Can you afford to pay dead participants?
Analysis of the federal government’s coronavirus stimulus payments indicate up to $1.4 billion in payments were sent to dead people. The overpayments were a function of two elements: no formal process was utilized to identify deceased persons and it doesn’t appear the federal agencies responsible for payments had access to all the necessary data.
This same overpayment issue is happening for similar reasons to Pension plans. However, while overpayments to deceased persons via the coronavirus stimulus program are a unique occurrence, pension plan overpayments of $1B+ happen annually.
In 2011, a change to data available via the Social Security Administration Death Master File (DMF), the government’s primary data source and the death data source most utilized by Pension plans and Death Audit service providers, introduced two issues that make finding deceased Pension Plan participants much more difficult – data source proliferation and data complexity. Prior to 2011, if Pension plans had a participant’s social security number, the Plan could easily and accurately identify deceased participants via the DMF. However, deaths available via the DMF have been steadily declining since 2011 and the DMF now accounts for only 16% of death identifications vs. approximately 95% prior to 2011.
No longer is there a single data source (DMF) with a single piece of unique personal identifiable information (social security number) that can be easily used to identify deceased persons. Now, thousands of sources (state records, obituary websites) are required to capture all potential deceased participants. Additionally, processes using multiple pieces of information are required to validate deceased persons from sources like obituaries because there is no social security number in an obituary.
With the use of different data sources and differing processes for identifying deceased participants, Pension plans are now faced with the same issues faced by the federal government’s stimulus program: lack of complete data, no consistent formal process for identifying deceased participants. Because of these issues, many Pension plans now only identify 60%-70% of participant deaths versus 95% prior to 2011. The result of missed deaths across thousands of Pension plans is $1B+ in annual overpayments to deceased Pension Plan participants.
To address the Pension Plan overpayment issue and eliminate the work, complexity and uncertainty associated with identifying deaths, CertiDeath was developed. CertiDeath is a proprietary solution that combines integrated databases and human expertise to deliver the most complete list of verified deaths with a coverage rate of up to 96.5% – similar to the rate of pre-2011 DMF coverage.
By analyzing up to 38% more data than the typical Death Audit solution, CertiDeath addresses the lack of complete data. By executing a standardized process involving both artificial intelligence as well as human expertise, CertiDeath eliminates the inconsistent process issue. With several hundred customers, CertiDeath has uncovered $1B+ in overpayments since introduction in 2019.
