Social Security:  When Someone Dies

Speaking about our newly formed republic in 1789, Benjamin Franklin famously wrote that “In this world, nothing can be said to be certain, except death and taxes.”  Historically in the U. S., tariffs on imported goods started in 1789 and taxes on income were codified into law in 1913.  The 16th Amendment to the Constitution thus became the basis of the income tax system we know today. And, as we are obviously aware, death is a natural part of life. So now, nearly 240 years later, Franklin’s observation still holds true – everyone pays taxes and everyone will eventually die. But remember, the taxes we pay include FICA and SECA taxes,[1] which provide funding for our federal Social Security program.  So, what happens with Social Security when someone dies?

Who can get Survivor Benefits?

Social Security provides monthly benefits for eligible surviving spouses and eligible dependents of deceased individuals who qualified for Social Security. A surviving spouse can get up to 100% of their deceased spouse’s benefit amount, but there are specific rules for eligibility and payments, including age restrictions. Other surviving dependents (such as minor children or disabled adult children) can also receive SS benefits up to 75% of their deceased parent’s Social Security amount, again with certain eligibility and payment restrictions. When there are multiple dependents collecting benefits from the same deceased individual, there is also a “Family Maximum” which limits how much can be paid on a deceased person’s account. Thus, if a deceased person who qualified for Social Security dies, and that person has a surviving spouse and/or other dependents, the survivor(s) should consult with an expert in Social Security matters (such as the AMAC Foundation’s Social Security Advisory Service).

What about the Deceased Person’s monthly SS benefit?

Social Security must be notified whenever someone dies, because if the deceased person was collecting Social Security benefits, those benefits must immediately stop. In most cases, the funeral director who provides final arrangements is obligated to inform Social Security of the death, which will result in Social Security taking action to stop benefits. In any case, the surviving spouse or other survivor should notify the Social Security Administration of the death as soon as practical after the death, so as to avoid any overpayment of the deceased person’s SS benefits and, if eligible, apply for available survivor benefits.

A Common Misunderstanding

One common misunderstanding by survivors is that SS benefits for a deceased person are paid for the month of death. SS benefits are always paid “in arrears” (in the month following the month earned) and are only paid if the person lives the entire month. Thus, even if the deceased died in the last hours of the last day of the month, they would not be entitled for benefits for that month, because Social Security does not pay benefits for partial months. Any benefits received from SS during the month of death are usually a payment for the previous month (the month before the person died). 

The survivor should also be aware that the bank (or other financial institution) which normally receives the deceased person’s monthly Social Security payment is obligated, upon receiving notification of the death, to return all future monthly SS payments for the deceased to the Social Security Administration. This can, depending on timing, cause the bank to inadvertently return SS payments which the deceased’s estate is actually entitled to.  For instance, if the deceased normally received their monthly SS payment late in the month[2], yet the bank is notified earlier of the death, they may (as they are obligated to do) return a valid monthly benefit payment to the Social Security Administration. In cases like this, the survivor’s estate may request return of the benefit payment by submitting form SSA-1724 to their local Social Security Administration office.

The “One-time, Lump Sum Death benefit

Many survivors are not aware that they may also be entitled to a one-time, lump sum death benefit of $255. Although a death benefit was part of the 1935 Social Security Act, it was capped at $255 in 1954 and remains at that amount today. The death benefit is only available to a surviving spouse or dependent child if the deceased person was eligible for Social Security benefits. It must be applied for within two years of the deceased person’s death, and it cannot be applied for online (contact your local SS office or 1.800.772.1213 to apply).

Where to get help

Social Security is a complex topic. If you’re unsure about how these basics apply to you, or if you have any questions about your individual situation under Social Security or enrollment in Medicare, note that the AMAC Foundation provides a free-to-the-public advisory service to help Americans navigate the complexities of these programs. All questions are answered quickly, at no charge.  Learn more about it here…

[1] FICA is the Federal Insurance Contributions Act or “payroll tax;” SECA is the “Self-employment Contributions Act;” both of which provide funding for the Social Security and Medicare programs from work earnings.

[2] SS payment dates are determined by the person’s birthday.  Born before with the first 10 days of the month, the SS payment is made on the 2nd Wednesday; born between the 11th and 20th of the month, payment is made on the 3rd Wednesday of the month; born after the 20th, the SS benefit is paid on the 4th Wednesday of the month.