Decisions for The End Of Life

By Ian Sutton

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US Senate Considering Increased Death Benefit

by Ian Sutton October 9, 2024

The United States Senate is in the late stages of considering an increase in the benefit paid to families on the death of a close relative. But the current election campaign and budgetary deficits may have an impact on chances of its passage.

It’s the first time since the 1950s that an increase in the death benefit has come before legislators and almost a hundred years since Franklin Roosevelt signed the Social Security Bill in 1935. The “Lump Sum Death Benefit” maximum payment at that time was $315, although the average amount was about $97 when the program. lapsed in 1939. The Lump Sum Death Benefit was reinstated in 1954. It offers a one-time lump sum benefit of up to $255 to qualified beneficiaries of a Social Security recipient upon death. There have been minor changes to the law since that time, but the maximum benefit has remained at $255.

That may all change if Bill 5178, introduced by Democratic Senator Peter Welch of Vermont on September 25, becomes law. The Social Security Survivor Benefits Equity Act, co-authored by Independent Senator Bernie Sanders of Vermont and Democratic Senator Elizabeth Warren of Massachusetts, is titled “A bill to amend Title II of the Social Security Act to update the amount of Social Security lump sum death payments and index lump sum death payments to inflation.”

Sen. Welch says the change is aimed at helping alleviate the financial burden for families following the loss of a loved one. “Funeral costs should be the last thing on the minds of grieving families when they lose a loved one,” he said. “Benefits designed to help folks afford funeral expenses haven’t kept pace with inflation. The cost of burying a loved one has become top of mind for many mourning families.”

One report said the bill calls for a maximum $2,900 death benefit that would start as early as 2025. That sum would be adjusted for inflation to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is used to calculate Social Security’s annual cost-of-living adjustments.

The proposal has been endorsed by advocacy organizations Social Security Works and the Strengthen Social Security Coalition. The House may force a vote on a bill affecting pensioners’ Social Security benefits. The Social Security cost-of-living increase in 2025 could be lowest in years.

Today, according to the National Funeral Directors Association, the median cost of a funeral with casket and burial is $8,300, while the average cost for a funeral with cremation is $6,280. In the 1950s, when the $255 lump sum death payment that is still in effect today was established, a full memorial and cremation service cost around $700.

“If you’ve worked long enough, we make a one-time payment of $255 when you die,” the Social Security Administration states in a guide on survivors’ benefits.

Survivors — such as a spouse or child — must apply for the payment within two years of the date of death, the agency says.

A surviving spouse may be eligible for the death payment if they were living with the person who passes away. If the spouse was living apart from the deceased but was receiving Social Security benefits based on their record, they may also be eligible for the $255 payment.

If there is no surviving spouse, children of the deceased may instead be eligible for the payment, as long as they qualify to receive benefits on their deceased parent’s record when they died.

In Canada, the CPP (Canada Pension Plan) death benefit is a one-time payment, payable to the estate or other eligible individuals, on behalf of the deceased. To qualify for the death benefit, the deceased must have made contributions to the Canada Pension Plan for at least a third of the calendar year in the period. International social security agreements Canada has with other countries may be used to meet the requirements. In Quebec province, a person may contribute to both the CPP and the Quebec Pension Plan. Contributions made under both plans are combined when a death benefit is calculated. Under the Canada death benefit, they may be eligible to receive survivor’s pensions and benefits to children under 25.

In the United Kingdom, if an individual dies before age 75, death benefits up to £1,073,100 are paid tax-free to the beneficiaries. Any death benefits payments made in excess of the limit will be taxed at the beneficiaries' rate of income tax. In Australia, a superannuation death benefit is generally a payment made to a dependent beneficiary or to the trustee of a deceased estate after the member has died. In New Zealand, A Funeral Grant can help with some of the funeral costs of someone who has died. But a Funeral Grant can only be used towards essential funeral expenses.

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