The U.S. Office of Personnel Management (OPM) erroneously paid $274 million in benefits to deceased federal retirees over the past three years, including $84.7 million in 2013 alone, according to the agency’s annual financial report.

OPM’s FY 2013 financial report released in mid-December revealed that improper “overpayments” to deceased federal annuitants under its retirement program reached $102.9 million in FY 2011, $86.1 million in FY 2012, and $84.7 million in FY 2013 for a total of nearly $274 million during that three year span.

According to the OPM report, improper payments made by the agency include “underpayments (monies that OPM owes to the annuitant) and overpayments (monies that OPM has paid out to the annuitant erroneously or in excess of entitlement).” 

The good news is the payment errors to deceased federal retirees have started to go down since the OPM Inspector General (IG) sounded the alarm on the issue in a September 2011 audit.

According to the IG, OPM improperly made more than $601 million in benefit payments to dead federal annuitants from FY 2006 through FY 2010, averaging $120 million annually.

In FY 2013, OPM made a total of $278 million in improper payments under its retirement program, including the $84.7 million in overpayments to dead retirees.

OPM also made $74 million in improper payments that year under its Federal Employee Health Benefits Program (FEHB).

The $74 million is a sharp decrease from the $213 million in improper payments to health program beneficiaries in 2012.

In total, OPM improperly paid at least $353 million in taxpayer funds to federal employees and retirees in FY 2013, the majority of which was doled out “erroneously or in excess of entitlement” as overpayments.

Government agencies are required by law to identify programs with improper payments that exceed either $100 million or both 2.5 percent and $10 million of program spending. OPM did not identify programs that failed to meet that threshold in its financial report.

In response to the 2011 IG report, the OPM formed a task force to deal with improper payments made to dead beneficiaries.

“Under direction from the senior task force, OPM developed and issued its first comprehensive improper payments plan in November 2012,” noted the recently released financial report. “The plan was updated in January 2013 and contains two measurable goals: one to reduce the rate of improper payments… [and] to increase recoveries of improper payments to deceased annuitants. OPM will review progress against those goals in FY14 and develop new goals as appropriate.”

OPM relies on the Social Security Administration (SSA) Death Master File to learn whether its beneficiaries have passed away. 

However, an audit by the Government Accountability Office (GAO) released on Dec. 27 found that the SSA may not always know who is dead. 

“SSA’s methods for processing death reports may result in inaccurate, incomplete, or untimely information for users of its death data,” noted the GAO. “Consequently, this could lead to improper payments if benefit-paying agencies rely on this data… Because SSA does not verify death reports from sources it considers most accurate, the agency risks having erroneous information in its death data, such as including living individuals or not including deceased individual.”