Note that even if you have power of attorney for your loved one, you still have to apply and be approved as a Social Security representative payee.
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Grow Your Legal Practice. Meet the Editors. A social security representative payee helps disabled individuals manage their benefits. Who Needs a Representative Payee? The following recipients of disability benefits are required to have a Social Security representative payee: minors adults declared legally incompetent, and adults who have drug or alcohol problems. What Does the Payee Have to Do? Spending the Disability Benefits on Behalf of the Beneficiary A representative payee must deposit the benefit checks in a checking or savings account not a joint account and use the money to pay for the disabled person's: housing food clothing utilities medical and dental expenses, and personal care items.
If a beneficiary believes there is a rep payee who is a better fit for their circumstances, the beneficiary should contact the local SSA office regardless of whether the proposed rep payee meets the standards above or is lower on the preference list than the current rep payee is. Generally, SSA will remove a rep payee and make direct payment to a beneficiary when the beneficiary demonstrates they are mentally and physically able to manage or direct the management of benefit payments.
To request removal of a rep payee, a beneficiary should complete the appropriate SSA form, which will ask the beneficiary to explain why they can handle their own benefits. If SSA determines a full review is needed, SSA may interview the beneficiary, interview other knowledgeable people, and review documents to determine whether the beneficiary is capable of managing their own funds.
If possible, a beneficiary may want to gather the following documents prior to filling out the SSA form requesting removal of a rep payee and prior to any interview:. This is called a capability determination. SSA looks at legal, medical, and lay evidence to determine capability. These types of evidence are described below.
In terms of legal evidence, if a court has declared a beneficiary legally incompetent to manage their own finances, the beneficiary must have a rep payee.
If a beneficiary who has been found legally incompetent requests direct payment of benefits, SSA must get evidence showing the beneficiary is now competent. If SSA cannot get this evidence, the beneficiary must continue to have a rep payee. Medical evidence is evidence from a doctor, psychologist, or other qualified medical practitioner that helps SSA determine whether a beneficiary is able to manage or direct the management of their funds.
Medical evidence is usually a signed opinion by a qualified medical practitioner who conducted an examination of a beneficiary. Medical evidence used in determining capability must be up to date; generally, this means it is based on an examination within the last year.
Medical evidence is very important to SSA, but is not the only factor considered. Therefore, if you have power of attorney for a beneficiary who is found incapable of managing their own benefits, you must still file an application to serve as rep payee. No, unless you are a qualified organizational payee who has applied and been approved in writing by SSA to collect a fee. SSA never authorizes an individual payee to charge a fee for their payee services.
To qualify as a fee for service payee, your organization must be:. You may be reimbursed for reasonable actual out-of-pocket expenses you incurred on behalf of the beneficiary. The amount of reimbursement must correspond with the actual expense you incurred for the beneficiary. You must keep records of your out-of-pocket expenses. Note: If you are a fee for service payee, the cost of postage is not reimbursable.
For example, the costs associated with utilities, rent, office equipment and supplies cannot be collected from beneficiaries. In making the decision to use a checking account, you should consider the fact that some beneficiaries cannot maintain high enough balances to avoid service charges. But if you must pay bills through the mail, a checking account would still be cost effective because cashier's checks and money orders have charges associated with them, as well.
You should set up an account that minimizes fees and enables you to keep clear records. SSA encourages interest-bearing accounts. The bank account must be titled so that it is clear that the money in the account belongs to the beneficiary.
What Is the Proper Use of Benefits? Benefits should be used for current needs such as food, clothing, shelter, utilities, dental and medical care and personal comfort items, or reasonably foreseeable needs.
If not needed for these purposes, the benefits must be conserved or invested on behalf of the beneficiary. Where the beneficiary has unmet current maintenance needs, saving benefits serves little purpose and would not be in the beneficiary's best interests. A payee cannot:.
Are there other restrictions on what a payee can do? Payees also have no legal authority over earned income, pensions, or any income from sources other than Social Security or SSI, unless the payee is also a legal guardian or has power-of-attorney for a beneficiary.
What Is My Responsibility? Your main obligation is to ensure that the current needs of the beneficiary are met. Once that has been done, the beneficiary has the right to have some discretionary spending money, even if you do not approve of all of his or her choices. In the case of drug or alcohol abuse, you may want to give the beneficiary only small amounts of spending money, or purchase food to give to the beneficiary, rather than giving him or her cash.
How much do they want to set aside for savings for more significant expenses or purchases, like first, last and security deposit; a car; a vacation? Below is a very basic budgeting form I like to use as a starting point. Within the last few years, ABLE accounts have been getting a lot of press — and for good reason.
For individuals who became disabled at birth or at a young age, an ABLE account is a wonderful way for the individual to save money for important needs and not have those assets affect the essential financial and healthcare benefits they need.
In the resources below is an article from Disability Scoop with information about these updates. They are many ways to do this, and it may take some trial and error to find the best way for your child. It is important to remember that you are not allowed to give the beneficiary direct access to the bank account as the representative payee.
That means you cannot just hand over the debit card to your child. However, many companies offer programs that help young people and adults manage their money. And yes, I have worked with individuals who were without personal spending money within days of receiving their excess funds for the month. Still, I have worked with individuals who have, over time, been able to build some savings and a greater understanding of money management.
I have listed some in the resources, but these are not ones I have personally used, so please review and see which ones you think would work best for your family. Another method that I find beyond useful to help build financial independence and assess current money management skills is to transfer the responsibility of paying a bill over to the individual.
This should be a lower priority bill, like the cable bill, a streaming service or a cell phone bill. As time goes on and the person can pay the bill on time without prompts, increase the number of accounts the person is responsible for paying.
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