security numbers for 6.5 million 112-year-olds—even though there are only 35 alive in the world—leading to instances of improper payments and fraud.

The OIG faulted the agency for its inability to terminate payments in a timely manner after a person dies.

"SSA did not have effective controls to terminate records of deceased beneficiaries and recover direct deposit payments made after the beneficiaries’ deaths," they said. "Specifically, SSA’s policy did not instruct its staff to use all available information, such as reports of death on the Numident and all information available from FIs [financial institutions]."

"In addition, SSA staff did not always develop cases according to SSA’s policies to determine the beneficiaries’ status," the OIG said. "Lastly, we found that SSA did not terminate all the beneficiaries it could have based on its presumption of death policy."

The audit was conducted between November 2013 and January 2015. From a pool of 1,280 beneficiaries whose benefits were suspended, the OIG identified 75 that were in "death development suspension." The OIG then subpoenaed their bank records, leaving a sample of 59. They determined 58 had died.