The Social Security Administration sent  about 89,000 stimulus payments of $250 each to dead and incarcerated people — but almost half of them were returned, a new inspector-general’s report has found.

The agency was charged with distributing the one-time payments, worth about $13 billion in total, as part of the economic-stimulus package passed in February 2009. Most of the payments were made in May 2009.

The inspector general found that  about 72,000 payments were sent by electronic-transfer and as checks to people who would have qualified to receive them — had they still been alive. The report said that  of these payments, about 55,000  were sent because the recipients had died recently, and the  Social Security Administration had not been informed of their deaths by states, families or funeral homes at the time the payments were sent. The remaining 17,000 of the mistaken payments were attributed to the SSA failing to properly process death records that  it did have.

Another 17,000 payments went to recipients who were in prison at the time the payment was made in May 2009.  However, not all of those payments were necessarily against the letter of the law. While lawmakers intended to prevent payments to people in prison, the law included only a provision prohibiting payments to people incarcerated in the three months before the plan was passed  — from November 2008 through January 2009.

There’s a startling bright spot in the report: The inspector general estimates that about 41,000 of the payments were returned. It is illegal to spend social-security money issued to somebody else, but such actions are rarely prosecuted for small amounts. At least one person has been prosecuted for cashing a stimulus check not issued to them, in one of the few accusations of stimulus fraud to date.

The downside:  The SSA says that the stimulus package didn’t include a provision allowing it to try to retrieve funds  that were mistakenly sent out, so it can’t try to retrieve the rest of the money. Money transferred electronically may be sitting untouched in bank accounts of dead people.

The combined total of the mistaken payments is $22.3 million.  About $12 million hasn’t been returned.

Continue reading at The Wall Street Journal