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Is it true that supplemental security income (SSI) benefits are not prepaid and that payments received during the month of a beneficiary’s death are not subject to reclamation? – IBA Compliance Connection

Is it true that supplemental security income (SSI) benefits are not prepaid and that payments received during the month of a beneficiary’s death are not subject to reclamation?

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No, we believe that SSI benefit payments made within the month of death are subject to reclamation. The regulations governing reclamation of federal benefit payments require banks to return all federal benefit payments received after learning of a beneficiary’s death.

Based on its internal operations manual, we think it may be possible that the Social Security Administration would not reclaim SSI payments made during the month of a beneficiary’s death. However, because there is no exception from the general federal reclamation requirements for SSI payments, we recommend following the same procedure for returning SSI payments as you would for any other federal benefit payments.

For resources related to our guidance, please see:

  • 31 CFR 210.10 (“An RDFI shall return any benefit payments received after the RDFI becomes aware of the death or legal incapacity of a recipient or the death of a beneficiary, regardless of the manner in which the RDFI discovers such information.”)
  • U.S. Treasury Green Book, A Guide to Federal Government ACH Payments, Chapter 5, page 5 (“An RDFI is liable for ALL benefit payments received after the death or legal incapacity of a recipient or death of a beneficiary; unless the RDFI meets the qualifications for limiting its liability (see B. Limiting Liability below).”)
  • 31 CFR 210.2(m) (“Notice of reclamation means notice sent by electronic, paper, or other means by the Federal Government to an RDFI which identifies the benefit payments that should have been returned by the RDFI because of the death or legal incapacity of a recipient or death of a beneficiary.”)