REPRESENTATIVE PAYEE & YOUR BENEFITS

WHAT IS A REPRESENTATIVE PAYEE?

A representative payee is a friend, relative, or other interested party that the SSA appoints to protect the interests of the person who is being paid Social Security Disability (SSDI) and Supplemental Security Income (SSI) benefits.

More than eight million people, who get monthly SSDI and SSI payments, need help handling their money. Some people chose to have a representative payee, because they know they need help managing their benefits. Additionally, in some cases, the person getting the benefits has a mental condition that prevents them from handling the money themselves. That is when the SSA will step in an appoint a rep payee. Also, if you have a Social Security hearing and are awarded benefits, it is possible for the judge to order you to have a representative payee.

A representative payee receives your monthly benefit payments and has the authority to use them on your behalf. Most of the time, with some exceptions, a payee may not collect a fee for this service. You can’t collect a fee for services from the beneficiary, unless Social Security allows it, or you are the legal guardian authorized by a court to charge a guardian fee. For specific information about your situation, you should talk with a worker at your local Social Security office or your attorney.

WHO CAN BE A REPRESENTATIVE PAYEE?

In order to be a representative payee, you must know what the beneficiary’s needs. Your job as the payee is to decide the best use of benefits for the care of the beneficiary. You are not allowed to use the funds for yourself. Nor are you allowed to misuse the funds or withhold the funds from the beneficiary.

The SSA will require the payee to complete a form, each year, to account for the benefits. It is also possible for a Protection and Advocacy agency in your state to contact you to review your receipts and records of income and expenses for the beneficiary.

The law requires payees to use the benefits in the beneficiary’s best interest. If a payee misuses benefits, they must repay the misused funds. If a payee is convicted of misusing funds, then they may be fined and imprisoned. When the SSA appoints a representative payee, they are only to manage the funds from the SSA. A payee has
no legal authority to manage non-Social Security income or medical matters. A representative payee, however, may need to help a beneficiary get medical services or treatment.

Family members often use a power of attorney to handle a disabled family member’s money or affairs. However, for SSA funds, a power of attorney is not an acceptable way to manage a person’s monthly benefits. The SSA will only recognize only the designated representative payee to handle monthly benefit payments.

HOW THE REPRESENTATIVE PAYEE MUST USE MONTHLY BENEFITS

There are rules for representative payees and they must follow them. First, the payee must use the monthly benefit payments for the beneficiary’s daily needs for food and shelter. Then, the payee must use the money for the beneficiary’s medical and dental care. The payee can also pay for the beneficiary’s personal needs, such as clothing and recreation. Recreation can be going to the movies or a concert. It could be buying a book, music, or a video to watch.

After the payee pays bills, such as the rent or mortgage, utilities, and food. And, once other needs, such as clothing and recreation are paid, then the payee must save whatever is left over from the monthly benefit payments. Anything monies left over should be saved in U.S. Savings Bonds or an interest paying bank account. The bank account must be insured under either federal or state law. In other words, the payee must save the money in a safe place.

If the beneficiary is in a nursing home or institution, then the payee can use the benefits to pay the fees of the institution. Also, if the beneficiary is in a nursing home, then the payee should set aside a minimum of $30 each month to use for the beneficiary’s personal needs.

If you are the payee for a child receiving SSI payments, then you must seek treatment for the child’s medical condition if necessary.

WHAT HAPPENS IF YOU ARE THE BENEFICIARY AND YOU GET A LARGE BACK BENEFIT

There are time when the SSA pays back due benefits to the claimant all at once in a lump sum. This benefit payment can be a large amount of money. If this happens, then the payee must spend the money on the beneficiary’s current needs such as rent and a security deposit, food, or furnishings. After paying these expenses, the payee may spend the money to improve the beneficiary’s daily living conditions or for better medical care.

The payee should always use the money for the beneficiary’s best interests. Learn more about the increase in Social Security benefits here.

The payee may decide to use the funds for major health expenses, if they are not covered by health insurance. Examples of these expenses are reconstructive dental care, a motorized wheelchair, rehabilitation expenses, or insurance premiums. The payee can also use the money to arrange for the beneficiary to go to school or get special training. Also, the payee spend some of the money for recreation, such as movies, concerts, or magazine subscriptions.

SPECIAL PURCHASES FOR THE BENEFICIARY CAN BE MADE BY THE PAYEE

The payee can use a large back benefit payment to make special purchases for the beneficiary. For example, special purchases can be:

• A home — Use funds for a down payment. Use the money for payments on a house owned by the beneficiary. 
• Home improvements — Pay for repairs to make the beneficiary’s home safer or more accessible. For example, benefit can pay for the installation of a ramp or for widening doorways for wheelchair access. 
• Furniture — Buy furniture for the beneficiary’s personal use. You can buy items such as a television the beneficiary can share with others in the household. 
• A car — Use funds for a down payment. Use the money for car payments for the beneficiary’s car.

The rep payee must be careful when paying for special purchases, because some purchases can count against a beneficiary’s resources. An SSI recipient must not have resources worth more than $2,000 ($3,000 for couples). Some items the payee could buy might cause the beneficiary to lose their SSI payments. Also, benefit money the payee doesn’t spend could count as a resource. Therefore, the payee should check with the SSA before making any special major purchases for an SSI recipient. Learn more here in our article SSI benefits – What You Need to Know.

WHAT IS A DEDICATED ACCOUNT FOR PAST DUE SSI PAYMENTS?

Sometimes, blind children or children with a qualifying disability, like autism spectrum disorder, will receive large past due SSI payment covering more than six months of benefits. Usually, these payments must go directly into a separate banking account. The SSA calls this a “dedicated account” because funds in this account are only for certain expenses related to the child’s disability. The dedicated account must be separate from other bank accounts. Except for certain past due payments, no other funds may be put into the dedicated account. The SSA does not count money in the dedicated account as a resource. They also do not count the interest earned on the money as a resource.

The money in the dedicated account can only be used for the following expenses:

• Medical treatment and education or job skills training for the beneficiary. 
• Personal needs related to the disability of the child. For example, therapy, rehabilitation, special equipment, and housing modifications. 
• Necessary items or services for the child, such as legal fees for the child’s benefit claim.

You must keep a record of all money taken from this account. Save the receipts for all items or services bought because we’ll review these records at least once a year.
If you knowingly use money from the dedicated account for anything other than the expenses listed above, you must repay us from your own funds. If you have questions about dedicated accounts, contact us.

HOW TO HOLD FUNDS

The Treasury Department requires all federal benefit payments to be made using a form of electronic payment. We recommend that you hold benefits in a checking or savings account to protect against loss or theft. Also, don’t mix the beneficiary’s funds with your own or other funds.

The payee must save any money left over after meeting the beneficiary’s personal needs. The best way of saving is through U.S. Savings Bonds or an interest paying bank account. The accounts must be insured under either federal or state law. Interest earned belongs to the beneficiary.

The checking or savings account title must show the beneficiary’s ownership of the funds and show you as the financial agent. Neither you as the payee, nor another third party, can have any ownership of the account. The beneficiary must never have direct access to the account. Any account title (under state law) that shows beneficiary ownership of the account with the payee as the financial agent is acceptable. Don’t use joint accounts.

HOW TO HOLD THE TITLE OF THE ACCOUNT

The SSA recommends that the payee title the account in one of the following ways:

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

However, there is an exception for parents and spouses who are representative payees. A common checking account for all family members living in the same household who receive benefits may show a parent or spouse as the owner of the account. Children’s savings, however, must be in separate savings accounts for each child. And, they must show the child as the account owner.

Sometimes nursing homes or other organizations place funds for several beneficiaries in a single checking or savings account known as a “collective account.” This is usually acceptable, but special rules apply to these accounts: 

• Account titles must show the funds belong to the beneficiaries and not the representative payee. 
• The account must be separate from the organization’s operating account. 
• Any interest earned belongs to the beneficiary. 
• There must be proper procedures to document credits and debits with clear and current records of each beneficiary’s share. 
• The organization must make the account and records available to the SSA when they ask for them. 

More information about being a payee is available in the Guide for Organizational Representative Payees  available online or from any local Social Security office.

THE REPRESENTATIVE PAYEE MUST KEEP RECORDS OF THE MONEY

As a payee, you’re responsible for keeping records and reporting on how you spend the benefits by completing a Representative Payee Report. The SSA will mail the proper form to the payee once a year. You can also file the report online on Social Security’s website.

You must complete the report unless you are exempt. The following types of payees are exempt from the annual accounting requirements: 

• A natural or adoptive parent of a minor child who resides in the same household as the beneficiary.
• A legal guardian of a minor child who resides in the same household as the beneficiary. 
• A natural or adoptive parent of a person with a disability who resides in the same household as the beneficiary. 
• The spouse of an individual.

When you 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.

PAYING INCOME TAX

Some people who get Social Security benefits have to pay federal income tax on them. At the beginning of each year, the SSA will mail each beneficiary a Social Security Benefit Statement (Form SSA-1099) that shows the total benefits they received during the previous year. The payee should give this statement to the beneficiary’s tax preparer to determine if any taxes are due on the benefits.

If Medicaid pays more than half the cost for an SSI recipient in a medical facility, the SSA limits SSI payments to $30 a month, plus any extra money the state pays. The SSA also applies this limit to children under age 18, if private health insurance — or both private health insurance and Medicaid — pay more than half the cost of the child’s care in a medical facility. The payee must use the entire payment for the child’s personal needs. After meeting all the needs, the payee must save any money left over for the beneficiary.

It is hard to imagine what money the SSA thinks will be left over after the payee has a grand total of $30 a month to pay for the beneficiary’s needs. Nevertheless, if somehow the beneficiary’s bills aren’t more than the $30 a month, then the payee must save the leftover pennies in an insured account.

CHANGES THE PAYEE MUST REPORT

The payee needs to tell the SSA about any changes that may affect benefit payments. It is the payee who must repay money if the payee fails to report any of the events below to the SSA. For example, the payee must tell the SSA if:

• The beneficiary moves. 
• The beneficiary starts or stops working, no matter how little the earnings amount. 
• The beneficiary’s medical condition improves. 
• The beneficiary starts receiving another government benefit or the benefit amount changes. 
• The beneficiary travels outside the United States for 30 days or more. 
• The beneficiary is imprisoned for a crime that carries a sentence of more than one month. 
• The beneficiary is committed to an institution by court order for a crime committed because of a mental illness. 
• Custody of a child beneficiary changes or a child is adopted. 
• The beneficiary is entitled as a stepchild, and the parents’ divorce. 
• The beneficiary gets married. Learn more here about marriage and how it may impact your SSI benefits.
• The beneficiary no longer needs a payee. 
• The beneficiary dies. 

OTHER CHANGES TO REPORT TO THE SSA

You must also tell the SSA if:

• the payee is no longer responsible for the beneficiary. 
• the beneficiary or payee move. 
• the payee is convicted of a felony
• the payee must tell the SSA if they or the beneficiary have an outstanding arrest warrant for a felony in the state where the payee or the beneficiary live. In states that don’t classify crimes as felonies, the payee must also tell the SSA if they or the beneficiary have an outstanding warrant for a crime punishable by death or imprisonment for more than one year.
  

If you fail to report any actions to the SSA, then the SSA may pay the beneficiary too much money. In that case, it is the payee that may have to return the money the beneficiary wasn’t due and the payments may stop. If the payee intentionally withholds information to continue to receive payments, then they may face criminal prosecution. Criminal penalties can include fines and imprisonment.

CAN YOU CHANGE YOUR REPRESENTATIVE PAYEE? 

A beneficiary may want to change their payee if the beneficiary finds a person or organization that better fits their needs. They may also want to change their payee if they think their payee is misusing their SSA benefits. Likewise, if you think your payee is unable to manage your benefits or is not following SSA payee rules, then you should request that the SSA appoint you a new payee.

The SSA has a preference list for for those who they think will be the best payees. SSA can choose not to follow its order of preference if SSA decides it is in the beneficiary’s overall best interest to choose someone lower on the list. Below please find SSA’s preference list.

PAYEE PREFERENCE LIST FOR ADULTS

1. A spouse, parent or other relative with custody or who shows strong concern;
2. A legal guardian/conservator with custody or who shows strong concern;
3. A friend with custody;
4. A public or nonprofit agency or institution;
5. A Federal or State institution;
6. A statutory guardian;
7. A voluntary conservator;
8. A private, for-profit institution with custody and is licensed under State law;
9. A friend without custody, but who shows strong concern for the beneficiary’s well-being, including persons with power of attorney;
10. Anyone not listed above who is qualified and able to act as payee and who is willing to do so;
11. An organization that charges a fee for its service.

If a beneficiary believes there is a payee who is a better fit for their circumstances, then the beneficiary should contact the local SSA office and tell them about it. The SSA looks at the circumstances in each case to decide what is in the beneficiary’s best interest. Obviously, the beneficiary’s desires matter to the SSA.

WHAT EVIDENCE DO YOU NEED TO PROVE THAT YOU DON’T NEED A REPRESENTATIVE PAYEE?

SSA reviews any evidence that can help them understand a beneficiary’s ability to manage their benefits. This is called a capability determination. SSA looks at legal, medical, and lay evidence to determine whether or not you can manage your own funds.

LEGAL EVIDENCE

If a court declares a beneficiary legally incompetent to manage their own finances, then the beneficiary must have a payee. If a beneficiary who has been found legally incompetent requests direct payment of benefits, then the SSA must get evidence showing the beneficiary is now competent. The beneficiary must continue to have a payee as long as they don’t have legal evidence proving competence.

MEDICAL EVIDENCE

Medical evidence is evidence from a doctor or psychologist that tells the SSA whether a beneficiary is able to manage their funds. Usually, the medical evidence is a signed opinion by a doctor who knows or has examined the beneficiary. The SSA will use this medical evidence if it is up to date. This usually means the exam was within the last year. Medical evidence from a doctor is very important to SSA, but is not the only factor they consider.

LAY EVIDENCE

Unless there is evidence of legal incompetence, SSA must also consider lay evidence to determine the ability to manage funds. The SSA can have a face to face interview with the beneficiary, which is the person who is getting the benefits. They can review statements from family and friends. Likewise, they can ask questions about how the beneficiary will deal with their own money. Each case is looked at by the SSA and then a decision is made.

WHO MAY NOT BE A REPRESENTATIVE PAYEE?

A payee must meet SSA’s qualifications. Generally, a person cannot be a payee if the person:

• violates the Social Security Act
• is convicted of an offense resulting in imprisonment for more than one year
• receives SSA benefits through a payee
• previously served as a payee and was found by SSA or a court to have misused benefits
• the payee is a creditor
• SSA may allow a creditor to be a payee if the payee poses no risk to the beneficiary

WHAT HAPPENS TO THE BENEFITS IF THE BENEFICIARY DIES?

If the beneficiary dies, the payee must give any saved benefits to the legal representative of the estate. State law applies to the benefits. If you need information about your state laws, contact the probate court or an attorney.

When a person who receives Social Security benefits dies, no check is payable for the month of death. This is true even if they die on the last day of the month. You must return any check received for the month the beneficiary died. An SSI check, however, is payable the month of death. But you must return any SSI checks to the SSA that come after the month of death.

If you need more information about what the amount of your monthly benefits payment is, then read here.

MEDICARE AND MEDICAID BENEFITS

The payee may need to help the beneficiary get medical services or treatment. This is part of being a payee for a child who gets SSI. The adult payee should keep a record of medical services and medical expenses not covered by Medicare and Medicaid. Likewise, it is always smart for the payee to keep a record of all of the benefit money they are spending on medications, counseling, or other medical costs. For more information about Medicare benefits, read here. They payee should also help the beneficiary make decisions about Medicare Advantage plans. Learn more about Medicare Advantage plans here.

If the beneficiary has low income and few resources, your state may pay Medicare premiums and some medical expenses. A person may qualify for these premium payments even if their income or resources are too high for SSI. For more information, contact your state Medicaid agency and you can also read more information about Medicaid benefits here.

The beneficiary may also be able to get Extra Help paying for the annual deductibles, monthly premiums, and prescription co-payments related to the Medicare prescription drug program. The beneficiary may qualify for Extra Help if they have limited resources and income. These resource and income limits usually change each year. For help completing your application, see Instructions for Completing the Application for Extra Help with Medicare Prescription Drug Plan Costs.

IF YOU NEED HELP WINNING DISABILITY BENEFITS CONTACT CANNON DISABILITY LAW

At Cannon Disability Law, our Salt Lake City Social Security lawyers have won over 20,000 SSDI and SSI cases. Also, in 30 years we have won over $100 million in back due and ongoing benefits for our clients. You are three times more likely to win your benefits if you hire an attorney. However, you need to hire an attorney who has legal experience and understands the law. You should also hire an attorney to help prepare you for your psychological exam with the SSA.

If you have a mental or physical condition that prevents you from working for over 12 months, then we can help win your benefits. You can apply for SSDI and SSI benefits on Social Security’s website. If you need help filing your claim, call us today. Every day you wait to file your claim is a day you lose money. Because SSI benefits begin on the date of your application.

Contact us today. Take advantage of our free review of your case. Call and we will answer your questions. You can explain why your physical or mental condition prevents you from working. We will be able to tell you if you qualify for benefits and if you have a good chance of winning benefits.

THE LAWYERS AND STAFF AT CANNON DISABILITY LAW

If you want to learn more about the lawyers and staff at Cannon Disability Law, then read our About Us page. There you will find more information about each of our attorneys and our staff. For example, Andria Summers can help you with your Medicare plan. Likewise, she has also won thousands of Social Security cases.

Dianna Cannon also has over 30 years of experience helping her clients win benefits in court. Ms. Cannon also has law licenses in a number of states. For example, she has law licenses in California, Utah, Nevada, and Washington State. If you need help filing for benefits or you need to appeal a decision from the SSA, contact our firm. If you need information about filing for benefit in California, read here. Utah SSDI benefits information is here on our website. Likewise, you can learn more about Nevada SSD and SSI benefits here. We can help you no matter where you live.

Additionally, Brett Bunkall has experience helping people obtain their SSI and SSD benefits. He is also has a license to practice law in Utah and by the Idaho State Bar Association. Find out more about disability benefits in Idaho here. Similarly, all of our lawyers and staff are Social Security law experts. You can trust us to help you win benefits and help you with representative payee issues.