In 1939, Congress first authorized the Social Security Administration (SSA) to make benefit payments to another person or organization (aka a representative payee) when a beneficiary is not capable of managing his or her own Social Security benefits.
Representative payees are required for adults judged legally incompetent by a State court and for most minor children. Most legally competent adult beneficiaries do not require payees, however, a competent adult unable to manage or direct the management of his or her own benefits may require a payee. As of the end of 2016, 8.8% of all beneficiaries required a representative payee. While that may seem small, it equates to ~5.3 million people.
Typically, SSA will first consider the beneficiary’s family and friends for the payee position. Where such support networks do not exist, SSA may rely upon state, local or other community resources instead. Payees are NOT allowed to collect a fee for services performed. However, very limited exceptions exist for certain organizations who must file a separate application (SSA-445) to obtain authorization to collect a fee.
A payee has significant responsibilities to the beneficiary and to SSA. The payee’s responsibility to the beneficiary is to decide how benefits should be spent to secure him or her a stable living environment. This should ensure that the beneficiary’s food, shelter, clothing and medical care needs are met. If any funds are leftover, they should be saved for the beneficiary’s future use. At least once per year, the payee must report how benefits were used or saved. Thus, it is important the payee keep a record of deposits and expenses for each beneficiary served.
Additionally, the payee must report to SSA any changes that would impact the beneficiary’s entitlement to benefits or payment amount. This includes whether the beneficiary moves, dies, divorces, changes his or her name, starts or stops working, changes his medical status, is incarcerated, is overpaid, or no longer needs a representative payee.
This list of responsibilities is not comprehensive. Many other issues can arise while acting as a payee. Moreover, the nature of the benefits payable can alter how a representative payee may act. For example, the nature of Social Security Disability (“SSD”) and Supplemental Security Income (“SSI”) is very different. Thus, it is important that a representative payee understand the nature of the benefits payable to his or her beneficiary.
The Strengthening Protections for Social Security Beneficiaries Act of 2018:
Changes to the representative payee program last took place 14 years ago. In the interim, significant concerns have been raised about the SSA’s management of the program.
Congress recently passed the Strengthening Protections for Social Security Beneficiaries Act of 2018. This bill was signed into law on April 13, 2018, the effective date. The Act will:
- Increase oversight of representative payees by increasing the number of performance reviews of payees.
- Eliminate the requirement to file the annual accounting form for representative payees who are parents living with their child or who are spouses
- Require SSA to identify whether a beneficiary is in foster care and reassess whether the payee is appropriate, and direct SSA to study how better to coordinate with Adult protective Services and with state guardianship courts.
- Allow beneficiaries to make a designation of their preferred payee in advance and require SSA to assess the appropriateness of the order of preference list it uses to select payees.
- Codify the policy that bans individuals with certain criminal convictions from serving as payees and prohibiting individuals who have payees from serving as a payee for others.
- Limit overpayment liability for children in the child welfare system.
SSA may be contemplating other changes to the representative payee system. Among other things mentioned by the Social Security Advisory Board, it recommended the Office of Management and Budget study how best to coordinate the management of federal benefits for people who have been determined to be financially incapable, with the recognition of alternative approaches such as Supported Decision Making.
Taking on responsibility as a representative payee can seem daunting. To address this, SSA provides several resources and publications for guidance. This includes online publications outlining the representative payee obligations (whether an individual or organization) as well as the opportunity to maintain accounting through SSA’s website. Such resources can be found here: (https://www.ssa.gov/payee/NewGuide/toc.htm). When in doubt, you can call Social Security at 1-800-772-1213 or visit your local SSA District Office.