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Social Security benefits are not ever prorated
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Q: It has always puzzled me why Social Security takes back a person's Social Security check for the month he or she dies. My aunt recently died. And as her executor, I was counting on using her last Social Security check to pay off some of her bills. But the government took that money away from me. Can you explain that?

A: Simply put, the law has always said that you must meet all the eligibility requirements for a Social Security benefit for an entire month to be eligible for a payment for that month. That is why Social Security benefits are paid a month in arrears (the May check is paid in June, the June check in July, etc.); to make sure a person is eligible for a benefit for the prior month.

Obviously, one of the eligibility rules is that a person be alive. And again, you must be alive for the entire month to get the benefit for that month. So, for example, if your aunt died in May, whether it might have been May 2nd or May 30, then she (and her estate) is not due the May Social Security check. In other words, the check that comes in June (the May benefit) must be returned.

Another way to put that is this: Social Security checks are not prorated. They never have been and probably never will be. But what most people don't think about is the flip side of that coin. The law does allow a person to get their first Social Security check for the month they are due benefits, even though they might not be eligible until later in the month. For example, my brother was born on June 22. He took his benefits at age 65. And he got his first Social Security check for the entire month of June, even though he was only 65 for 8 days of the month.

Think of it this way: The law presumes you'd rather have that extra benefit up front while you are alive; as opposed to your family getting the proceeds of your last check after you are dead!

Q: When my father died about five years ago, my mother got the $255 burial benefit from Social Security. About a month ago, my father-in-law died. But his wife, my mother-in-law, who has been in a nursing home for about 10 years, never got any burial money. We asked Social Security about that, and they said we are not due anything. When we asked why, all they told us is, "It's the law." Were they correct?

A: Well, their answer was technically correct. But they certainly could have done a better job of explaining the law.

Before I do that, I must clarify one misconception about this one-time $255 death benefit. It is not, and never was intended to be, a "burial benefit." And good thing it isn't because $255 would barely cover the cost of flowers at most funerals today!

This death benefit is a holdover from the very earliest days of the Social Security program. It started out as a means of refunding a small portion of the taxes a person paid into the Social Security system if he or she died before having a chance to collect monthly benefits. Over the years, that simple "refund" of taxes that was paid only to the family members of non-beneficiaries morphed into a death benefit payable to the family members of just about everyone.

The benefit amount was locked in at $255 about 40 years ago. Since then, it's never gone up and has never gone down. Attempts are occasionally made to simply eliminate this almost worthless payment. But every time that happens, senior citizen groups inundate Congress with letters of protest and so the little death benefit remains in law.

Back in the 1980s, the Reagan administration did have the guts (although others would say the gall) to take on those seniors and they lobbied Congress to at least nibble away at the death benefit. They changed to law to say that the death benefit can be paid only to a surviving spouse WHO WAS LIVING WITH THE DECEASED AT THE TIME OF DEATH. Your mother-in-law was apparently not living with your father-in-law. (You said she was in a nursing home for the past decade.) So she isn't due the money.

If I was in charge of all Social Security laws, I would either play Scrooge and simply eliminate the almost worthless benefit. Or, I would play Santa Claus and raise the death benefit to $2,500 to make it more meaningful. Also, I would pay it to the next of kin or to the person who is handling the deceased estate.

However, if I chose to increase the death benefit, I'd want to come up with some way to pay for the added costs to the program. I would do that by closing the current loophole that allows well-to-do retirees to collect dependent spousal benefits between age 66 and 70 before switching to their own augmented retirement benefits at age 70. This is the restricted application policy I have discussed many times in this column.