SSA may have overpaid millions in death benefits

The Social Security Administration should automate the process of withholding lump-sum death payments to the families of deceased beneficiaries to reduce any existing overpayment of monthly benefits. Social Security's disparate systems and manual intervention result in an unknown amount of overpayment, the Social Security Administration Office of Inspector General said in a recent report.

Although Social Security has the opportunity to reduce existing overpayments by not paying the $255 lump sum death benefit, it has not routinely done so, the report said.

A lag time often occurs between the death of a beneficiary and when the state informs Social Security, which provides monthly benefits to retirees. Withholding lump sum death benefits to recover the overpayment of monthly benefits will help in reducing the agency's improper payments.

Social Security generally pays the lump sum through its Modernized Claims System. However, employees manually reconcile recoverable benefits paid to a recently deceased beneficiary in a separate system because the claims system does not recognize an overpayment. And if employees directly key in death information through the Post-entitlement Online System, the Title II Processing System pays the lump sum. But the Title II system does not talk with the Modernized Claims System or the manual system for beneficiary record updates.

In a review of 250 cases from a data extract of 3,464 number holders, the inspector general found Social Security incorrectly overpaid 73 percent of those beneficiaries by $570,597.

Program service personnel told the IG that these processes had been in place for many years.

'As such, we believe SSA lost the opportunity to reduce/recover millions of dollars in overpayments,' said IG Patrick O'Carroll Jr.

Social Security said that it improved the claims system earlier this year to produce a payment exception when it detects an overpayment in the specific data field, said Larry Dye, the agency's chief of staff, in a written response to the IG's report. In November, that agency will expand the system's ability to produce a payment exception.

'We believe it is technologically feasible to either fully automate overpayment offset with LSDP, or we can produce an online or batch exception to prevent payment release,' Dye said in the response earlier this month.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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