WASHINGTON — Federal agencies now have another safeguard designed to prevent government payments from being issued after a recipient has died.
The Treasury Department said it successfully implemented a new check using death information before certain federal payments are released, expanding an effort to reduce improper spending and recover money that would otherwise be difficult to retrieve.
Government programs make billions of payments each year through retirement, disability, benefit and assistance systems. Delays in updating death records can allow money to continue reaching an account after the intended recipient is no longer living.
Some payments are returned when financial institutions identify the death. Others may be withdrawn by relatives, caregivers or individuals with access to the account, creating costly investigations and recovery proceedings.
The new safeguard is intended to stop more of those transactions before the money leaves the government.
Preventing an improper payment is considerably cheaper than trying to recover it later.
The change also affects banks and federal contractors responsible for processing payments. More accurate records can reduce disputes over whether a financial institution should return funds and how much money remains available in an account.
No national death database is perfect, and timing remains a challenge. Agencies receive information from states and other sources on different schedules, creating a risk that a legitimate payment could be delayed when records are incorrect or belong to another person with a similar identity.
Treasury will therefore need to balance fraud prevention with safeguards for living beneficiaries who depend on federal payments for basic expenses.
The broader issue extends beyond deceased recipients. Improper payments can result from identity theft, administrative mistakes, outdated eligibility information or organized fraud.
The new system addresses one defined weakness. Its effectiveness will depend on how quickly death records are updated and whether agencies consistently use the information before approving payments.
JBizNews Desk | Washington
© JBizNews.com All Rights Reserved. Reproduction or distribution without written permission is prohibited.
