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Social Security death benefits do not cover funeral expenses in full, but they can help cover some of the costs
Social Security death benefits and Social Security survivors’ benefits are not the same thing
Social Security death benefits apply to people who are over age 65
You can’t apply for Social Security death benefits online, so you’ll have to visit your local Social Security office, or make a call to Social Security
Loss of a family member might cripple the financial situation of a family, especially if the deceased was the family’s primary earner. Social Security death benefits pay a lump sum for the deceased who has paid Medicare taxes for more than ten years or has attained the age of 65 or older.
The SSA (Social Security Administration) pays the funds to the surviving spouses or the children who meet the eligibility criteria.
Social Security death benefits do not pay out for funeral expenses, but can pay a small amount of money to be used for covering some funeral-related costs.
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People tend to generalize Social Security death benefits and Social Security survivors’ benefits and misunderstand them to be the same, but there are distinct differences between the two.
Retirees who have worked for 10 years or more while paying Social Security taxes earn their Social Security benefits, while Medicare benefits typically apply to retirees of age 65 and older, regardless of work history.
Social Security Administration (SSA) manages the functions of the two programs. This means that anyone receiving Social Security Benefits gets an enrollment automatically into the Medicare program after turning 65.
The Social Security death benefit is a one-time lump-sum payment that leaves qualified survivors $255.
The Social Security survivors’ benefit is an ongoing benefit paid to qualifying family members of the deceased.
The more that person paid into Social Security in the form of taxes over their working years, the higher the survivors benefits will be.
Those who reached full retirement age and worked for at least 10 years while paying Social Security taxes earn their full Social Security benefits, and in doing so they also leave behind the highest potential survivors benefits when they pass away.
Survivors benefits are paid to eligible spouses and family members, and the benefit paid is based on the amount of Social Security benefits the deceased received at the time they passed away.
Eligibility for Medicare health insurance benefits is mostly reserved for those who have reached 65 years of age, but Medicare is offered regardless of work history. However, a person may have to pay more for Medicare Part A premiums if they did not work or pay Social Security taxes for the full 10 years.
The insurance companies use the following criteria to determine the spouses and children eligible for the Social Security death benefits:
Social Security death benefits can only begin after reporting the loss and after applying; they do not automatically begin when the person passes away. Therefore, it is important to make an application as soon as possible.
The application is not available online, and a survivor would require visiting the nearest Social Security office, or make a phone call to Social Security to report a loss and apply for survivors benefits.
Applicants will provide the following information to prove their eligibility:
Before any benefits are paid, Social Security also asks widowed spouses if any Social Security benefits, Medicare, or Supplemental Security Income were claimed by the deceased, and on whose Social Security work record they were applied for.
The Social Security death benefit must be claimed within two years of death, and will only be paid to a surviving spouse who was living at the same address as the deceased at the time of death.
The Social Security Administration automatically notifies Medicare to stop coverage and premium payments upon reporting the loss of a loved one to Social Security.
Reporting the departure of a beneficiary marks the beginning of the Social Security death benefits.
If the deceased leaves any unpaid medical bills, Medicare sorts out 80 percent of the total bill as agreed in national standards.
If the late beneficiary also had a secondary insurance plan, such as a Medigap plan or Medicare Advantage plan, that plan pays its agreed upon amount regarding final medical bills. After that, the recipient’s estate pays any remaining amount.
If the individual dies without being properly reimbursed for out-of-pocket final medical expenses from Medicare (up to 80% the expense) or the secondary insurance company, then a separate claim to receive those reimbursements can be filed by the estate, child, or spouse who covered the cost.
All people enrolled in the Medicare Health plan qualify to leave behind the lump- sum cash payment.
The eligible survivor (the deceased’s spouse, child, or parent) receives a one-time payment of $255.
The beneficiaries whose work records allowed them to receive full Social Security benefits are qualified to leave this full amount to their eligible survivors.
Otherwise, if the full 10 years of working while paying taxes weren’t met, the lump-sum cash payment may be less.
The benefit amount depends on the age of the surviving spouse.
Sometimes, the Social Security Administration may deny eligible person compensations due to one reason or another.
If denied, the survivor should write an appeal within 60 days of receiving the notification from the SSA.
Failure to appeal within the stipulated time leads to the closure of the beneficiaries claims.
Appealing takes place on four levels that include:
Although the time following a loss is one of grieving, a bit of guidance on how to wrap up financial affairs can help in bringing closure.
If the departed received monthly benefits, the benefits received for the month of death and months following their death must be returned to Social Security.
To make sure this is properly carried out:
Medicare does not cover funeral costs or burial expenses. However, the insured may set up a Medicare Medical Savings Account (MSA), which allows certain flexibility for non-medical expenses. These are plans which annually add funds to a devoted bank account, truly meant to be used for Medicare-covered medically necessary services.
If that money gets used up, MSA plans require account holders to pay out-of-pocket until reaching a high deductible amount.
There is no premium for an MSA, but monthly premiums for Part B must continue to be paid. Certain plans allow one to designate a surviving beneficiary in the event of death.
A Medicare Medical Savings Account allows unused funds to cover expenses such as funeral costs, albeit at a highly taxed and penalized rate. Funeral and burial expenses are considered ‘ineligible’ expenses under an MSA because they are non-medical, but nonetheless the funds can be used for these purposes.
Money from the account used for these types of expenses are taxed as part of yearly income, and are also subjected to an additional 50% tax penalty.
Annual deposits made by the plan into the MSA before the current calendar year began go to the beneficiary’s estate upon death.
Based on the number of months remaining in the current year, a proportional amount of the most recent annual deposit made by the MSA plan into the person’s account must be paid back to Medicare. The reason for this return of funds is because Medicare Medical Savings Accounts make deposits once each full year while the account holder is alive.
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