As a result of a finding that he was mentally incompetent, K, who had no resources except his old-age insurance benefits, was committed to a State mental hospital. His son, L, was designated as payee to receive the monthly social security benefits of $79 or K's behalf. After investigation of K's social security benefits of $79 on K's behalf. After investigation of K's resources, the State, which had a maximum monthly charge of $81 for hospital care and maintenance, established a monthly maintenance charge of $60 for him. It requested that L pay this amount plus an additional $10 a month for K's use in making purchases from the hospital canteen. L refused to honor this request on the grounds that he intended to save the benefits until he had accumulated a fund of $2,000 to be used for K's funeral expenses.
Section 205(j) of the Social Security Act provides that, when the interest of an entitled individual is served thereby, his social security benefits may be paid to a relative or some other person for his use and benefit.
In keeping with this provision, a person designated to receive and administer benefits on behalf of another receives the benefits as a fiduciary for the purpose of applying the money in the best interest of the beneficiary. In discharging his responsibilities as fiduciary, the payee must take into account the beneficiary's circumstances and over-all needs including, in some cases, his legal obligations. In determining what allocation of the benefit amount will serve the best interest of a hospitalized beneficiary, the payee must give favorable consideration to meeting properly assessed hospital charges for treatment, care, and maintenance as well as to the patient's need for other goods and services which will contribute to his well-being.
Although conservation of part of the benefits for specific foreseeable purposes of predictable advantage to the beneficiary (such as rehabilitation or reasonable funeral expenses) is for the "use and benefit" of the beneficiary, such conservation should not be at the expense of the beneficiary's current maintenance and personal needs; nor should it exceed such amounts as appear to be reasonable in view of the beneficiary's individual circumstances.
Accordingly, it is held that, unless L reconsiders his refusal and agrees to manage benefits in the best interest of K, he will be discontinued as payee.
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