1617. Use of Benefit Payments

1617.1 What is the proper use of funds?

A representative payee must apply the payments for the use and benefit of the entitled individual. Social Security and/or SSI funds are properly used if they are:

1. Spent for the beneficiary's current and reasonably foreseeable needs (see §1618); or

2. Saved or invested for the beneficiary, after current needs have been met (see §1620).

1617.2 May payments be applied to the needs of other individuals?

Yes. If the current and reasonably foreseeable needs of a Social Security beneficiary are being met, part of the benefits may also be used to support a spouse, child, or parent who is the beneficiary's legal dependent.

1617.3 May funds be used for someone other than the beneficiary, if the beneficiary is institutionalized?

For institutionalized beneficiaries whose current needs are being met, part of the beneficiary's Social Security funds may be used for:

1. The support of the community spouse (the legal spouse of the beneficiary); and

2. Any dependent family member as specified in the Medicaid determination.

Note: SSI funds may not be used to support a beneficiary's dependents.

1617.4 What expenditures are given priority for beneficiaries in institutions or nursing homes?

If a beneficiary is in an institution or nursing home that is not receiving Medicaid funds on behalf of the beneficiary, the representative payee will give priority to using funds for the current maintenance of the beneficiary. Current maintenance includes:

1. Customary charges made by an institution/nursing home for the beneficiary's care;

2. Items that will aid in the beneficiary's recovery or release; and

3. Personal needs to improve the beneficiary's condition while in the institution.

1617.5 How much money should be set aside for personal needs of beneficiaries who are in institutions or nursing homes?

The representative payee is required to set aside at least $30 each month for a beneficiary living in an institution or nursing home, to be used for the beneficiary's personal needs or saved on his or her behalf.

1617.6 What is misuse of Social Security and/or SSI funds?

Generally, misuse occurs when a representative payee converts Social Security and/or SSI payments for purposes other than the "use and benefit" of the beneficiary or for certain legal dependents of the beneficiary after the beneficiary's current and reasonably foreseeable needs are met as explained in 1617.2.

1617.7 Does a representative payee who misuses funds owe the beneficiary the money?

A representative payee who misuses Social Security and/or SSI payments owes the beneficiary the amount of misused funds. However, SSA will reissue misused benefits to the beneficiary when:

1. It has been determined that the representative payee has misused funds and the payee is an organization or an individual payee serving 15 or more beneficiaries; or

2. It has been determined that an individual representative payee serving 14 or fewer beneficiaries has misused funds and SSA was negligent in following procedures to investigate or monitor the representative payee's actions.

SSA will seek restitution of the misused benefits from the representative payee by treating the misused amounts as an overpayment to the misuser payee.

1617.8 What are the penalties for misused Social Security or SSI funds?

When a representative payee misuses funds, we may refer the case for criminal prosecution. The penalty upon conviction for a payee's misuse of funds may be a fine of up to $250,000, imprisonment up to 10 years, or both.

When the case is not criminally prosecuted, SSA may impose a civil monetary penalty up to $5,000 for each payment or partial payment misused and an assessment of not more than twice the amount of the misused benefits.

Last Revised: Aug. 17, 2009