Social Security kept paying a dead Florida woman for nearly 6 years — and her great-niece cashed in. Who's on the hook?

Now Anderson has been found guilty of both Social Security fraud and theft of government funds, meaning she could face fines and jail time.

If the Social Security Administration (SSA) keeps paying benefits after someone dies, who’s on the hook? The law is pretty clear about this one.

What constitutes Social Security fraud

Social Security fraud comes in many forms. For example, fraudsters might target you by pretending to work for the SSA so they can obtain your personally identifiable information, such as your Social Security number. Then, they can use that information to commit identity theft and file claims under the stolen SSN.

But fraud also relates to submitting false information on a claim, misusing someone’s benefits who’s incapacitated or collecting someone’s benefits after they pass away — either hiding their death or simply not bothering to report it.

**“**Under federal law, collecting funds from a deceased beneficiary constitutes federal Social Security fraud and theft of government property,” writes Dmitry Gorin, a partner with Eisner Gorin LLP, in a blog post. “This serious federal crime carries penalties including felony charges, federal prison sentences, mandatory financial restitution and substantial fines.”

It’s possible you spent the funds without any fraudulent intent. After all, the death of a loved one comes with an enormous amount of administrative work at a time when you’re experiencing an enormous amount of grief.

In cases where there’s no criminal intent to commit fraud, you’ll still have to repay any posthumous payments.

But intentional deception or willful concealment is a different matter altogether. In those instances, you’ll have to repay the stolen funds, but you could also face substantive jail time.

Anderson, for example, faces up to 10 years in jail for theft of government funds and up to five years for Social Security fraud. That means she could end up in jail for 15 years — and have to pay a $152,000 bill for her withdrawals over six years.

“Federal prison is a real possibility, especially if the total amount converted exceeds $1,000, the conduct spanned several years or deliberate acts (such as forging signatures or filing false documents) occurred,” writes Gorin.

However, he points out that someone without prior criminal history might be able to negotiate probation and a civil repayment plan.

What to do if a family member passes away

When someone passes away, the surviving family is required to report the death to the SSA. Most funeral homes will take care of this for you, after you provide them with the late beneficiary’s Social Security number.

You can contact your local Social Security office and report the death by phone or in person. At this point, you can’t do this online and email isn’t considered an acceptable form of notification.

Ultimately, the surviving family is responsible for ensuring the death is reported — not just to the SSA, but to other government agencies and financial institutions. The SSA will automatically notify Medicare, but you’re responsible for notifying private insurers (say, if the person had Medicare Advantage, a Medigap policy or Part D coverage).

You’ll also have to return any posthumous payments — and that includes any payment made during the month of the beneficiary’s death. That’s because the SSA doesn’t pay benefits for the month of a person’s death.

But benefits are also paid in arrears, which is where some people may mistakenly spend a benefit check.

So, for example, if the beneficiary passed away in October, they wouldn’t be eligible to receive their October benefit. And, since the October benefit is paid out in November, the November payment (made via check or direct deposit) must be returned.