This chapter explores several important provisions regarding representative payees, including when a representative payee is needed, how a payee is selected, the responsibilities of a payee,and how payees can be changed. It also provides information about when and how a person can begin to receive his or her own benefits. Much of this chapter was abstracted from the SSA Handbook, which provides guidance about these and many other issues related to representative payees.[1]
A representative payee is an individual, agency, organization, or institution that SSA selects to receive and manage benefits on behalf of an incapable or legally incompetent beneficiary. When evidence suggests a beneficiary is unable to manage or direct management of benefit payments in his or her own best interests, representative payment may be made. SSA assumes that all adult beneficiaries have the right to manage their own benefit payments. However, if it is determined that a person is in need of a representative payee, the person or organization best suited to serve as the payee is selected.
SSA appoints a representative payee when the Agency determines that a beneficiary is unable to manage or direct someone else in the management of his or her benefit payments. SSA regulations state that a representative payee is required when a beneficiary is: (1) a minor child under age 15; (2) a legally incompetent adult; or (3) mentally or physically incapable of managing benefit payments or directing the management of his or her benefits.
Legal incompetence can be determined only by a court after a judicial proceeding; it cannot be determined by SSA. The determination that a person is legally incompetent results in the court’s appointment of a guardian. SSA relies on the decision of the court and appoints a representative payee for any beneficiary who has been declared legally incompetent—even if the beneficiary was managing his or her benefits successfully. Of course, circumstances may change and the court subsequently may re-assess competence and find the beneficiary competent. In that case, as explained later in this chapter, SSA may resume direct payment.
Unless a court has determined a recipient is incompetent to manage SSI payments, mental and physical incapability is determined by SSA based on medical evidence, SSA’s own observations of the beneficiary's behavior, and statements from relatives, friends, and others who have known and observed the beneficiary. If a case manager believes that a client is mentally or physically not capable of managing or directing the management of his or her own benefit, he or she should notify SSA, so that SSA can determine incapability and consider appointing a representative payee.
Not every applicant who is found disabled due to a mental impairment requires a representative payee. A payee is necessary only if a beneficiary is found unable to use money in his or her own best interest. Typically, this is limited to people unable to manage or direct someone else to manage their money due to delusions, impulse control problems, or recent histories of drug or alcohol abuse. However, if the beneficiary continually has been managing benefits successfully, SSA has the option to allow the beneficiary to continue to receive the benefit check directly.
The responsibilities of a representative payee are to:
Funds received on behalf of the beneficiary should be maintained separately from all other funds in the possession of the payee, including his or her own money. Any money deposited in a bank should be kept in a separate account and titled to show the beneficiary’s ownership of the account.
Responsibilities of representative payees are limited to managing the Social Security benefits received by the beneficiary.
Designation as a representative payee does not confer any other legal rights or responsibilities.
If a payee fails to carry out his or her duties, or if there is an abuse of the authority vested in him or her, SSA may reach a decision that the payee no longer is entitled to serve in that role.
A representative payee must apply the payments for the use and benefit of the entitled individual. Social Security and/or SSI benefits are properly disbursed if they are:
Current needs are defined as shelter, food, clothing, utilities, medical care and insurance, dental care, personal hygiene, education, and the rehabilitation expenses of disabled beneficiaries. Representative payees also may use funds to pay the beneficiary’s pre-existing debts, but only after all current needs have been met. Any additional funds should be invested or saved. Preferred investments are U.S. Savings bonds, or interest bearing bank accounts. Investments such as stocks and other types of bonds are discouraged.
All invested funds must be monitored to ensure that the beneficiary’s income or assets do not exceed the SSI income or resource guidelines. If it becomes necessary to take action to reduce the assets of an SSI recipient, case managers should refer to Chapter 4 for guidelines regarding asset expenditure.
SSA sends a Representative Payee Report form to each payee once a year asking:
A payee must submit this information in a timely manner or provide a good reason for not doing so.
If a case manager believes a representative payee is not acting in the best interests of a beneficiary, he or she should report it to SSA. This information can provide the basis for SSA to ask for such an accounting or to decide whether to change payees.
In selecting a representative payee, SSA looks for the “person, agency, organization, or institution that will best serve the interest of the beneficiary.” When choosing a payee, SSA considers the:
In most cases, the order of preference in selecting a payee for a beneficiary, age 18 or over, is—
SSA uses the preference list as a guide and is not required to follow this order of preference, if doing so would not serve the beneficiary's best interest.
In some cases, a beneficiary may ask that SSA appoint as representative payee, a friend, family member, or guardian who is not necessarily the best choice. A case manager is in a unique position to identify this potential misstep since he or she often knows the client best. The case manager should suggest to both the applicant and SSA alternative people or agencies to serve as the representative payee. If the case manager has completed a SSA–1696 Appointment of Representative form, this recommendation can be made to SSA (if absolutely necessary) without the client’s permission. This should occur only in situations when the case manager feels the client’s funds will be misused by the representative he or she has named.
In light of SSA’s stated preferences, case managers and the organizations they represent effectively are the payees of last resort. If a beneficiary does not have a family member or friend to serve as a payee, and the beneficiary is not in the custody of an institution that can be his or her payee, then a case manager or other homeless program staff person may apply to serve in that role.
Beneficiaries have formal appeal rights in a number of areas related to representative payees, including the right to appeal the decision to appoint a payee; the right to appeal the payee selection; and the right to appeal with respect to a misuse of benefits determination.
It is not unusual for a beneficiary determined to be in need of a representative payee to object to that requirement. Several approaches can be taken to challenge a decision:
If a beneficiary believes a payee is not complying with legal obligations, SSA should be notified and will investigate the allegations. If necessary, SSA will process a payee application from another person, as long as the new applicant being suggested is suitable to serve as payee. In addition, the beneficiary, or a case manager working with a beneficiary, should provide SSA with any evidence they have uncovered that the payee has not complied with the rules. If SSA finds the evidence credible, in addition to selecting a new payee, SSA will note the information on the original payee’s record so he or she cannot become a representative for other beneficiaries.
SSA is required to reissue benefits to beneficiaries whose funds have been misused by organizational representative payees or by an individual serving 15 or more beneficiaries. SSA then seeks to recover the misused funds from the payee. Reissued benefits are excluded from SSI resource determinations. This is effective for misuse determinations made by SSA on or after January 1, 1995.
If SSA assigns a representative payee or does not agree to change a representative payee, the beneficiary may file a Request for Reconsideration. If the beneficiary continues to be dissatisfied, he or she may follow the regular SSA appeals process described in Chapter 7. Case managers can assist beneficiaries by serving as a representative and helping to appeal a decision.
While a representative payee is in charge of managing a beneficiary’s funds, he or she has no jurisdiction over when or if a beneficiary can file an appeal unless the individual is also a court–appointed legal guardian. This ensures that representative payees cannot prevent beneficiaries from enforcing their rights under SSA regulations.
A case manager can take a number of different roles with respect to representative payees. The most obvious is to be the representative payee. It is important to note that it is not the individual case manager, but the case manager’s organization, that becomes the representative payee. Besides taking on this role, case managers also can be active in educating family members or friends who are representative payees, monitoring payees to ensure that they are acting on the beneficiaries’ best interest, and helping beneficiaries meet the requirements necessary to regain responsibility for managing their own benefits.
While a case manager may not be SSA’s first choice for a representative payee, case managers are often asked by SSA, by the recipient, or by friends or family to take on this role. No matter how the issue comes up, case managers should be aware of what may be involved.
In light of the pros and cons presented by the situation, case managers must make informed decisions every time the possibility of becoming a representative payee arises.
Frequently, case managers work with family members and friends of the people they are helping. When someone else is serving as a representative payee, the case manager should help ensure that the person is aware of how to act effectively as a payee. In particular, the person should know the duties of a payee. Case managers always can direct others to the SSA Web site or can give them sections of this manual.
Occasionally, case managers may suspect an existing payee is not acting in a beneficiary’s best interest. If this situation arises, case managers should contact SSA and explain their concerns. To the extent possible, if there is evidence of mismanagement, the case managershouldforwardthatevidencetoSSA.
Case managers can help clients by teaching them money management skills. In this way, clients who previously have been poor money managers ultimately may be able to receive their benefit directly. Periodically, case managers may assess a beneficiary’s money management skills and provide evidence to SSA of the beneficiary’s capacity to receive and manage checks when, and if, those skills are mastered.
1The Handbook can be found at: www.socialsecurity.gov/OP_Home/handbook/handbook.16/handbook-toc16.html.
220 C.F.R. 416.665.
3The fees are re-determined each December based on the annual Cost of Living Adjustment.