Sifting Through the Walking Dead in Federal Benefit Programs

July 31, 2014 Steve Herndon

AMC’s The Walking Dead and federal agencies like the Social Security Administration don’t often come up in the same conversation. One is a post-apocalyptic drama television series, and the other administers benefit payments to Americans who meet certain qualifications. However, while the survivors in AMC’s hit series are victimized by zombies, the United States government has opened itself up to a different breed of “Walking Dead” – people who have died, but are still sent benefit checks because of discrepancies in the federal records.

In an ideal world, every government payment delivered would be received by the rightful, legitimate recipient. Rather, according to the Washington Post, since 2008 more than $700 million in federal agency payments to the deceased have been improperly accepted. Agencies make these payments because while people have died, federal records do not reflect the death. For example, in the past several years, Social Security has paid $133 million to beneficiaries who had passed away, while each month an additional 750 people are falsely recorded as deceased in the Death Master File and cannot receive the benefits they are due.

While wrongful distribution of government payments originates from many different agencies, it is Social Security who is in charge of maintaining the Death Master File. This file tracks information about Americans who had Social Security numbers and whose deaths were reported to Social Security. This comprehensive file contains over 85 million death records reported to Social Security, from 1936 to the present day.

The vast majority of death notifications is reported to Social Security by relatives, friends, hospitals and funeral homes, while the remainder comes from state and other federal agencies. The primary reasons why notification of death is missing or erroneous are delays in reporting, clerical errors and willful fraud.  Social Security is working on a pilot program to develop an Electronic Death Registration System which would allow states to submit death reports electronically – improving the timeliness of death reporting.

There also is an opportunity for identity theft as much of the information in the Death Master File is available for purchase from the Department of Commerce.  For example, unscrupulous individuals have mined the Death Master File for new entries, filed large numbers of fraudulent tax returns, and collected the refunds.

In response, USA Today reveals that Congress has voted to restrict public access to the Death Master File, and Congressional Budget Office estimates show that this could save the government up to $800 million over the next 10 years.  But this does not fully solve the problem.  Until the Department of Commerce establishes a system of certification for the right to access, the system still leaves openings for fraudulent use of Social Security numbers.

This issuing of improper payments is a long-standing and ongoing issue across numerous federal government programs, including the earned income tax credit, which provided $14.5 billion in improper payments in 2013. According to the House Oversight government operations subcommittee, an estimated $106 billion in federal government payments were made in error last year, yet the issue is not without solutions.

There should be a concerted, legislated effort to establish clear rules – with penalties for non-performance – for a centralized, standard death reporting process. This includes a designated entity who will perform said process with time to report requirements, coinciding with the issuance of the death certificate. If reporting is not adhered to, strict penalties should be enforced.

Many of these fraudulent and wasteful payments are benefits provided by our government or subsidies funded by taxpayer dollars.  Reporting that is not adhered to, regardless of intent, translates into billions of wasted taxpayer dollars.  Although steps have been taken, it will take a coordinated, concerted effort from government agencies to rid the world of these walking dead.

About the Author

Managing Director for Financial Services, Federal Government Solutions

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