More than 7 million people who receive monthly Social Security Disability Insurance or Supplemental Security Income (SSI) benefits need help managing their money. Many who collect Social Security Administration (SSA) disability benefits are mentally ill, addicted to alcohol or drugs, or have reached a point in their illness where they are no longer able to manage their own finances. In such cases, someone else is appointed to handle the recipient’s disability benefits. This person, who is appointed by the SSA, is called a ‘representative payee,’ and would be recommended in the following situations:
- The recipient has dementia, is mentally ill, or is developmentally disabled.
- The recipient’s physical condition makes him or her vulnerable to others with questionable motives.
- The recipient has had alcohol or drug addiction problems and is at risk for relapse.
- The recipient is a minor.
A representative payee does not act as a legal guardian or conservator for a recipient, but serves as a receiver of United States Social Security Disability Insurance funds or Supplemental Security Income for someone who is not fully capable of managing their benefits in their own best interest. The representative payee is expected to protect the recipient from victimization. Since the disabled person has presumed poor judgment, he or she may choose, or let someone else choose, a payee who may misuse the funds and leave the disabled person deprived of adequate clothing, food, or shelter. For this reason, representative payees are appointed through the Social Security Administration after a thorough review.
Who Can Become a Representative Payee?
A representative payee can be an individual or an organization. In most cases, the disabled person has a relative or friend who can serve as payee. If there is no individual available or willing to act on the recipient’s behalf, the Social Security Administration will appoint an organization to fill the role.
If you are an individual who is interested in becoming a representative payee for a disabled relative or friend, contact the nearest SSA office and submit an application. You will be required to provide proof of identification, as well as your Social Security number, and go through an interview process. Individuals who serve as representative payees usually are not allowed to collect a fee for their services.
Organizations that serve as representative payees are allowed to collect fees for their services. However, requirements stipulate that the organization must provide services to at least five recipients and not be a creditor to any of them.
Responsibilities of the Representative Payee
The responsibility of a representative payee is to allocate benefits in the beneficiary’s best interest. This includes:
- Ensuring the beneficiary has food and shelter.
- Providing funds for medical or dental care not covered by insurance.
- Coordinating medical treatment if the recipient is a child.
- Covering rehabilitation expenses.
- Fulfilling personal needs, such as clothing and recreation.
- Purchasing medical equipment not covered by insurance, i.e., a wheelchair.
- Arranging for the beneficiary to go to school or receive special training.
- Paying a rental security deposit or making a down payment on a vehicle.
- Placing any leftover funds in an interest-bearing account for future needs.
- Keeping records of all financial transactions.
- Returning any funds to the SSA that were sent to the beneficiary in error (overpayments).
Payees can be reimbursed for out-of-pocket expenses but should not comingle their personal funds with the benefits of another. Becoming an SSA representative payee does not grant power of attorney over a recipient’s affairs, and payees are not authorized to sign legal documents on behalf of the disabled person. Payees SHOULD NOT:
- Spend money needed for food or other basic necessities on other items.
- Spend the beneficiary’s money on the payee’s personal expenses.
- Put the beneficiary’s funds in anyone else’s account.
- Charge a fee for services, unless the SSA has authorized it.
- Sign documents, other than SSA documents, on behalf of the beneficiary.
The representative payee is required to file an annual report with the Social Security Administration detailing how the beneficiary’s benefits have been used. This report, called the Representative Payee Report, must be filled out and returned via US mail or by using the online accounting form. Additional information that should be reported to the SSA includes changes that may affect the beneficiary’s eligibility for benefits or the amount of the beneficiary’s payments. Other changes that must be reported include:
- Address changes.
- Work attempts by the recipient.
- Changes or improvements in the recipient’s medical condition.
- Other benefits received by the recipient.
The representative payee must maintain accurate records of all financial transactions — both incoming and outgoing. When the SSA requests a report of expenses, which it does yearly, the report should account for all expenses paid and any amount saved. The representative payee always must act in the best interest of the disability recipient when distributing funds for his or her care. Any representative found guilty of misusing a beneficiary’s funds will be required to repay the misused funds and will be subject to fines and possible imprisonment.