Social Security: A Guide For Representative Payees

By Social Security Administration
SSA Publication No. 05-10076
April 1997
ICN 468025

A Message From Social Security

More than six million people who get monthly Social Security or Supplemental Security Income (SSI) benefits, or both, need someone to help them manage their money. When a person needs this kind of help, the Social Security Administration..after a careful investigation..
appoints a relative, friend, or another interested party to serve as the beneficiary's .representative payee.. The person's Social Security or SSI benefits are then paid in the representative payee's name on the beneficiary's behalf.

You probably are reading this booklet because you have volunteered to serve as someone's representative payee. If so, we appreciate your help in seeing that the benefits this person receives are used for his or her personal care and well-being. As you read this booklet, you'll find an explanation of your responsibilities as a representative payee and how to keep track of what you spend on the beneficiary's behalf.

Who Needs A Representative Payee?

About 25 percent of the people who get SSI, and about 10 percent of the people who get Social Security, have payees.

Almost all children under age 18 have payees.a parent, usually. Adults who are unable to manage their finances because of severe physical or mental limitations also need payees.

What About .Power.of.Attorney?.

People often work out other ways to handle a family member's finances to suit their needs. A .power-of-attorney. arrangement is one of the most commonly used methods. For Social Security purposes, however, such an arrangement is not an acceptable way to provide for management of a person's monthly benefits. Although it may be a convenient way to pay bills and handle some legal matters, the power-of-attorney procedure does not include provisions for the responsibility and accountability that Social Security requires of its representative payees.

A Representative Payee's Duties

As a representative payee, you need to keep informed about the individual's needs so that you can decide how benefits can best be used for his or her personal care and well-being. This is particularly important if the beneficiary doesn't live with you.

Any money left after meeting the beneficiary's current and reasonably foreseeable needs must be saved and maintained in the beneficiary's behalf. Periodically, Social Security will ask you to complete a form accounting for the funds you have received. There's a a worksheet at the end of this booklet that you can use to keep track of what you spend.

As a representative payee, you will need to keep Social Security informed of changes that may affect the beneficiary's eligibility for benefits. You'll find a list of those changes under section on "Changes To Report".

Representative payees are required by law to use benefits properly. If a payee misuses benefits, he or she must repay the misused funds to the beneficiary. A payee convicted of misuse may be fined and/or imprisoned.

Reminder: A payee is prohibited from entering into binding contracts for a beneficiary, unless the payee is the beneficiary's parent or legal guardian, or the beneficiary has granted the payee a .power of attorney..

A Special Note To Payees For Child Beneficiaries Receiving SSI.If you are payee for a child receiving SSI payments, you may be required to obtain treatment for the child's disabling condition when treatment is determined to be medically necessary. If you are not sure whether treatment is required for the beneficiary, you should contact your Social Security office. Failure to obtain medical treatment for the child may require Social Security to remove you as payee.

How To Use The Benefits

First, make sure the beneficiary's day-to-day needs for food and shelter are met. Then, benefits may be used for the beneficiary's personal needs, such as clothing, recreation, and other expenses. Benefits also can be used to pay for medical needs (for example, eyeglasses and hearing aids) and dental care not provided by Medicare, Medicaid, or a residential institution.

If a beneficiary is in a nursing home or other institution, you should use benefits to pay the usual charges for care. For these institutionalized beneficiaries, you also should set aside a minimum of $30 each month to be used for the beneficiary's personal needs or saved on his or her behalf.

Also, if the beneficiary lives in an institution and is eligible for Medicaid or is a member of a family that receives Aid to Families with Dependent Children (AFDC) payments, you should contact the local Social Security office about using benefits to support family members.

Handling Large Sums of Money

Sometimes the representative payee for a Social Security or SSI beneficiary receives a large payment covering several months, or even years, of benefits. When this happens, it is particularly important for the representative payee to make plans to spend the money wisely. Many payees are unsure about how to use a large sum of money. The main thing to keep in mind is that the money must be used in the best interests of the beneficiary.

Your first priority is to make sure the beneficiary's current needs are being met. This includes food, shelter, medical care, and other items for the individual's personal comfort.

If there's money left over after you have provided for these basic needs, you could spend the money on things that would improve the beneficiary's daily living conditions or provide better medical care. You also could arrange training for the beneficiary to help him or her have a more rewarding future and become more self-sufficient.

You may decide to use the beneficiary's funds for major health-related expenses, such as reconstructive dental care, a motorized wheelchair, rehabilitation expenses, or insurance premiums. Funds also can be used to pay for special training programs, school tuition, or daily school expenses. You also could spend some of the money on recreation such as movies, concerts, magazine subscriptions, or a special trip for the beneficiary.

Special Purchases
You may want to make some of the following special purchases for the comfort of the beneficiary.

  • A home.Funds belonging to the beneficiary can be used as the down payment and a reasonable share of the monthly payments on a house owned wholly or in part by the beneficiary.
  • Home improvements.You may want to arrange renovations to make the beneficiary's home safer and more accessible; for example, install a wheelchair ramp, widen doorways to accommodate a wheelchair, install a chair lift, or make household repairs.
  • Furniture.You can buy furniture for the beneficiary's personal use as well as items that may be shared with other members of the household, such as a television.
  • A car.The beneficiary's funds can be used for the down payment and reasonable monthly payments on a car used for and owned by the beneficiary.

If you are uncertain about whether an expenditure is proper (for example, paying a bill the beneficiary owed before you became payee), contact your Social Security office before you fulfill such obligations.

A Special Note About Beneficiaries Receiving SSI.To continue receiving SSI, an SSI beneficiary must not have resources worth more than $2,000. Not all resources are counted, however. This means some purchases (for example, a computer or expensive jewelry) could make the beneficiary ineligible for payments. You should check with any Social Security office before making a major purchase for an SSI beneficiary.

A Special Note About Blind/Disabled Children Receiving SSI.Certain large past.due SSI payments to blind or disabled children covering more than six months of benefits must be paid directly into a separate account in a financial institution. We call this separate account a dedicated account because funds in this account may only be used for certain expenses, primarily those related to the child's disability. The dedicated account must be maintained separately from any other savings or checking account set up for the beneficiary. Except for certain subsequent underpayments, no other funds may be commingled into the account, and money in the dedicated account is not countable as an SSI resource. Interest earned on the money in a dedicated account also is not countable as income or a resource. Money in a dedicated account must be used only for the following allowable expenses for the benefit of the child:

  • Medical treatment and education or job skills training;
  • If related to the child's disability, personal needs assistance; special equipment; housing modification; and therapy or rehabilitation.
  • Any other item or service related to the child's disability that we determine to be appropriate. You should first get approval from your local Social Security office for this category of expenses.

If you use money from the dedicated account for anything other than the expenses shown above, you must repay the Social Security Administration from your own funds an amount equal to what you spent. You must keep a record of all money taken from this account and receipts for all items or services bought, because we will periodically review these records. If you have questions about dedicated accounts, contact your local Social Security office.

How Funds Should Be Held

It is a good idea to ask Social Security to send the benefit checks to a bank account by direct deposit. We recommend that you hold funds for current and foreseeable needs in a checking or savings account. As with your own money, it is not wise to keep large amounts of cash at home where it may be lost or stolen. Also, do not mix the beneficiary's funds with your own or other funds.

If any money is left after meeting day-to-day and personal needs, it must be saved. The preferred ways of holding savings are in U.S. savings bonds or in an interest-paying bank account that is insured under either federal or state law. Interest paid on savings belongs to the beneficiary.

To protect the beneficiary's funds, checking and savings accounts must show the beneficiary as the only owner. Neither the representative payee nor a third party can have ownership interest in the account. While the beneficiary retains ownership interest, the account title should not permit him or her to have direct access to the funds. Here are two recommended titles:

  • .(Beneficiary's name) by (your name), representative payee,. or
  • .(Your name), representative payee for (beneficiary's name)..

Although these are the most common methods of identifying accounts, any account title which under state law shows beneficiary ownership, and you as fiduciary, is acceptable. If you are not sure, ask your bank.

A Special Note For Parents.A common checking account for all family members who receive benefits may show a parent as the owner of the account. Children's savings, however, must be held in separate savings accounts for each child, with the child's name shown as the owner of the account.

Keeping Records

As a representative payee, you should keep records showing how much you received in benefits and how the money was used. You should maintain these records for two years from the time you complete a Representative Payee Report (Form SSA-623 or SSA-6230). You are required to account for the funds you have received by completing this form. (Parents, grandparents, and stepparents who are payees for children in their custody should complete Form SSA-6230.) The appropriate form will be mailed to you about once a year.

You must complete the accounting form even if you are a legal guardian; the accounting you make to the court cannot be substituted.

If you wish, you may use the worksheet in the center of this booklet to help you keep track of your expenditures. For your convenience, space is provided for 12 monthly entries. When you need to fill out the Representative Payee Report, you can add the amounts in each column of your worksheet and put the totals on the accounting form.

When you need additional worksheet space, you can call Social Security for another copy of the worksheet.

Paying Income Tax

Some people who get Social Security will have to pay federal income tax on their benefits. At the beginning of each year, Social Security will mail you a Social Security Benefit Statement (Form SSA-1099) that shows the amount of benefits paid during the previous year. Give this statement to the person who prepares the beneficiary's tax returns to use in determining if any benefits are subject to tax.

Institutions That Serve As Payees

Sometimes nursing homes or other institutions place funds for several beneficiaries in a single checking or savings account. This is called a .collective account.. This is usually acceptable, but special rules apply to these accounts. You are required to set aside a minimum of $30 per person each month to be used for the beneficiary's personal needs or saved on his or her behalf. Contact Social Security for more information.

Some examples of collective account titles are:

  • .Sunnydale Nursing Home, representative payee for Social Security beneficiaries,. or
  • .Sunnydale Patients' Fund for Social Security beneficiaries..

If your institution is serving as a payee and you are considering charging the beneficiary for past care and maintenance costs, you will need to get prior approval from your local Social Security office. The office also needs to approve any decision to pool the personal funds of several beneficiaries to purchase an item that will benefit the group.

A Special Note About Beneficiaries Receiving SSI. If Medicaid is paying more than half the cost of an SSI beneficiary's care or private health insurance is paying for a child's care, the SSI payment is usually limited to $30 per month plus any additional money paid by the state. This entire payment must be used for the beneficiary's personal needs or saved on his or her behalf.

Changes To Report

You need to tell Social Security about any changes that may affect the checks you receive. As payee, you are liable for repayment of money you received on behalf of the beneficiary if any of the events listed below occur and you do not report them. For example, tell us if:

  • The beneficiary dies;
  • The beneficiary moves;
  • The beneficiary starts or stops working, no matter how small the amount of earnings is;
  • A disabled person's condition improves;
  • The beneficiary starts receiving another government benefit, or the amount of the benefit changes;
  • The beneficiary will be outside the U.S. for 30 days or more;
  • The beneficiary is imprisoned for a crime that carries a sentence of over one month;
  • The beneficiary is committed to an institution by court order for a crime committed because of a mental impairment;
  • Custody of a child changes or a child is adopted;
  • The beneficiary is a stepchild, and the parents divorce;
  • The beneficiary gets married;
  • You are no longer responsible for the beneficiary;
  • The beneficiary no longer needs a payee.

A Special Note About SSI Benefits: In addition to the events listed above, the following changes must be reported if the beneficiary is getting an SSI check. The amount of the SSI check may change if any of these events occur:

  • The beneficiary moves to or from a hospital, nursing home, or other institution;
  • A married beneficiary separates from his or her spouse, or they begin living together again after a separation;
  • Somebody moves into or out of the beneficiary's household;
  • The beneficiary has any change in income or resources.

A child's SSI check may change if there are any changes in the family's income or resources.

If you are payee for a person who gets SSI, you should be aware that savings and other resources are limited to $2,000 under the SSI program. Interest earned on savings counts toward that limit. In determining a child's resources, money in the child's dedicated savings account does not count toward the resource limit. For more information, contact Social Security for a copy of the booklet, What You Need To Know When You Get SSI (Publication No. 05-11011).

Medicare And Medicaid

As a representative payee, you may need to help the beneficiary obtain medical services or treatment. You will need to show the Medicare card or State Medicaid Eligibility Card to the person or place providing the medical service. You should keep a record of medical services the beneficiary receives and medical expenses not covered by Medicare and Medicaid. For information about Medicare coverage, call Social Security to ask for a copy of The Medicare Handbook (HCFA Publication No. 10050).

If the beneficiary has low income and few resources, the state may pay Medicare premiums and some out-of-pocket medical expenses. A person may qualify even if income or resources are too high for SSI. For information, contact the state or local medical assistance (Medicaid) agency, social service office, or welfare office.

If You Stop Being Payee

If you will no longer be payee, you must notify Social Security immediately. This is important because a new payee will have to be selected as soon as possible.

You must turn over to the Social Security Administration any benefits remaining after you are no longer responsible for the beneficiary, including interest and cash on hand. In some cases, we will ask you to turn over the funds to the beneficiary or to the new payee.

If The Beneficiary Dies

If the beneficiary dies, saved benefits belong to his or her estate. They must be given to the legal representative of the estate or otherwise handled according to state law. If you need information about state law, contact the probate court or an attorney.

When a person who receives Social Security dies, no check is payable for the month of death, even if he or she dies on the last day of the month. Any check received for the month of death or later must be returned.

An SSI check, however, is payable for the month of death. But you must return any SSI checks that come after the month of death.

For More Information

You can get recorded information 24 hours a day, including weekends and holidays, by calling Social Security's toll-free number, 1-800-772-1213 . You can speak to a service representative between the hours of 7 a.m. and 7 p.m. on business days. Our lines are busiest early in the week and early in the month, so if your business can wait, it's best to call at other times. If you'd like general information about Social Security and SSI benefits, ask for a copy of the booklet Understanding The Benefits (Publication No. 05-10024).

People who are deaf or hard of hearing may call our toll-free .TTY. number, 1-800-325-0778, between 7 a.m. and 7 p.m. on business days.

You can also reach us on the Internet. Type http://www.ssa.gov to access Social Security information.

The Social Security Administration treats all calls confidentially.whether they're made to our toll-free numbers or to one of our local offices. But we also want to ensure that you receive accurate and courteous service. That's why we have a second Social Security representative monitor some incoming and outgoing telephone calls.

INCOME AND EXPENSES WORKSHEET

Month
and
Year

Amount of
Social Security
or SSI
Benefits
Received

Expenses
for
Food
and
Housing

Expenses for
Clothing,
Medical/Dental,
Personal Items,
Recreation,
Miscellaneous

Totals for Report Period

$ ____________

$ ____________
Put this figure on line
3B of the Form SSA-623

$ _____________
Put this figure on line 3C of the Form SSA-623

Show the total amount of any benefits you saved for the beneficiary, including any interest earned.

$ _____________
Put this figure on line 3D of the Form SSA--623

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