Payments to the Recently Deceased

A June 28, 2013 Government Accountability Office (GAO) report entitled, “USDA Needs to Do More to Prevent Improper Payments to Deceased Individuals” bluntly lays out a pervasive problem that can be easily resolved. 

GAO detailed how the United States Department of Agriculture’s (USDA) Farm Service Agency (FSA) doles out tax dollars to farmers through various programs to help support their incomes and provide disaster assistance.  Since 2007, FSA has had a system in place to prevent improper payments from going to deceased farmers, matching Social Security numbers from deceased individuals with payments to program participants.  The FSA has identified a total of $3.3 million in improper payments to deceased individuals between 2007 and 2012.  To date, the agency has recovered only $1 million, or 30 percent of the $3.3 million.

Unlike FSA, the USDA’s Natural Resources Conservation Service (NRCS), which administers voluntary conservation programs, has no system in place to identify, let alone recover, similar improper payments.  GAO reviewed NRCS data “for fiscal year 2008 to April 2012 and estimates that NRCS made $10.6 million in payments on behalf of 1,103 deceased individuals 1 year or more after their death.”  Due to the NRCS’s nonexistent detection framework, this estimate may be too low.

Like NRCS, the USDA’s Risk Management Agency, which administers crop insurance programs, also does not have any procedures in place to prevent improper subsidies from being delivered to deceased individuals.  The GAO matched every policyholder’s Social Security number that received a crop insurance subsidy and found that from 2008 to April 2012, $22 million in subsidies and allowances may have been provided to an estimated 3,434 program participants two years after their deaths.

The tendency for the federal government to make improper payments to the deceased is not limited to the USDA.  According to a September 14, 2011 report by the inspector general (IG) for the Office of Personnel Management (OPM), the Civil Service Retirement and Disability Fund made more than $601 million in payments to dead federal retirees from 2007 through 2011.  Total annual payouts ranged between $100 million and $150 million, which prompted the IG to note, “When compared to other Federal benefits programs, the improper payment rate is arguably low.”  In response to this report, OPM created a task force on improper payments, which all government agencies should consider replicating.

In a June 2013 audit report, the Social Security IG revealed that the agency had also been making improper payments to dead people for months, and in some cases, years, after they died.  According to the report, “SSA paid 2,475 beneficiaries for months or even years after it received notification they were deceased.  SSA received death reports for these beneficiaries and recorded dates of death on the Numident [a database of the information contained in an application for a Social Security].  However, SSA did not record death information on the beneficiary’s payment record or terminate benefit payments.”

In response to the growing magnitude of this problem, Sens. Tom Carper (D-Del.) and Tom Coburn (R-Okla.) introduced S. 1360, the Improper Payments Agency Cooperation Enhancement Act of 2013, which would sharpen the government’s tools for curbing payments to deceased people.  By providing agencies and inspectors general with new methods to coordinate anti-waste and fraud efforts, the bill would save the government millions of dollars and continued ridicule.

At a time when lawmakers are continuing to complain about the effects of sequestration on federal agencies, making sure that tax dollars are being provided only to individuals with pulses would be a good way to reduce the deficit without cutting a single program or raising taxes.

– P.J. Austin