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Home Publications Blogs Beat the Press Social Security Paid Out 0.006 Percent of Benefits to Dead People

Social Security Paid Out 0.006 Percent of Benefits to Dead People

Monday, 04 November 2013 07:33

That's what the headline of the front page Washington Post story might have read if the purpose was to inform readers. Instead the lengthy piece (which covers the whole back page) told readers that Social Security paid out $133 million in benefits to people who were dead over the last three years.

While it is useful to weed out such improper payments, this piece likely led many readers to wrongly conclude that such payments are a major cost to the program. They are not. Nothing about the finances of Social Security would be noticeably changed if the amount of such improper payments were immediately reduced to zero.

If the Washington Post followed the NYT's commitment to putting big numbers in context, it would have expressed $133 million as a share of the $2102 billion paid out in benefits over the relevant time frame. That way readers would realize that these mistakes have little impact on the program's financial condition.

Comments (21)Add Comment
written by Last Mover, November 04, 2013 7:10

I object your honor. My client has every right to avoid a liberal death panel under Obamacare and that includes being intentionally buried alive and kept alive in order to collect SS legitimately despite what the death certificate says.
Another way
written by rbitset, November 04, 2013 8:08
Rather than expressing this as part of the federal budget, how about expressing it as part of a family's budget. In this case, this would imply that a median income family wouldn't be able to find $3.22 at the end of the year.
written by Bloix, November 04, 2013 8:36
We are beginning see the direction of the Jeff Bezos Post.

The front page has two editorials today: one is "Corrupt stupid gov't pays dead people!" the other is "here's an anecdote about a person who will pay more under the ACA, who is representative of some small fraction of the small fraction of the public who buy insurance individually - we won't tell you how many people are in this boat, and although we might remember that the reason they're there had to do with efforts to compromise with Republicans, we're not going to tell you that - instead, we'll report this as a populist rising of anger instead of the Fox- and talk-radio-driven campaign that it really is."
pay outs to the dead
written by john murray mcintire, November 04, 2013 9:21
My mother died in the middle of a month. She received her full monthly security check in that month. A couple of weeks after she died, the Social Security admin sent me a bill for the balance. (I repaid) I assume such payments are part of the $133 million
Dear rbitset
written by papicek, November 04, 2013 9:28
It's not a percentage of the federal budget. It's not even a percentage of the money in the Social Security Trust Fund. 0.006% is the proportion of the paid out benefits for the relevant time period. In other words, it's a vanishingly small, utterly miniscule amount. The money quote:

it would have expressed $133 million as a share of the $2102 billion paid out in benefits over the relevant time frame

Gotta READ these things.
written by medgeek, November 04, 2013 10:05
I think you're right. We are watching the bezosization of the Post.
Equivalence in Potties
written by Bart, November 04, 2013 10:51

The figure could also be conveyed in a quiz, e.g., "How many bathrooms did $133M buy in our new Iraq embassy?"
written by John Glover, November 04, 2013 11:03
@Another Way

A better way of looking at it: Over that same period, we averaged 140 million tax returns filed each year. The $133 million averages out to about 30 cents per taxpayer per year.

@bloix: Bezos has nothing to do with this. The Post has always excelled at making mountains out of anthills.
3 days' grace
written by Cobbler, November 04, 2013 12:08
Here's another way to do the math.

The payments about to .06 % of all checks mailed. In other words, one in every 1700 checks goes to a dead person.

Let's say the average person retires at 65 and lives to be 80. They'll collect a total of 180 checks over 15 years.

Now the math: if the average person gets 180 checks, and one in every 1700 checks goes to a dead person, then one out of every ten dead people (180 divided by 1700, more or less) gets one extra check.

In other words, depending on what day of the month someone dies on, there's a 10% chance they'll get an extra check.

With a little bit more math, one might conclude that the government needs an average of three days (one tenth of a month) to figure out that you're dead.
Unclaimed benefits
written by jayackroyd, November 04, 2013 12:09
I wonder how the number compares to the amount of unclaimed death benefits.
written by Cobbler, November 04, 2013 12:15
Sorry, missed a zero. The payments are .006%, not .06%, of all checks mailed. So your odds of getting an extra monthly check are one in a hundred.
written by skeptonomist, November 04, 2013 1:43
The piece does not discuss what happens in the private sector when somebody dies - is that always handled perfectly? There are not so many "perpetual" benefits like SS or Medicare but there is still the possibility of relatives or others using payments or services intended for the dead. Everybody actually involved in this kind of tracking knows that there is an expense involved with keeping perfect records, and that should not exceed the cost of the errors. The government potentially has more centralized resources and could do this better than private industry with no duplication - in fact could do it as a public service. Whether it is actually done better is a valid question but that is not answered by the piece.
Efficiency of undertakers
written by Carol, November 04, 2013 2:58
I assume that the efficiency of undertakers notifying the Social Security Administration is a factor in overpayments. The ones who handled my husband's cremation had all of his information, and notified SocSecAdmin, and lo and behold, his payments were ceased forthwith. This is really a bubble in a bubblebath.
Admin costs and cost benefit analysis
written by Bruce Webb, November 04, 2013 3:06
The Social Security Adminsistration has consistently spent right under 1% of total benefits paid out for the cost of administration of combined OASDI (Old Age/Survivors and Disability Insurance). The cost for OAS in isolation has been steady at 0.6% of benefits. The cost for DI is signficantly more per recipient which is why the smaller program's costs bring the ocmbined program up by 50% from OAS considered alone. This is because of the significantly heavier paper work load in making qualifying decisions for DI, i.e. is the recipient really disabled as defined. The question for the WaPo is, or would be in a rational world, is how much boost in the current 0.6% of benefit administration cost in OAS should be tolerated in the cause of chasing down 0.006% of these overages (and that assuming that none of it is actually recovered in the normal process). Because if the resultant total is more than 0.6006% then we would be asking SSA to lose money in the process of cracking down on people who used a couple of weeks of Gramma's last check to cover funeral expenses not covered by the princely $270 or so 'Death Benefit'. This is particularly agregious since almost all recipients are required to have automatic deposit and so what you have in effect is banks depositing checks made out to dead people. With th subsequent obligation placed on estate administrators to determine what portion of that bank balance actually represented an overpayment.

Even having to spell it out like this is frankly absurd, because the 'answer' to this 'problem' is adding a whole bunch more bureaucrats whose job would be to descend like vultures on grieving families. Rather an odd stance to hold by those anti-government fanatics who loathe the IRS for doing much the same thing. Guess it is different when you can stick it to the old and particularly the poor olds. Got to stop the zombie gramma looters I guess.
Too early gang up on Bezos
written by RRaccoon, November 04, 2013 4:58
Dean's article and subsequent additions reinforcing the theme seem spot on to me.

Is it necessary to lash out at Bezos. I doubt the editorial board has changed much in personnel and or character since he took over. He's only been owner for a short while.

No reason to be a hater. He seems a practical and smart person and I would think he'd want to bring the post up to the standard that the times has just recently come to. Appeal to him no reason to knock him so soon especially when unsure of his influence as if yet.
written by Ron Alley, November 04, 2013 5:56
Does Social Security actually mail out checks? Or are we talking about direct deposits for the most part?

There are a number of Social Security recipients living in foreign countries. Their undertakers presumably do not notify the Social Security Administration of the death. I wonder how many of those Social Security payments went to foreign addresses anyhow. And that brings us to a larger question.

How did the Social Security Administration determine the amount paid to deceased beneficiaries anyhow? If the Social Security Administration is awaiting voluntary disclosure, that raises the question of whether payments are being made to deceased beneficiaries long after death. I doubt that the Social Security Administration has a builtin method of determining whether a beneficiary actually is alive.
Summa Cum Laude
written by John Parks, November 04, 2013 6:15
No matter how you calculate it, 99.99+ efficiency is pretty damn good!
written by watermelonpunch, November 04, 2013 9:25
written by Ron Alley, November 04, 2013 6:56
Does Social Security actually mail out checks? Or are we talking about direct deposits for the most part?
If the Social Security Administration is awaiting voluntary disclosure, that raises the question of whether payments are being made to deceased beneficiaries long after death. I doubt that the Social Security Administration has a builtin method of determining whether a beneficiary actually is alive.

There's a lawful procedure for this.

I know that undertakers would generally report it.

If there are any relatives (or others) interested in the person's belongings, they would have to report it to get anywhere in the process of settling the affairs of the deceased.
And they would be required, I think, to report to Social Security.

If there are no living relatives, and nobody who has any claim to the person, their belongings, and nobody to arrange for handling of the corpse, I believe the state takes over the situation, and arranges for some manner of appropriate settlement of affairs for the body & belongings.
One imagines the state would surely notify Social Security in this case.

If the matter concerns improper disposal of a corpse, so that someone goes missing, and someone, anyone misses them, and reports them missing - I'm assuming part of the police process in dealing with a missing person, would be to check to see if they're collecting their SS payments!

Sounds like your worries are about people illegally disposing of corpses of people with no family, friends, or neighbors who would miss them, & raiding a dead person's bank account, or forging their signatures on the checks.
That's definitely happened for periods of time, because I've heard about that on some of those tawdry true crime tv shows.
But usually involves someone who actually murdered someone with few social ties, or hides their death, and then secretly & illegally disposes of the corpse.
They generally get charged with all sorts of fraud, check fraud, impersonation, improper disposal of a corpse, and who knows what else.
How common do you think that really is?

And is it Social Security's responsibility to deal with that kind of thing, or the responsibility of law enforcement? I think that's a matter for law enforcement. And not something that Social Security really can control.

I don't see it as cost-effective to make a special missing person's division of law enforcement type agents within the Social Security administration, to keep tabs on every elderly SS recipient on a regular basis, to see if they're dead yet.

As for when someone dies overseas... They're not off in some jungle somewhere if they're getting their social security checks. One would imagine that whatever local governments have agreed upon procedures regarding dead foreign ex-pats.
more fifth grade arithmetic
written by Michael, November 04, 2013 9:27
Let's see: The SSA gives $1230 as the average monthly benefit. So $133 million over 3 years works out to: (133e6)/(1.23e3 x 36) = 3003 of these payments per month. My back of the envelope estimate is that maybe 250,000 people die each month who are collecting Social Security. (I cut back a moderate amount from 310 million / (12 x 70) ). Now 3003/250,000 is approximately 1/83. This would indicate that the Social Security Administration is cutting people off, less than 9 hours after they die. I think I can handle that.

Kudos to Dr. Baker for teaching us all the power of 5th grade arithmetic!
Another suggestion for context
written by Kat, November 05, 2013 8:27
Say a company such as Johnson and Johnson has been actively promoting off label use of drugs and they receive a fine for this behavior. Say the fine is oh, 2.2 billion dollars. It might be helpful to express this number as percentage of sales of drugs. And then you might add how much Medicare or Medicaid was billed for these drugs. This might give you a better idea of the scope of the fraud and if the fine will serve the purpose of preventing off label marketing in the future.
The 133,000,000 was for three years, not one
written by Bill Skillern, November 05, 2013 12:09
So this is even more infintesimal of a non-issue

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.