When a person receiving retirement, disability, or other benefits from the Social Security Administration passes away, the SSA enters his or her identifying information – name, birth date, death date, zip code, and Social Security number – into a list known as the Death Master File. After a benefit recipient is entered on this list, his or her benefit payments will stop automatically. Further, the SSA sells the deceased’s identifying information to banks, credit bureaus, and the general public.

Normally, this is standard procedure for ensuring that people who are no longer alive – or their heirs – do not receive erroneous Social Security Disability or other benefit payments. But what happens when the SSA makes a mistake, and enters someone who is not deceased onto the Death Master File?

Unfortunately, that seems to occur more often than we would like to think. SSA data indicates that approximately 14,000 of the approximately 2.8 million death reports it receives annually are entered into the Death Master File incorrectly. This averages out to 38 nonexistent deaths every day.

Although people who have been incorrectly declared dead by the SSA are generally able to get their benefit payments restarted, it is usually not a fast or easy process. As a result, recipients who rely on their benefits for their livelihood can find themselves without any source of income for weeks, or even months. Further, the personal information that was sold following their “death” is now readily available to identity thefts, creating countless future headaches.

We will discuss this further, with advice on how to re-establish your livelihood, in a blog post later this week.

Source: CNN Money, “Social Security mistakenly reports thousands of deaths,” Blake Ellis, August 17, 2011