The Lump Sum Death Benefit--Should It Be Changed?
HRD-80-87: Published: Aug 8, 1980. Publicly Released: Aug 8, 1980.
- Full Report:
Social security has paid more than $6 billion in lump-sum death benefits since 1940, the first year payments were made. The original concept of lump-sum death benefits was to provide a return on the social security contributions of wage earners. However, the concept has been changed to include a modest payment toward the costs associated with death. Various proposals have been made to eliminate, or in some way alter, the current benefit. One proposal by the Department of Health and Human Services would significantly reduce the cost of the lump-sum death benefit payment; however, most individuals currently insured for this benefit would no longer be eligible. Another proposal by the Advisory Council on Social Security would almost double the current annual cost.
GAO assessed the impact of proposed changes and developed data for possible alternatives. In a review of a random sample of death benefit claims, GAO found that, in 86 percent of the cases, average benefits exceeded average employee contributions. In over three-fourths of the cases, benefits received were about 15 times more than contributions. The lump-sum death benefit, however, was the only benefit received on behalf of about 14 percent of deceased workers because the primary beneficiary died before receiving any social security benefits and had no eligible survivors at the time of death. In terms of the program's original objective, a return on the workers' contributions in the system, an overwhelming majority of the beneficiaries or their survivors receive average benefits well in excess of the average contribution.