Social Security: The Lump-Sum Death Benefit
Updated October 9, 2024
Congressional Research Service
https://crsreports.congress.gov
R43637
Congressional Research Service
https://crsreports.congress.gov
R43637
Social Security: The Lump-Sum Death Benefit
Congressional Research Service
When a Social Security–insured worker dies, the surviving spouse who was living with the deceased is entitled to a one-time lump-sum death benefit of $255. If they were living apart, the surviving spouse can still receive the lump sum under certain conditions. If there is no such spouse, the payment can be made to a child who meets certain requirements. In the majority of deaths, however, no payment is made.
The lump-sum death benefit was once an important part of Social Security benefits to survivors. Between 1937 and 1939, the lump sum was the only benefit available to survivors of insured workers who died before 65 years old, and before 1952, the $255 amount was greater than three times the maximum monthly benefits payable under Social Security. However, because the lump- sum death benefit has been capped at $255 for the past eight decades, inflation has eroded its value. At the same time, the real value of other Social Security benefits has increased. The total payment of lump-sum death benefits in 2023 was about $215 million, approximately 0.02% of total Social Security (Old-Age, Survivors, and Disability Insurance) benefit payments.
The lump-sum death benefit’s eroding value has brought about various proposals to change it. S. 5178 would increase the lump-sum death benefit from $255 to $2,900 for deaths in 2025, and the new amount would then be indexed by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for deaths after 2025. Several presidential budget proposals have also proposed changes, ranging from eliminating the provision to changing eligibility rules. None of these proposals has been enacted into law.
Social Security: The Lump-Sum Death Benefit
Congressional Research Service
Introduction ..................................................................................................................................... 1 History of the Lump-Sum Death Benefit ........................................................................................ 1 Current Eligibility Rules.................................................................................................................. 2 Number of Benefit Payments and Total Spending .......................................................................... 2 Proposals to Change or Eliminate the Lump-Sum Death Benefit ................................................... 4
Figure 1. The Lump-Sum Death Benefit (1940-2023) .................................................................... 4
Author Information .......................................................................................................................... 5
Acknowledgments ........................................................................................................................... 5
Social Security: The Lump-Sum Death Benefit
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Following the death of a worker beneficiary or other insured worker,1 Social Security makes a lump-sum death benefit payment of $255 to the eligible surviving spouse or, if there is no spouse, to eligible surviving dependent children.2 In 2023, such payments were made for about 841,961 deaths, for a total of about $215 million in benefit payments.3 The death payment was capped at $255 in 1954, and since 1982, almost all payments have equaled $255, so the real (inflation- adjusted) value of the benefit now declines each year.
Monthly survivors benefits were not included in the original Social Security Act of 1935 (P.L. 74- 271), but the program did include a lump-sum benefit that would be paid if a worker died before the retirement age of 65.4 That provision provided some benefits to families who otherwise would have paid Social Security taxes but received no benefits. The benefit equaled 3.5% of the worker’s covered earnings—those earnings that were subject to the Social Security payroll tax. Those payments were made from 1937 through 1939.
When monthly survivors benefits were added to the program in 1939 via the Social Security Amendments of 1939 (P.L. 76-379), a limited version of the lump-sum death benefit was retained. It was paid only when no survivors benefits were paid on the basis of the deceased worker’s earnings record. When made, the payment equaled six times the primary insurance amount (PIA).5 The payment was made to a family member or to an individual who helped pay for the funeral.
The Social Security Act Amendments of 1950 (P.L. 81-734) expanded eligibility for the payment to include cases where survivors benefits were also paid “so that survivors benefits need not be diverted for payment of burial expenses of an insured worker.”6 The benefit was therefore paid in nearly every death of a Social Security–insured worker. The 1950 legislation also sharply increased the PIA (and therefore increased regular monthly benefit levels). To maintain the lump- sum benefit at its pre-1950 level, the formula was changed to equal three times the PIA, rather than six times.
1 An insured worker is one who has worked enough in employment subject to Social Security payroll taxes to qualify for benefits.
2 The surviving spouse and dependent children may be eligible for survivors benefits, as well; for more on survivors benefits, see CRS Report RS22294, Social Security Survivors Benefits.
3 Social Security Administration (SSA), Annual Statistical Supplement, 2024 (in progress), Table 4.A5 and Table 6.D9. Statistics reported in the two tables (Table 4.A5 and Table 6.D9) may slightly differ due to differences in data sources and calculation methods.
4 For more details, see Larry DeWitt, The History & Development of the Lump Sum Death Benefit, Social Security Administration, Historian’s Office, Research Note #2, June 1996, updated September 7, 2006, http://www.ssa.gov/ history/lumpsum.html.
5 The primary insurance amount (PIA) is the benefit a person would receive if he or she elects to begin receiving retirement benefits at full retirement age. The PIA is a calculated based on lifetime covered (Social Security payroll taxed) earnings. For a background on Social Security benefit computation, see CRS Report R42035, Social Security Primer.
6 U.S. Congress, House Committee of Conference, Social Security Amendments of 1950, committee print, 81st Cong., 2nd sess., August 1, 1950, H.Rept. 2771, p. 107, http://ssa.gov/history/pdf/Downey%20PDFs/ Social%20Security%20Amendments%20of%201950%20Vol%203.pdf.
Social Security: The Lump-Sum Death Benefit
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The Social Security Amendments of 1954 (P.L. 83-761) kept the formula of three times the PIA but capped the benefit at $255, which was approximately three times the maximum PIA payable under Social Security in 1952. By 1974, the minimum PIA had reached $85, or one-third of the $255 cap, so the lowest possible lump-sum benefit also reached $255. As a result, the lump-sum death payment has been unindexed since 1973, 7 and nearly all lump-sum benefits have been $255 since (because some payments are based on PIAs from earlier years, some payments were slightly lower). In 1974, the average payment per worker was $254.64, and payments have averaged $255 since 1982.8 Currently, the payment may be lower if the deceased was covered by a foreign system with which the United States has an agreement to integrate benefits, known as a totalization agreement.9
Finally, in 1981, the Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35) restricted eligibility for the lump-sum payment to limited categories of survivors.10 That change reduced the number of payments made by nearly half, from 1.57 million in 1980 to about 808,000 in 1982.
If a surviving spouse is living with the worker at the time of death, the benefit is paid to the spouse. If the worker and the spouse were living apart, the spouse can still receive the lump-sum death payment if the spouse was already receiving benefits based on the worker’s record or became eligible for survivors benefits upon the worker’s death. If there is no eligible spouse, the benefit is paid to a child (or children) who is receiving or is eligible to receive monthly benefits on the worker’s record.11 If there are multiple eligible children, the benefit is split evenly among them. When there are no eligible survivors, no death benefit is paid.
In 2023, the Social Security Administration (SSA) paid about $215 million in lump-sum benefits for 841,961deaths.12 Because the $255 payment was split between multiple recipients in some cases, the agency made a total of 875,279 payments. The number of payments has generally remained at about the same level since 1982, the year after the eligibility rule change of the lump- sum death benefit; thus total spending remained at approximately the same dollar level.13
7 Social Security Administration (SSA), Social Security Trustee Report, 2018, available at https://www.ssa.gov/OACT/ TR/2018/tr2018.pdf.
8 SSA, Annual Statistical Supplement, 2021, Table 6.D9, https://www.ssa.gov/policy/docs/statcomps/supplement/2021/ supplement21.pdf.
9 SSA, Program Operations Manual System, GN 01701.220: Lump-Sum Death Payment (LSDP) in Totalization Claims, https://secure.ssa.gov/apps10/poms.nsf/lnx/0201701220.
10 Before 1981, if no spouse or child of the deceased worker was eligible to receive the lump-sum death benefit, a funeral home or other party who was responsible for the funeral expenses could sometimes claim the benefit. After the 1981 changes, the only people eligible for the lump sum are a spouse who was living with the worker at the time of his death or a spouse or child who is receiving monthly benefits on the worker’s record.
11 To receive benefits, the child must be a dependent of the worker, unmarried, and (1) younger than 18 years old or a full-time elementary or secondary school student and had not attained the age of 19 or (2) under a disability that began before the age of 22.
12 SSA, Annual Statistical Supplement, 2024 (in progress), Tables 4.A5 and 6.D9.
13 The number of death payments was 877,943 in 2020; 923,462 in 2021; and 895,624 in 2022. These relatively larger numbers over the period of 2020-2022 were likely attributable to the COVID-19 pandemic and related deaths. See Sherry L. Murphy et al., Mortality in the United States, 2020, National Center for Health Statistics, December 2021, (continued...)
Social Security: The Lump-Sum Death Benefit
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For most deaths, no lump-sum death benefit is paid. In 2023, fewer than 38% of the deaths among insured workers resulted in lump-sum death benefit payments.14 One possible reason is that, for many deaths, there was no eligible family member to receive the death payment.
The lump-sum death benefit’s real value has declined significantly since it was introduced. For example, in 1954, the average lump-sum nominal death benefit per worker was $208, which would have been equivalent to more than $2,299 in 2023 dollars.15 In recent decades, inflation has caused the real value of the $255 payment to continue to decline, as shown in Figure 1.
Total spending on the lump-sum death benefit as a share of total Social Security benefit payments has generally been declining over the years since 1937 (see Figure 1). In the 1960s, the lump- sum death benefit accounted for more than 1% of Social Security benefit outlays, but that share declined to about 0.38% in 1980. In 1981, the Omnibus Budget Reconciliation Act (P.L. 97-35), which restricted eligibility for the lump-sum payment to limited categories of survivors, decreased the total lump-sum death benefit by nearly half from $394 million in 1980 to $203 million in 1982. Consequently, the lump-sum death benefit’s share of total Social Security benefits further dropped to 0.15% in 1982. Since then, the share has declined steadily and reached about 0.02% in 2023.16 Under current law, except for the period of the pandemic, the share will likely continue to decrease as payments on the lump-sum death benefit remain relatively stable and payments on other benefits continue to increase steadily.17 The lump-sum death benefit’s share of total Social Security benefits (indexed to wages) has declined faster than the lump sum’s real value (indexed to prices), mainly because Social Security benefits are linked to national wage levels, which are increasing faster than price levels.
https://www.cdc.gov/nchs/data/databriefs/db427.pdf; Jiaquan Xu et al., Mortality in the United States, 2021, National Center for Health Statistics, December 2022, https://www.cdc.gov/nchs/data/databriefs/db456.pdf; Kenneth D. Kochanek et al., Mortality in the United States, 2022, National Center for Health Statistics, March 2024, https://www.cdc.gov/nchs/data/databriefs/db492.pdf.
14 In 2023, about 2.0 million retired worker beneficiaries and 230,502 disabled worker beneficiaries died (see SSA, Annual Statistical Supplement, 2024 [in progress], Table 6.F2). In comparison, there were 875,279 lump-sum death payments tied to approximately 841,961 deaths. This means that about 38% of beneficiary deaths resulted in a lump- sum death payment (841,961 / (1,966,495 + 230,502) = 38.3%). This estimate does not include deaths of insured workers who are not currently beneficiaries (data for deaths of insured workers are not readily available). Including deaths of insured workers in the estimate could result in a percentage of deaths that lead to a lump-sum death payment that is lower than 38%.
15 Real value of the average benefit is calculated using Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
16 The payments for lump-sum death benefits and Social Security benefits both increased from 2019 to 2021, and the lump-sum death benefit as a share of total Social Security benefits slightly increased from 0.0228% to 0.0239%. See SSA, Annual Statistical Supplement 2024 (in progress), Tables 4.A5.
17 In the 2024 Social Security trustees report, the historical and projected death rates in 2020-2024 are relatively higher than those in 2010-2019 to account for the effects of the COVID-19 pandemic compared to what would have been projected in the absence of the pandemic. After 2024, death rates are assumed to return to levels estimated pre- pandemic. For more information, see 2024 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, May 7, 2024, https://www.ssa.gov/OACT/TR/ 2024/tr2024.pdf.
Social Security: The Lump-Sum Death Benefit
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Figure 1. The Lump-Sum Death Benefit (1940-2023)
Source: CRS, based on Social Security Administration, Annual Statistical Supplement 2024 (in progress), Tables 6.D9 and 4.A5. Notes: Real value of the average death benefit is shown in 2023 dollars, based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Over the years, various proposals would have changed or eliminated the death benefit. In 1979, President Carter’s budget described it as “largely an anachronism” and proposed replacing it with a similar benefit that would be paid only if the deceased or the surviving spouse were eligible for Supplemental Security Income, a program that provides cash benefits to aged, blind, or disabled persons with limited income and assets.18 Under that proposal, about 30,000 recipients would have received a benefit each year.19
The 1979 Advisory Council on Social Security recommended that the benefit be increased to three times the PIA, but no more than $500. A significant minority of the council favored the Carter proposal of targeting the benefit to those with the greatest need, but with a higher benefit of perhaps $625. The council found that the benefit “provides valuable assistance at a time of special financial need. The monthly survivors benefits under Social Security are designed to meet regular recurring costs, whereas the lump-sum death payment is designed to meet the expenses of a final illness and funeral.”20 In 2023, the median cost of an adult funeral with viewing and burial was $8,300,21 and the lump-sum death benefit was fixed at $255 per worker. Although the benefit
18 For more information on Supplemental Security Income, see CRS In Focus IF10482, Supplemental Security Income (SSI).
19 Government Accountability Office (formerly General Accounting Office), The Lump Sum Death Benefit—Should It Be Changed?, HRD-80-87, August 8, 1980, p. 5, http://www.gao.gov/assets/140/130061.pdf.
20 1979 Advisory Panel on Social Security, Social Security Financing and Benefits, December 1979, pp. 173-175.
21 National Funeral Directors Association, “Statistics,” 2023, http://www.nfda.org/news/statistics.
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was once linked to burial expenses and is sometimes still referred to as a “burial benefit,” it no longer has any legal connection with funeral expenses.22
President George W. Bush’s FY2007 budget proposed eliminating the benefit, arguing that it “no longer provides meaningful monetary benefit for survivors” and that it results in high administrative costs.23 The $15 million estimated annual administrative cost at the time was about 7% of lump-sum death benefit outlays.24 Administrative costs for the entire Social Security program are less than 1% of benefit outlays.
Some proposals would increase the benefit. For example, in the 118th Congress, S. 517825 proposes increasing the lump-sum death benefit from $255 to $2,900 for deaths in 2025, and the new amount would then be indexed by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for deaths after 2025. SSA’s Office of the Chief Actuary estimated that the increased death benefit would cost $39.8 billion over the period 2024-2033.26 Another example was H.R. 5302 and S. 1739 (BASIC Act) in the 115th Congress that proposed increasing the lump-sum death benefit to 50% of the worker’s PIA. As of September 2024, none of these proposals has been enacted into law.
Zhe Li Analyst in Social Policy
The original report was written by former CRS analyst Noah Meyerson.
22 Larry DeWitt, The History & Development of the Lump Sum Death Benefit, Social Security Administration, Historian’s Office, Research Note #2, June 1996, updated September 7, 2006, http://www.ssa.gov/history/ lumpsum.html.
23 Office of Management and Budget, Budget of the United States Government, Fiscal Year 2007, February 2006, p. 290, http://www.gpo.gov/fdsys/pkg/BUDGET-2007-BUD/pdf/BUDGET-2007-BUD-29.pdf.
24 SSA estimated in 2016 that the lump-sum death benefit’s annual administrative costs were about $10 million, which was about 5% of death benefit outlays in that year. See SSA, Office of the Inspector General, Informational Report: Lump-sum Death Benefit, July 2016, https://oig.ssa.gov/sites/default/files/audit/full/pdf/A-08-16-50108.pdf; and SSA, Annual Statistical Supplement 2024 (in progress), Tables 4.A5.
25 The bill may be cited as the “Social Security Survivor Benefits Equity Act.”
26 Stephen C. Goss, Chief Actuary, SSA, letter to the Honorable Peter Welch, U.S. Senate, September 25, 2024, https://www.ssa.gov/OACT/solvency/PWelch_20240925.pdf.
Social Security: The Lump-Sum Death Benefit
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