Following the death of a worker beneficiary or other insured worker, Social Security makes a one-time payment of $255 to the surviving spouse or, if there is no This bill would increase the value of the Social Security lump-sum death benefit from $255 to $1,000.
Following the death of a worker beneficiary or other insured worker, Social Security makes a one-time payment of $255 to the surviving spouse or, if there is no spouse, to surviving dependent children. The death payment was capped at $255 in 1954, when few recipients received the entire amount. Since 1982, all payments have equaled $255, so the real (inflation-adjusted) value of the benefit now declines each year. This legislation seeks to increase the one-time payment to $1,000.
The current LSDB was introduced in 1940, with the intention that it would assist surviving family members when regular survivor benefits were not otherwise payable. The amount of the LSDB was defined as 6 times the Primary Insurance Amount (PIA), which is the monthly Social Security benefit amount for the worker at full retirement age. The average LSDB payment in 1940 was $145.79. In 1952, the maximum PIA payable under Social Security had reached the $85 level. Thus, 3 times the PIA for these maximum cases would yield a LSDB of $255. The statutory cap of $255 was introduced by law in 1954. In 1981 the OBRA act provided that the LSDB is 3 times the PIA, or $255, whichever is less.
In 1954, the average nominal benefit was $208, which would have been equivalent to $1,740 in 2012 dollars. The dollar cap of $255 on the lump-sum death benefit, as adjusted for inflation, would equal $2,260 in today’s dollars. According to the National Funeral Directors Association, the national median cost of a funeral for calendar year 2012 was $7,045. An increase in the dollar cap of $255 which was set over sixty years ago is long overdue.
Additionally, total spending on the benefit as a share of total Social Security benefits has declined even faster than the real value of the benefit, because monthly benefit payments are linked to national wage levels. In the 1960s, the lump-sum benefit accounted for more than 1% of Social Security benefit outlays, but that share has declined steadily, to only 0.03% in 2012. Under current law, the share will continue to decline as spending on the lump-sum death benefit remains generally constant but spending on other benefits continues to increase steadily.
Rep. Mimi Walters (R-CA) has introduced H.R. 1109, the ‘‘Social Security Lump-Sum Death Benefit Improvement and Modernization Act of 2015’’ to address this important problem. Key element of the legislation are as follows:
Increase the value of the LSDB, which has been capped for sixty years, from $255 to $1,000.
The National Funeral Directors Association strongly supports H.R. 1109, the ‘‘Social Security Lump-Sum Death Benefit Improvement and Modernization Act of 2015” and urges members of the House to support this important legislation and contact Rep. Walters office as soon as possible to cosponsor the bill.