Proposal to Raise the $255 Death Benefit to $2900

September 25, 2024

The Office of the Chief Actuary of the Social Security Administration has issued an analysis in response to a request from Senator Peter Welch regarding the financial impact of the proposed "Social Security Survivor Benefits Equity Act," introduced on September 25, 2024. The bill seeks to increase the one-time lump-sum death benefit from its current level of $255 to $2,900 for deaths occurring in 2025, with future payments indexed to inflation.

The current lump-sum payment of $255 has remained unchanged since 1954, and only about 57% of eligible survivors receive this benefit. The proposed increase to $2,900 is expected to result in more recipients applying for the payment, with an estimated 90% of eligible cases receiving the benefit from 2025 onward. The provision would increase the overall cost of the Old-Age, Survivors, and Disability Insurance (OASDI) program by approximately $39.8 billion from 2024 to 2033.

If the total increase in program cost due to the "Social Security Survivor Benefits Equity Act" is estimated to be $39.8 billion over the period from 2024 to 2033, and the Social Security Administration currently pays out around $110 billion per month, then:

This means that the total additional cost from the proposed increase in lump-sum death payments would be less than one month of current Social Security payouts (about 11 days). Thus, the impact on the life of the trust funds, in this specific context, would be relatively minor, shortening the depletion date by less than one month.

The report projects that, over a 75-year period, the enactment of this bill would reduce the actuarial balance of the OASDI program by 0.03% of taxable payroll. This slight worsening of the program’s financial position reflects the increased costs associated with the higher death benefit, although the broader fiscal impact on Social Security is deemed modest. The analysis was conducted using the intermediate assumptions from the 2024 Trustees Report, and further detailed cost projections and program balance effects are provided in the attached tables.

In summary, while the proposal to increase the lump-sum death benefit would substantially raise the amount paid to eligible survivors, the long-term financial effect on the Social Security trust funds is relatively minor, according to the Office of the Chief Actuary’s projections.

https://www.ssa.gov/oact/solvency/PWelch_20240925.pdf

09252024 NH