Paying benefits to deceased participants is one of the most common — and most preventable — losses a self-funded health plan or pension fund faces. A scheduled audit plugs the leak before it becomes a recovery problem.
It happens quietly. A pension annuity keeps depositing after a retiree dies, a survivor doesn’t report the death, or the eligibility file simply hasn’t caught up — and a self-funded plan keeps paying claims for someone no longer covered. Months, sometimes years, go out the door before anyone notices. Across a large population, the dollars add up fast, and recovering them after the fact is hard: the money’s often already spent.
Why It’s Worth Doing on a Schedule
- Prevents overpayments. Catching a death in the first month instead of the eighteenth is the difference between a small correction and a costly, often unrecoverable loss.
- Lowers PBGC premiums (pension plans). Flat-rate premiums are driven by participant and beneficiary headcount — removing deceased individuals can directly reduce what’s owed.
- Reduces self-funded claim leakage. Eligibility files that aren’t current let medical and Rx claims pay for people no longer covered.
- Protects the right people. Identifying a death promptly means survivor benefits reach beneficiaries on time, not late.
“We Check the Death Master File” Isn’t Enough
Before 2011, the public Social Security Death Master File caught most deaths on its own. After access was restricted, it surfaces only a fraction. Effective auditing today means cross-referencing multiple data sources — and doing it on a set schedule, because a provider that refreshes only once a year leaves a long window for payments to keep flowing.
What the Regulations Expect
- ERISA fiduciary duty. Under ERISA Section 404, fiduciaries must act solely in participants’ interest — and recovering overpayments is treated as a fiduciary obligation. Regular death searches are increasingly viewed as basic plan governance, and the DOL and IRS have stepped up scrutiny of plans with missing or deceased participants.
- SECURE 2.0 overpayment rules. The SECURE 2.0 Act (2022), with IRS Notice 2024-77, gives fiduciaries discretion not to recoup certain inadvertent overpayments — but adds participant protections that limit how recovery can be done. Translation: prevention beats recovery, and the cleaner your process, the better.
- EPCRS expectations. IRS guidance has generally expected sponsors to attempt recovery of all but the smallest overpayments to protect the plan’s tax-favored status — another reason to catch deaths early.
This is general information, not legal or actuarial advice — specific recovery decisions should run through your plan’s counsel and actuary.
How Often?
We recommend a quarterly schedule for most plans. Quarterly keeps the window between a death and its detection short enough to stop the bleeding while staying cost-effective. Larger or higher-risk populations may warrant more frequent checks; the key is that it’s regular and documented, not occasional.
How SHN Helps
Death audits are part of what SHN does. Drawing on 30+ years administering retiree and pension benefits, we run regular, multi-source death audits — identifying deceased participants and beneficiaries early, validating against more than a single data file, and handling the follow-through: stopping payments, recovering what’s appropriate, cleaning the census, and routing benefits to the right survivors. We do them on a scheduled basis at a reasonable cost, so the audit reliably pays for itself.
The bottom line: A regular death audit is one of the rare plan-administration tasks that pays for itself — prevented overpayments, lower premiums, cleaner compliance. If yours is occasional or leans on the public DMF alone, it’s worth a conversation.
Solidarity Health Network | Retiree healthcare done right since 1989 | www.shninc.org