LAW FIRM BLOG
Social Security Representative Payees
August 02, 2021
Generally, unless there are indicators or evidence to the contrary, a person qualifying for Social Security benefits is presumed by the SSA to be capable of managing their finances, and their benefits are disbursed directly to them. Indicators a “representative payee” may be needed include the beneficiary’s difficulty answering questions, providing necessary information, and understanding explanations, or information that needs to be reported to the SSA.
How the SSA Determines Beneficiary Capability
When the SSA learns of evidence that may prevent a beneficiary from managing their benefits, it must make a capability determination and decide whether representative or direct payment is in their best interest. SSA staff that make a capability determination obtain and evaluate evidence from medical providers, family, friends, and other knowledgeable sources. Lay evidence can include direct observation during a face-to-face interview and signed statements from individuals applying to be an individual’s representative payee. Although preferred, SSA does not require a face-to-face meeting between an employee and a claimant to determine his or her capability to manage funds. The SSA instructs staff to be mindful of changes in circumstances that may indicate a capability re-determination is necessary, and agency policy is to re-evaluate a beneficiary’s capability when staff receives a valid request for a new determination.
The representative payee program serves a vital purpose for some of our most vulnerable citizens such as, individuals who are under age 18, or have a diagnosed mental impairment or drug or alcohol addiction which interferes with their ability to manage their finances. The representative payee will receive the benefits on their behalf, and disburse them directly to payors such as landlords, or to the disabled person, while providing money management assistance and oversight (e.g., help with purchasing items, limiting discretionary spending). Note that even if you have been appointed power of attorney for a loved one, you still have to apply and be approved as a Social Security representative payee.
Who is a Representative Payee?
A representative payee may be an individual or an organization. The representative payee generally does not charge a fee for this service, especially if the payee is a friend or relative. Social service agencies who are assigned as payees are prohibited from charging a fee, though some private payee agencies do provide the service for a small fee. Some states and counties have representative payee agencies (also called substitute payee programs) which receive the benefits on behalf of the disabled person’s social worker, and disburse the benefits per the social worker's instructions.
How Many Beneficiaries Have Payees?
More than 5.1 million out of 60 million Social Security beneficiaries (about 8%) had representative payees as of December 2019, the most recent data available, including:
• 1.5 million retired or disabled workers and their spouses, widows or widowers.
• 3.6 million “children,” a figure that includes children and those over 18 years who have been disabled since childhood.
Responsibilities of a Representative Payee
• Determine the beneficiary’s total needs and use the benefits received in the best interests of the beneficiary to meet his or her essential needs, such as food, housing, utility costs, and medical and dental care. The money can also be used for expenses like education, clothing, rehabilitation, and recreation.
• Save and invest any remaining funds from benefit payments in an interest-bearing bank account or trust account for the beneficiary’s future needs. The bank account into which benefits are deposited should be fully owned by the beneficiary (not a joint account), with the payee listed as a financial agent.
• Keep records of benefit payments received and how the money was spent or saved. Payees, who do not live with the beneficiary, are required to submit written annual reports to the SSA describing any event that will affect the amount of benefits the beneficiary receives and accounting for how benefits are used.
• Report to the SSA any changes or events that could affect the beneficiary’s payments (for example, a relocation, marriage, divorce, incarceration, arrival or departure of other person(s) in the household, or death).
• Notify the SSA of any change in circumstances that affect the payee’s ability to serve in the role.
