Social Security: Incapacity and Death

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Millions of Americans receive some form of Social Security benefits, such as retirement benefits, Social Security Disability Insurance (SSDI), or Supplemental Security Income (SSI). But what happens to the monthly payments if a beneficiary becomes incapacitated or dies?

Incapacity:

In some instances, a person receiving Social Security benefits becomes unable to manage his or her own finances. The Social Security Administration (SSA) will appoint a representative payee to receive benefits on behalf of the beneficiary and manage them accordingly. Representative payees can be individuals or organizations, but SSA generally looks for family or friends to serve in that capacity, since such people are likely to see the beneficiary often, to know what the beneficiary needs, and to want to help the beneficiary.

A representative payee’s main duties are to use monthly payments for the beneficiary’s current or future needs and properly save any excess. Current and future needs include food, clothing, shelter, medical care, dental care, utilities, and personal comfort items. The representative payee must keep track of all expenses and, when asked, must provide an accounting of how he/she saved what remained after expenses were paid.

In order to become a representative payee, the individual must apply for and be approved by SSA for the role. Being a beneficiary’s authorized representative, power-of-attorney, or joint account holder does not make someone a representative payee. To apply, contact your local SSA office, produce documents to prove your identity, and complete form SSA-11.

SSA offers the option to designate up to three people who could serve as your representative payee if the need arises in the future. If you have a representative payee, you must notify him or her if you move, get money from another source, get married, are admitted to a hospital, or go to jail, among other things.

Death:

Benefits cannot be received for the month of death. Since payments are made on a one-month delay (the funds you receive in May are April’s benefits payment, for example), the money received in the month following the death of a beneficiary must be returned. Social Security requires that the person live an entire month in order to receive benefits for that month; therefore, if a beneficiary died on April 15, he/she did not live the entire month of April, and the funds received in May (April’s payment) must be returned.

Most funeral homes notify Social Security on the deceased’s behalf as part of the end-of-life services that they provide. But you should contact the financial institution where the deceased’s benefits are deposited as soon as possible so that they can initiate the return. You can also contact Social Security at 1.800.772.1213 (TTY: 1.800.325.0778) or make an appointment at your local Social Security office. Following SSA’s notification of death, the bank account must remain open for at least forty-five days.

If you are the widow/widower who was living with the deceased at the time of death, you will receive a one-time, lump-sum death payment of $255; this payment will be made to a child who was eligible for benefits on the deceased’s record during the month of death if there is no surviving spouse.

In the event that a claimant died while his/her disability claim was pending, it may be possible for a family member to continue the claim and receive any benefits that he/she was owed. SSA may decide after death that the claimant was eligible and, thus, entitled to an “underpayment.” Underpayments may be collected by a surviving spouse, surviving child, or surviving parents, depending on the circumstances.

Additionally, a new disability claim can be filed within three months of a potential beneficiary’s death.