Become an Organizational Payee
Training for Organizational Payees
Become an Organizational Payee
Training for Organizational Payees
Guide for Organizational Representative Payees
The Social Security Administration recognizes your work on behalf of those who need help and we are committed to providing you with the guidance and assistance you need to fulfill your duties as representative payee.
Welcome to the Guide
The Social Security Administration (SSA) has developed this Guide for Organizational Payees to help organizations serving as representative payees. It should help you understand the duties and responsibilities of a payee.
We encourage you to use the Guide to develop your payee system and procedures to meet the needs of your beneficiaries and maximize your organization’s resources.
You and your staff, especially those who work with beneficiaries, manage their funds, and report changes to SSA should read and have access to the Guide.
For your convenience, the Guide, as well as other payee information, is available online at:
https://www.ssa.gov/payee.
If you cannot find the information you need in the Guide, or on our website, you may visit your local Social Security office or call our toll-free number at 800-772-1213.
If you call, you can speak to a service representative between the hours of 7:00 a.m. and 7:00 p.m. on business days.
If you call about a specific case, be sure to have the following information available:
New in the Guide
We have added a section about foster care agencies who serve as representative payee.
Beneficiary – an individual receiving Social Security or Supplemental Security Income (SSI) benefits
Collective Account – a single savings or checking account in which a representative payee holds funds for multiple beneficiaries for whom they serve. We must approve collective accounts before you can deposit beneficiary funds into them. The account must clearly show the individual amounts for deposits, withdrawals and interest earned for each beneficiary.
Conserved Funds – funds saved, or conserved, by the representative payee. Funds in excess of the amount needed to meet a beneficiary's current or reasonably foreseeable needs are the property of the beneficiary. A payee must conserve these funds on behalf of the beneficiary.
Custody – the control, supervision and care of the beneficiary. A payee may have physical custody of the beneficiary, meaning that the beneficiary actually lives with an individual payee or is in the care of an organizational payee. A payee may also have legal custody meaning that a court has issued an order placing a beneficiary in the care of an individual, institution, or other agency.
We do not consider temporary changes, such as vacations or short trips by the beneficiary, as a change in custody.
Dedicated Account -- a specific, separate account at a financial institution that is used only for the deposit of large past-due SSI payments (usually a payment covering more than 6 months of the current benefit rate) made to a representative payee on behalf of a disabled child under age 18.
Drug Addiction or Alcohol Condition (DAA) -- our determination that a disabled beneficiary has a drug addiction or alcoholism disorder. We do not pay disability benefits based primarily on a DAA condition but we may determine an otherwise disabled beneficiary has a DAA condition.
Fiduciary – a person or entity authorized to handle money on behalf of another.
Fiduciary Account -- an account established by a person or entity on behalf of another party.
Incapable – a determination we make that a beneficiary is unable to manage or direct the management of funds. We pay benefits due a beneficiary determined incapable through a representative payee. We base a determination of incapability on various kinds of evidence.
Our determination of incapability is not the same as a State court’s finding of “legal incompetence” and the two findings are not necessarily equivalent.
Incompetent (or legally incompetent) – a decision made by a State court that an individual is unable to manage their affairs. We presume that any beneficiary a State court finds legally incompetent needs a payee for SSA benefits. On the other hand, a beneficiary we determine incapable might not also be legally incompetent.
Before we select a payee based on a State court’s finding of legal incompetence, we must receive a copy of the court ruling as part of the documentation to support our decision.
Legal Guardian/Conservator – someone appointed by a court of law to be responsible for a minor or an incompetent adult. In some States, the terms “guardian” or “conservator” have the same meaning regarding persons placed in charge of another’s affairs.
We do not automatically select a legal guardian or conservator as payee for a beneficiary. Instead, we make an independent judgment in every case to determine who will best serve the beneficiary as payee. This may or may not be a legal guardian/conservator.
Misuse – Using the funds a payee manages on behalf of a beneficiary for someone other than the beneficiary. Misuse is prosecutable theft and payees who commit misuse must make restitution. We consider the misuse of benefits an overpayment to the payee.
Overpayment – an amount of benefits paid to a beneficiary, or to the payee of a beneficiary, to which the beneficiary is not entitled; or funds misused by a payee.
Funds misused by a payee are an overpayment to the misusing payee and the payee is liable for repayment of the debt.
Power of Attorney – a legal authorization granting someone the right to transact certain business for an individual. It does not diminish the rights of the individual and does not necessarily involve capability or competence.
The U.S. Treasury Department does not recognize power of attorney for the purpose of negotiating Federal payments, including Social Security or SSI payments. Therefore, a person with power of attorney for an incapable or incompetent beneficiary must still apply to SSA to become payee and to receive benefits on behalf of the beneficiary.
Representative Payee – an individual or organization we appoint to receive and manage the Social Security or SSI benefits of another person.
A representative payee must use the funds they receive for the use and benefit, and in the best interest of, the beneficiary.
We categorize payees into two broad groups:
Individual payees – These include relatives, guardians, friends, or any other interested person who is in a position to care for the beneficiary.
Organizational payees – These can include social service agencies, institutions, State or local government agencies, or financial institutions.
RSDI Benefits – Retirement, Survivors and Disability Insurance benefits paid by SSA under Title II of the Social Security Act. These are also sometimes called Social Security benefits. They are based on the earnings of a worker who has paid into the system by paying Federal Insurance Contributions Act (FICA) tax for a specified period of time. A worker, or their family, can receive RSDI benefits upon the worker’s attainment of a certain retirement age, disability, or death.
SSI Benefits – Supplemental Security Income benefits paid by SSA under Title XVI of the Social Security Act for aged, blind, and disabled persons with little or no income or resources.
The Social Security Administration (SSA) is an independent Federal government agency that administers two major benefit programs. For many Americans, these programs are an important source of income. In fact, for some they may be the only source of income.
The largest of these programs is the Retirement, Survivors and Disability Insurance (RSDI) program. This program is often referred to as Social Security.
The other is the Supplemental Security Income (SSI) program.
Social Security is a social insurance program that protects workers and their families from a loss of earnings because of retirement, death, or disability. Social Security benefits are based on the earnings of a worker who has paid into the system by paying Federal Insurance Contributions Act (FICA) tax for a specified period of time. A worker, or their family, can receive RSDI benefits upon the worker’s attainment of a certain retirement age, disability, or death.
The amount a beneficiary receives depends on the age at which the worker retires, becomes disabled, or dies and how long they worked.
SSI is a Federal income maintenance program for aged, blind, and disabled persons with little or no income or resources. Funding for SSI does not come from Social Security contributions. Rather, the United States Treasury’s general funds provide financing for this program. Some States supplement the maximum SSI Federal payment.
Because SSI is a needs-based program, the amount of resources or income an individual has may affect their eligibility to payments.
To receive SSI payments, a person must be age 65 or older, blind or disabled and must have limited income and resources. In order to qualify, an individual cannot have over $2,000 in countable resources ($3,000 for a couple).
(Important: In determining resources, we usually do not count the value of the beneficiary’s home and one car.)
Some individuals may receive both Social Security and SSI benefits. Eligibility depends on the individual meeting the requirements for each program.
As a payee, you need to know what type of benefit(s) a beneficiary is receiving and what events or changes you need to report to us. (See Reporting Events to SSA and Additional Reporting Events for SSI Beneficiaries.)
We always pay benefits through a payee for an adult judged legally incompetent by a State court.
We usually pay benefits through a payee for a minor child.
Otherwise, we usually pay benefits directly to legally competent, adult beneficiaries.
However, there are some exceptions...
If we determine a legally competent adult is unable to manage or direct the management of their own benefits, we appoint a representative payee.
When selecting a payee, we usually first consider the beneficiary’s family and friends. For some beneficiaries, however, the traditional networks of support do not exist and for these we rely on state, local, or other community sources to fill the need.
If you are aware of an SSA beneficiary who has difficulty managing their funds, or directing someone to manage their funds, please contact your local SSA office.
A beneficiary with a drug or alcohol addiction (DAA) may have difficulty handling their own funds in a responsible manner. As in the case of every other beneficiary, we will determine, on a case-by-case basis, if they need a payee.
If we decide a beneficiary with a drug or alcohol addiction is incapable of managing their funds, we will select a payee for them. In these cases, we often select as payee an organization or agency experienced in serving individuals with addictions since these are often in the best position to know these individuals’ special needs.
As a payee, you play a vital role in serving our beneficiaries. You decide how to spend benefits to help create a stable living environment for the beneficiary and ensure that the basic current needs of food, shelter, clothing, and medical care are met.
Once current needs are met, you must save any leftover funds for the beneficiary’s future use.
Also, to the extent possible, you should:
At least once per year, we will ask you to report on how you used or saved the benefits you received. Therefore, you must keep records of deposits and expenses for each beneficiary you serve.
Important: Having power of attorney, being an authorized representative, or having a joint bank account with the beneficiary is not the same as being a payee. These arrangements do not give you legal authority to negotiate and manage a beneficiary’s Social Security or SSI payments. For that, you must apply to SSA and be appointed as a payee.
Generally, payees are not allowed to collect a fee from the beneficiary for performing payee services. However, in some very limited circumstances, we authorize certain types of organizations to collect a fee.
Qualified organizations seeking to collect a fee for payee services must first file a separate application (SSA-445) and receive written authorization from us. The organization must obtain the SSA-445, in person, from their local SSA office. (See Fee for Service (FFS) Payees, Getting Approved as a FFS payee, Fee Amounts, and Restrictions on FFS Payees.)
Important: By law, we cannot authorize an individual payee to collect a fee for payee services.
To become a payee, your organization must contact the local Social Security office to file an application. We generally require an authorized representative of your organization to complete this application in a face-to-face interview.
During the interview, we will:
We encourage you to go beyond managing finances and to become actively involved in the beneficiary's life. For example, you can:
As payee, you must promptly notify us of any event or change that will affect the beneficiary’s entitlement to benefits, amount of benefits, or your ability to fulfill the responsibilities of being payee.
The following list, while not all-inclusive, shows some of the most common things you must report:
To report changes, call our toll-free number, 800-772-1213, or call, fax or visit your local Social Security office. When you contact us, you must have on hand the beneficiary’s name, SSN, date and place of birth, mailing address and one other unique identifier such as benefit amount; and your organization’s name, address and employer identification number.
Important: If you do not report changes timely, and an overpayment occurs, you may be held responsible for repaying the overpaid amount.
This handbook contains a list of publications you may order from us or download from our website (www.socialsecurity.gov). These publications provide in-depth reporting instructions for Social Security and SSI beneficiaries.
If the beneficiary receives SSI payments, you must also report the following events:
There are limits to what a Social Security payee is authorized to do. We appoint a payee to manage Social Security and SSI benefits only.
Being a payee does not give you authority to:
As payee, you may not use a beneficiary’s Social Security or SSI funds for anything other than their use and benefit. But more than that, you must make reasoned judgments to use the funds in the beneficiary’s best interest.
To be able to do this, you must make yourself aware of the beneficiary’s basic current and reasonably foreseeable needs.
By “current and foreseeable needs” we mean primarily food, shelter, clothing, and medical expenses not covered by Medicare, Medicaid or provided by a residential institution. Once you have satisfied these needs, you may use the remaining funds for the beneficiary’s personal comfort items, recreation and miscellaneous expenses.
You must save, or conserve, any remaining funds on behalf of the beneficiary.
If your organization is also a creditor, you may not use the beneficiary’s funds to reimburse yourself for any debts the
beneficiary owes your organization without first obtaining our approval.
You must never sacrifice a beneficiary’s needs to pay other expenses, a past debt, or to accumulate conserved funds.
For various reasons, a beneficiary might receive a large payment covering several months, or even years, of past due benefits. If this happens, your first responsibility is to ensure the beneficiary’s current and foreseeable needs are met. These basic needs are food, clothing, shelter, and medical care.
After these needs are met, you may spend the remaining funds on other things that will improve the beneficiary’s daily living conditions.
For example, you might arrange for schooling or special training that will help the beneficiary become more self-sufficient. Or you may use a reasonable amount of excess funds on recreation items and activities for the beneficiary.
As always, you must use the funds wisely and in the beneficiary's best interest.
If you receive a large payment on behalf of the beneficiary and are unsure of how to use the funds, you should contact us.
You must conserve or save any remaining funds on behalf of the beneficiary.
Important: Conserving more than $2,000 ($3,000 for a couple) can affect a beneficiary’s SSI eligibility.
If you are payee for a beneficiary living in an institution (e.g., nursing home, hospital, group home, residential care facility, etc.), there are some special rules you need to know about:
You should set aside at least $30 per month and spend it for the personal needs of the beneficiary. If the beneficiary is receiving SSI benefits and living in an institution, this is required.
You may not use the $30 per month “personal needs” funds to buy items that the institution ordinarily provides, or for items that are paid for by a State or Federal program.
If you are not sure of whether a beneficiary is considered to be living in an institution, or if you are not sure how you may spend the funds, contact us for assistance.
Some typical examples of appropriate personal needs spending are:
Group Purchase with Personal Needs Funds
You may pool the personal funds of several resident beneficiaries for whom you are payee to make a group purchase provided you obtain our approval prior to making the purchase. Submit your request to your local Social Security office.
The purchase must be for something that will benefit all the contributing beneficiaries. An example of this kind of purchase might be a large TV that is kept in a communal area and accessible to all the contributing beneficiaries.For Social Security (not SSI) beneficiaries living in an institution whose current maintenance needs are being met, you may use part of the funds to support the beneficiary’s legally dependent spouse, child or parent. You should contact your local Social Security office before you use funds for this purpose.
If your organization is a creditor of the beneficiary, such as a landlord or an institution in which the beneficiary is residing, you must obtain our approval before reimbursing your organization for any debts owed to the organization.
For other creditors, if the beneficiary’s current and reasonably foreseeable basic needs have been met, you may use some of the remaining funds to satisfy a beneficiary’s outstanding past debt that occurred before the first month you started to receive the Social Security/SSI payments.
If you are the court-appointed legal guardian for an incompetent beneficiary and the court has authorized guardianship fees, you may use a reasonable part of the beneficiary’s Social Security or SSI funds for the guardianship fees.
However, paying legal guardianship fees from Social Security or SSI funds is not allowed if the beneficiary’s funds will be so depleted that you cannot meet the beneficiary’s current basic needs.
Only qualified organizational payees we authorize in writing, in advance, may withhold a fee from the beneficiary’s monthly benefits for providing payee services. (See Fee for Service (FFS) Payees, Getting Approved as a FFS payee, Fee Amounts, and Restrictions on FFS Payees for additional information on Fee for Service payees.)
As payee, you may reimburse yourself for a reasonable amount of actual out-of-pocket expenses incurred on behalf of the beneficiary. Usually, these would be for actual expenses for food, housing, medical items, clothing, transportation, and personal needs items. For example, the cost of transporting a beneficiary to and from a doctor’s appointment (such as bus fare or mileage and tolls) is a reimbursable out-of pocket expense if it is paid from your organization’s funds. You should obtain SSA’s approval before using benefits for out-of-pocket items other than those mentioned above.
The amount of a reimbursement may not exceed the actual expense incurred. You must keep records of your out-of-pocket expenses.
You cannot receive reimbursement for any expenses we consider “overhead.” We define “overhead” as the normal cost of doing business. For example, expenses such as utilities, office rent, office equipment and supplies are “overhead” and you cannot reimburse yourself for them from a beneficiary’s funds.
If you are unsure whether an expense your organization incurs on behalf of a beneficiary meets out-of-pocket and reimbursement criteria, contact your local Social Security office.
Important: If you are an authorized Fee for Service payee, the cost of postage stamps is considered overhead and is not reimbursable.
Purchasing life insurance or a prepaid burial contract is an acceptable use of benefits unless:
Important: Any policy you purchase for the beneficiary must clearly show that the beneficiary is the owner of the policy.
Before you purchase life insurance or a prepaid burial contract for an SSI beneficiary, contact your local SSA office to find out how this purchase may affect SSI eligibility.
If you plan to use benefits to establish a trust, or fund an existing trust, on behalf of the beneficiary, you must submit a copy of the trust document to your local SSA office for review and approval. We will confirm that the terms of the trust comply with our use of benefits rules and determine what effect the trust may have on SSI eligibility.
We fully investigate every allegation of payee malfeasance and make a formal determination of whether misuse has occurred.
Payee misuse occurs when:
If you learn that an employee of your organization has misused funds, you must immediately report it to us. Your organization has a legal obligation to repay all misused funds.
If your organization is an approved fee for service payee, your organization must forfeit the fees charged for all months in which misuse occurred. If your organization does not repay the misused funds, including the fees, immediately, the law allows us to collect the misused amount from you.
If we determine your organization misused funds, we will re-evaluate your suitability to remain payee and may appoint a new payee or make direct payment to the beneficiary.
If misuse occurred, you must make full restitution of the misused funds. When you make restitution, or agree to a plan to do so, we may allow you to continue serving as payee if there is good reason to believe that you will use benefits properly in the future.
We refer all determinations of misuse for possible criminal prosecution. The penalty upon conviction may be a fine of up to $250,000, imprisonment up to 10 years, or both. We may also impose a civil monetary penalty up to $5,000 for each violation and an assessment of not more than twice the amount of the misused benefits.Most beneficiaries who become entitled to benefits for the first time after May 1, 2011, will receive payments electronically into an account at a financial institution opened on their behalf by their representative payee.
For all other beneficiaries, we strongly recommend the safety and convenience of direct deposit to receive benefits.
When opening a financial account to hold beneficiary funds, you must establish a fiduciary savings or checking account at a bank, trust company, credit union, or savings and loan association that is insured under Federal or State law. We may ask you to provide records from your financial institution to verify this account.
Here are some important points to remember when establishing and managing an account at a financial institution:
You must title any account you establish in a way that shows the beneficiary owns the account and you, the payee, have only a fiduciary interest.
You must not use a joint account format because this allows a beneficiary direct access to their funds.
When establishing the account, you must use the name of the organization on the title, not the name of an individual employee.
Examples of acceptable individual account titles:
If you serve as payee for many beneficiaries, you may request payment of funds into one deposit account. We call this kind of account a collective account. You must title the collective account to show the beneficiaries own the account, and you must maintain an individual account ledger for each beneficiary. Do not confuse this kind of account with your organization’s operating account. You may not mix a beneficiary’s funds with your organization’s funds.
Important: Before you deposit funds into a collective account, you must receive our approval.
For some organizations, collective accounts are more efficient because they:
Funds deposited by a fiduciary on behalf of a beneficiary into a collective account are owned by the beneficiary. The Federal Deposit Insurance Corporation (FDIC) insures funds in a collective account provided the financial institution’s depository account records reveal the existence of a fiduciary relationship and the interests of all the parties in the account.
Important: If you are thinking of establishing a collective account, you must contact us before you deposit any funds into it.
Your local SSA office will approve your request after verifying that:
Examples of acceptable collective account titles:
Funds Other Than Social Security or SSI in Collective Accounts
Organizations often establish collective fiduciary accounts for the use of all their clients, including those who receive Social Security or SSI benefits but do not have a payee. In addition, beneficiaries may authorize the deposit of other, non-social security, funds (e.g., pensions, VA payments, etc.) into the same collective account.
We prefer that the collective account you establish for the beneficiaries for whom you are payee contain only funds your organization receives as a Social Security or SSI payee. However, if you allow the funds of others in this account, your accounting records must clearly show the deposits, withdrawals, expenditures and interest for Social Security or SSI funds for each Social Security or SSI beneficiary for whom you are payee.
Important: “Resident Trust Fund” (RTF) accounts are specifically used to pool federal benefits for nursing home residents. The RTF title is acceptable as the collective account title. However, you must keep clear accounting records as described above.Unspent Social Security or SSI funds that you hold on behalf of a beneficiary belong to that beneficiary. When you are no longer payee for the beneficiary, you must immediately return all conserved funds, including interest, as well as any cash on hand, to us so that we can transfer the funds to a new payee or to the beneficiary directly if they no longer need a payee.
Upon the death of the beneficiary, any conserved or other funds you have belonging to the beneficiary become the property of their estate. You must immediately turn over conserved funds to the legal representative of the beneficiary’s estate for disposition under State law. If there is no legal representative, you must contact the State probate court for instructions on what to do with remaining funds. If you need information about State law, contact the probate court or an attorney.
Important: Do not return conserved funds to us after the death of the beneficiary.You may receive payments after a beneficiary dies. When a beneficiary dies, their entitlement to benefits end. See below for a discussion on when Social Security and SSI benefit entitlement ends due to death. If you receive benefit payments after the entitlement ends, these benefits are considered an overpayment and you must return them to us at once. This situation typically occurs if we do not learn of a beneficiary’s death immediately and continue making monthly payments for a time.
Remember to respond to any notices we might send you concerning overpayments and cooperate with us to clear up overpayment issues.
Overpayments and the Timing of Social Security and SSI Payments
Social Security benefits are paid each month representing payment for the previous month. When a person who receives Social Security benefits dies, no payment is due for the month of death, even if they die on the last day of the month.
Example –
A Social Security beneficiary dies in June, and SSA doesn’t learn of his death in time to stop the payment that is made in July representing payment for June, the month of death. The beneficiary is not entitled to a payment for the month of death and this represents an overpayment. You must promptly return the payment made in July.
SSI benefits, on the other hand, represent payment for the month in which they are paid. Therefore, the beneficiary is entitled to an SSI benefit for the month of death. However, you must return any SSI benefits you receive for months after the month of death.
Example –
An SSI beneficiary dies on June 25. You had received an SSI payment for June and you receive another payment on July 1. You must return the July 1 payment.
If you received and failed to return payments issued after the death of a beneficiary, you are liable for the debt.When a disabled child under the age of 18 receives a large SSI payment (usually exceeding 6 months' worth of benefits), the payee for the child is required by law to hold these funds in an account at a financial institution which is separate from the account used for regular monthly SSI benefits. We call an account like this a dedicated account because the funds in it can only be used for very specific kinds of expenses.
We will notify you when any past-due benefits we pay must be deposited into a dedicated account.
The dedicated account may be a checking, savings or money market account (preferably one that earns interest) established at a financial institution. You cannot use certificate of deposits, mutual funds, stocks, or bonds because these are generally not considered accounts at a financial institution.
You may use a collective “dedicated account” provided it meets the conditions described in Using Dedicated Accounts Funds and Misapplication of Dedicated Account Funds.)
Once you establish a dedicated account, you may not deposit additional money into it unless we notify you that you should. Funds you deposit into a dedicated account, and any interest they earn, do not count as income or resources for SSI purposes.
Important: The rules covering a dedicated account remain in effect until all funds in it are depleted or until the beneficiary’s eligibility for SSI benefits terminates.You are restricted in how you may use funds in a dedicated account.
You may use dedicated account funds for only:
You should obtain approval from your local Social Security office before making purchases that fall under the “other” category. We will carefully consider your request and let you know whether it is approved, or the reason for denial.
Using dedicated account funds for any items or services not listed above is inappropriate. For example, unless it is specifically related to the child’s impairment, you may not use dedicated account funds for food, housing, clothing, or personal items. Instead, you should use the ongoing monthly SSI benefits for these expenditures.
You may not use dedicated account funds to repay any SSI overpayments.
Important: In an emergency situation, we may approve the use of dedicated account funds for basic living expenses to prevent the child from becoming homeless or malnourished. You must first contact your local SSA office if you believe an emergency exists.
Here are some examples of approved requests for expenditures from dedicated accounts:
Example 1 –
The payee requested approval to pay for computer software that enables a blind child to hear text as it is keyed. We approved the request because it is related to the child’s impairment and allows her to use the computer and keep up with the other children in her class.
Example 2 –
The payee requested approval for purchases of large quantities of gluten-free products for a child with celiac disease. These foods were not readily available in the group home because other residents did not commonly eat them. We approved the request because the purchases were related to the child’s impairment.
Example 3 –
The payee requested approval to pay for attorney fees charged for the attorney’s work in securing the child’s SSI disability claim. The past-due benefits had been paid directly into the dedicated account before funds were withheld for the attorney’s approved fee. We approved the request because the fees were incurred in pursuit of the child’s disability claim.
Here are some examples of denied requests for expenditures from dedicated accounts:
Example 1 –
The payee requested approval to buy a pair of shoes for the disabled child. We denied the request because the shoes were not related to the child’s impairment. The child should have shoes, of course, but the payee must pay for them from the child’s monthly SSI benefits.
Example 2 –
The disabled child has a Social Security overpayment due to a parent’s wages. The payee requested approval to pay the overpayment from the child’s dedicated account funds. We denied the request because the overpayment is not related to the child’s impairment.
You must follow the rules explained in the “Dedicated Account Use of Funds Statement” which we give to you when we release past-due benefits for a dedicated account.
If you use money from the dedicated account for anything other than the accepted uses described above, your organization must repay us from its own funds.As payee, you must keep records on how you used and saved the monthly benefits you received on behalf of the beneficiary. In addition, when you are managing a dedicated account, you must keep separate records of all funds held in, and withdrawn from, the dedicated account. This includes receipts for all the items and services you purchased with these funds. (See Developing an Accounting System and Subcontracts for Accounting Functions.)
If you have any questions about dedicated accounts, contact your local Social Security office.
An overpayment of funds paid to you on behalf of the beneficiary can occur for various reasons. An overpayment is a debt owed to the U.S. Government that you must repay.
If an overpayment occurs, you may request a waiver of our recovery of the overpayment, or you may make an appeal to contest the facts of the overpayment.
To request a waiver or make an appeal, call our toll-free number, 800-772-1213, or call or visit your local Social Security office as soon as you learn of the overpayment.
In cases in which there has been a change of payee and we determine the former payee received an overpayment, we will initiate recovery against the former payee and not the current payee.
Example 1 -
The beneficiary’s SSI benefits should have been reduced due to earnings and an overpayment occurred. The payee had reported the increased earnings in a timely manner and had used the overpaid benefits to meet the beneficiary's needs. The payee requests a waiver of the overpayment.
SSA waives recovery of the overpayment because the payee is without fault in the overpayment, and the payee used the overpaid funds to support the beneficiary.
Example 2 -
The beneficiary died and the payee received an extra month’s payment. The payee failed to return the payment issued after the death of the beneficiary. The payee requests a waiver of the overpayment.
SSA denies the waiver because the payee did not return the payments received after the beneficiary’s death as they were required to. The payee must repay the overpayment.
Important:
We monitor your performance as a payee and ensure you are fulfilling your responsibilities by requiring you to complete an annual report and by making periodic, in-person visits to you.
If you are an authorized fee for service (FFS) payee, you must also show us each year that you continue to meet the requirements for charging a fee for your payee services. For example, you will have to present proof that you are currently bonded and licensed (in states where licensing is available) and that you continue to serve at least five beneficiaries. (See Fee for Service (FFS) Payees, Getting Approved as a FFS Payee, and Restrictions on FFS Payees.)
Most organizational payees must report to us, in writing, each year by submitting a form SSA-6234, Representative Payee Report, for each beneficiary they serve (See Exhibit 1). This form asks how you used the beneficiary's payments, how you saved any left-over funds, and whether or not the beneficiary's custody changed.
We will let you know when it is time for you to report by sending you an SSA-6234, Representative Payee Report to complete.
As an alternative to completing the paper Representative Payee Report, you may be eligible to use our online reporting facility. To see if you qualify for this method of reporting, you should carefully read the instructions that accompany the SSA-6234, Representative Payee Report you receive in the mail.
Whether you complete the paper form or report online, we will review your responses to determine if you are using benefits properly.
Important: Only certain State mental institutions that serve as payee for large numbers of beneficiaries are exempt from this method of annual reporting. For these payees, we substitute an intensive, in-person, onsite visit to the institution to evaluate their performance.
In addition to the reports described above, SSA has awarded grants to state Protection & Advocacy systems (P&A) to conduct visits to organizational payees, including FFS payees on SSA’s behalf. The purpose of these visits is to verify that the representative payee is using the benefits properly on behalf of the beneficiary and is carrying out representative-payee responsibilities and duties correctly. Before the visit, you will be contacted by the P&A to make an appointment.
During the visit, the P&A will:
These visits help us maintain effective lines of communication with you and give you the chance to ask us questions and to ask for help in resolving problems you experience.
When the review is complete, you will receive a letter documenting the findings. If we find that you have not followed our rules, the report will tell you about things you must change.
The report may contain suggestions for ways you can improve your performance.
If we find that you misused beneficiary funds, we will require repayment and may refer the matter for criminal prosecution.
Because your organization will have to file an accounting report for each year, and because you may also receive an onsite visit, you must retain records such as bank statements, cancelled checks, receipts for rent and utilities, etc., for at least 2 calendar years, and make them available to us upon request.
To help with the accounting process, your organization should establish an accounting system that tracks the following for each beneficiary:
Your system must also establish internal controls to ensure the integrity of your financial records.
Although not required, some payees find it helpful to use a computerized program that:
A video is available on our website at https://www.ssa.gov/payee to help you set up your system.
Some organizations serving as payee enter into contracts with third parties to manage client/resident fund accounts and to provide accounting services.
We allow this but you cannot outsource your payee responsibilities. Please note that we will neither pay beneficiary funds into an account owned by a third party contractor nor allow you to transfer funds into such an account.
As the payee, you are responsible for exercising oversight over any contractor or volunteer who helps you with payee services. You are responsible for the proper titling of accounts and investments, directing the use of funds to meet the needs of the beneficiary, and submitting the required annual accounting reports to us.
You, not the contractor, must sign the annual report forms.
If you use our online reporting service, to account for the beneficiary’s funds you, not the contractor, must submit the form online.Because your organization is responsible for all beneficiary funds it receives, you must establish internal procedures and guidelines to ensure the security of the funds. This will also help ensure the accuracy of your accounting system.
Here are some principles you should follow:
Separating employee duties helps deter fraud and theft. If the size of your staff allows, assign a different person to perform each of the following basic duties:
You should establish a procedure for the review and supervision of accounting functions. For example, you could:
You should perform monthly reconciliations of ledgers and bank records as soon as you receive bank statements. This gives you the opportunity to correct errors and inconsistencies in your records. The reconciliation should include explanations for any discrepancies and be retained as part of your accounting records.
An employee who is authorized to deposit or withdraw beneficiary funds should not perform these reconciliations. Instead, have a second party certify that the reconciliation is complete and accurate.
In addition, you should conduct routine internal audits of financial and bank records. The auditor should be someone who can verify the accuracy and completeness of your records but not the same person responsible for daily entries into the ledgers and bank accounts.
Finally, you should consider having an outside contractor or other entity conduct annual audits of your financial and bank records.
You should lock up stocks of blank checks in a secure cabinet or other container, preferably in an access-controlled area.
Be sure to change the key or combination to the cabinet or container periodically.
As a backup procedure for your accounting system, you should regularly make backup copies of computer and paper records and files so you can recover records if your master files are lost, stolen, or destroyed.
You should also have a disaster recovery plan so that procedures are in place for using backup copies to restore records and files if it ever becomes necessary.
Arrange to store backup copies in a safe place, such as a fireproof, locking cabinet.
If you keep your accounting records on a computer, you can help protect your files from unauthorized access by using password protection. Many off-the-shelf software programs include a password protection feature that you can enable for this purpose.
Your organization must ensure the security of beneficiary bank accounts and investments.
Remember that proper account titling will ensure FDIC protection of up to $ 250,000 per depositor in an FDIC-insured bank. (See Collective Accounts.)
You should never reveal an account number to a beneficiary. This will help prevent a beneficiary from making unauthorized telephone and Internet transactions.
You should take precautions within your own organization to help reduce the likelihood of fraud. Fraud often takes the form of embezzlement, forged signatures on checks, theft of check stock, and forged check endorsements.
Your bank should be able to advise you about check security features and any fraud prevention programs it has.
For example, you may be able to arrange for your bank to require two signatures before payment when presented with a check exceeding a certain amount.
Or if your bank has a “positive payee program,” it can compare a check number and amount to a list of check numbers and amounts that your organization provides. With a “positive payee program,” if you identify the payee of a check you issue, the bank will verify if the payee information is correct when the check is presented.
While most payees are not eligible to receive payment for being payee, the law allows payment of a fee for payee services in very limited circumstances.
To qualify to receive a fee, your organization must be a:
In addition, your organization must:
We may grant an exception to the creditor restriction on FFS payees when:
Important: A creditor organization's authorization to collect a fee for serving as a payee for one beneficiary does not extend to other beneficiaries for whom it is creditor. Rather, a creditor organization must request an authorization to collect a fee from us each time it applies to be payee. We will make a decision on a case-by-case basis.
Before your organization may collect a fee for performing payee services, you must request approval by obtaining a form SSA-445 (Application to Collect a Fee for Payee Services), in person, from your local SSA office, completing it, and submitting it to the office.
Some organizations that serve as payee have multiple extensions or branches. Each branch will serve as payee for beneficiaries in their area. To collect a fee from beneficiary funds for payee services, each branch must request approval with an SSA-445. The local SSA office approves each branch individually. If there is a change in ownership, you must submit a new SSA-445 and receive approval from us before continuing to collect a fee.
You may not begin collecting a fee until we approve the request in writing.
The following items are required from the organizational payee as part of the FFS application process;
If your organization is not a State or local government agency, you must also submit the following documents with the request:
Example:
ABC Organization holds conserved funds of $5,000 for its beneficiaries and receives an average of $12,000 a month in Social Security payments. The bond/insured amount must be at least $17,000.
If your organization receives our authorization to collect a fee for payee services, you should keep a copy of the approval letter for your records. You may not collect fees for any month prior to the month that we issued the fee approval notice to you.
The P&A will visit your organization 6 months after we authorize you as a FFS payee to make sure you are complying with your new responsibilities.We limit the amount of fee an authorized FFS payee may collect from each beneficiary. This maximum fee amount, however, may change because of a cost of living adjustment.
If you are a FFS payee, we will notify you by mail of any increase in the maximum fee allowed. If there is an increase, it would be effective in January of the next year. This means you could first collect the increased amount from the beneficiary’s January payment.
As of January 2023, the monthly fee allowed for FFS payees is the lesser of 10% of the monthly benefit amount or $52.
If we determine the beneficiary has a drug addiction or alcoholic condition, the monthly fee is the lesser of 10% of the monthly payment or $97 in January 2023.
There are certain circumstances under which an otherwise authorized FFS payee may not collect a fee.
A FFS payee may not collect a fee:
Important: In certain circumstances, with our prior approval, an organization may be authorized to collect a fee from the payment of accrued past due benefits. We may allow this when we make a payment for a prior period of nonpayment or incorrect payment and the FFS payee:
Example:
A county mental health association was an authorized FFS payee for a beneficiary whose disability payments were stopped effective January 2014. Members of the association staff assisted the beneficiary in processing an appeal of the termination of benefits.
While the appeal was pending, they also visited him at least once a month to ensure his county assistance payments were used for his basic needs.
In March 2014 SSA reinstated benefits to the individual and he received a payment for past due benefits for the period of January through March. We made the payments to the association, which was still the payee.
After obtaining SSA’s approval, the association may charge the individual a fee for each month covered by the past due payments.Children in foster care are extremely vulnerable and face numerous challenges. To help provide financial protections to these children, we encourage agencies to determine a child’s eligibility to Social Security and SSI benefits immediately upon the child’s entrance into the foster care system. You can access our State Verification and Exchange System (SVES) to determine if a child is receiving benefits from us. We encourage you to contact us about becoming the child’s representative payee as soon as you determine you can provide greater assistance by administering their benefits, especially when the child has no active, family support.
Because we recognize that as foster care children transition to adulthood, the possible loss of benefits can be traumatic, we allow children with a qualifying disability living in foster care to file for SSI benefits 180 days before aging out of the system. This will help alleviate the “gap” in benefits. We encourage foster care agencies to act as advocates for these children and help them file for disability benefits, when appropriate. If you serve as a payee to youth in foster care, you must meet with them regularly.
We remind agencies serving as representative payee that they must report when a child leaves their custody or they are adopted and to return funds, including conserved funds, to us if the child is no longer in your care. When a child is adopted, advise the adoptive parents about the child’s entitlement to benefits or provide us with their current information so that we can determine if benefit payment should continue.We have compiled a list of “best practices” that other payees have found helpful and that you may want to consider:
Identity theft is an increasingly common crime and victims often suffer extreme adverse consequences. The careless handling of personal information makes identity theft easier.
As a payee, your organization keeps records containing personal information for Social Security and SSI beneficiaries. Examples of such personal information include a beneficiary’s:
To deter identity theft and guard against the accidental loss or disclosure of confidential information, you should have documented guidelines and procedures to protect personal information.
Remember that you are responsible for overseeing the performance and behavior of any contractors or volunteers who perform services for your organization. Your guidelines and procedures should apply to their activities, as well.
Here are some ways to protect personal information:
For records kept on a computer:
If you believe one of your clients has been a victim of identity theft, go to SSA’s online pamphlet, Identity Theft And Your Social Security Number (SSA Publication No. 05-10064, ICN 463270), and follow the instructions. Contact us if you think someone is using a client’s Social Security number for work purposes.
The Federal Trade Commission is the lead government agency on identity theft issues. For more ideas on preventing identity theft and to learn what else you can do if identity theft occurs, visit www.ftc.gov/idtheft.
As a payee, you should know some things about Medicare and Medicaid coverage since you may need to help the beneficiary get medical services or treatment.
Medicare and Medicaid are two similar, but different, programs and some beneficiaries will qualify for both.
Medicare is a Federal health insurance program, administered by the Centers for Medicare and Medicaid Services (CMS). While it helps with the cost of health care, Medicare does not cover all medical expenses nor does it cover the cost of most long-term care.
Each year, you or the beneficiary will receive a copy of “Medicare and You.” If you do not receive a copy, or if you have other questions, call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.
For more information about Medicare, visit the CMS website at http://www.cms.gov
Medicaid is a State-run program that provides hospital and medical coverage for people with low income and little or no resources. Each State has its own rules about who is eligible and what is covered under Medicaid.
For more information about the Medicaid program, contact your local medical assistance agency, social services or welfare office.
The law prevents most payees from collecting a fee for their payee services, but under certain circumstances, some organizational payees are granted approval to do so.
Any organization that wishes to collect a fee for payee services must first apply and receive written authorization from us.
To qualify as a fee for service payee, the organization must be:
In addition, the organization must:
We will send you a "Representative Payee Report" at least once a year for each beneficiary you serve.
The report is easy to complete if you keep clear monthly records of the payments you received and how you spent and saved the money.
You must answer all the questions on the report and return it to us as soon as possible. Many payees are eligible to report using the Internet. Be sure to read the instructions you receive with your annual accounting report for more details regarding online reporting.
In addition to the Representative Payee Report, the P&A may also visit payees in person to see how they are doing.
You must establish an account that clearly shows you are acting in a fiduciary role and that the money belongs to the beneficiary, not you.
You should try to set up an account that earns interest, minimizes fees and helps you keep clear records.
If you serve as a representative payee for a large number of beneficiaries, SSA may allow you to establish a collective account (see About Account Titling and Collective Accounts).
You must receive our approval before you set up a collective account. Therefore, you must contact your local SSA office for guidance. The office will ensure that the collective account is established in accordance with our rules.
If we approve your proposal for a collective account, you will need to create an accounting system to keep accurate records for each beneficiary.
We review collective accounts periodically to ensure they continue to meet our requirements.
We know it is difficult to keep track of the whereabouts of some beneficiaries but the law requires SSA keep a current file of names and addresses for payees and beneficiaries.
For SSI beneficiaries, moving can mean a change of living arrangements and a change in their SSI payment. Therefore, you must notify us for each month in which a beneficiary has a new address.
If you ever become unable to contact the beneficiary, you must notify us by calling our toll free number at 800-772-1213, or by faxing, mailing or visiting your local SSA office.
We are a residential facility serving as a representative payee. One resident has expressed a desire to go on a vacation, however, the resident cannot go without close care and supervision. A staff member would have to accompany the resident and provide oversight and care. May we use the resident’s conserved funds to pay for the staff member’s expenses for transportation, food and lodging?
Perhaps. Any use of the beneficiary's funds must be for the benefit of the beneficiary. The expenditure must be reasonable in relation to the beneficiary's funds and the beneficiary must not have unmet current or foreseeable needs.
Before using the beneficiary’s funds for the purpose you describe, you must obtain our approval. We will examine each case and make a decision to approve or deny your request, as appropriate.
Whenever you are unsure about the acceptability of an expense, contact your local SSA office for assistance.
You may receive a reimbursement from the beneficiary's funds for actual expenses incurred in providing services for the beneficiary. Some typical reimbursable expenses are long distance phone calls, the cost of money orders, and transportation costs (e.g., cab fare or mileage), etc. To claim a reimbursement, you must keep records of your expenses.
You cannot receive a reimbursement for any expenses that are considered part of "overhead” or operating expenses. For example, you may not be reimbursed for expenses such as utilities, office equipment/supplies, and photocopying.
You should note that if you are a FFS payee, the cost of postage is considered overhead and is not reimbursable.
As payee, your primary responsibility is to ensure the beneficiary’s current needs are met. These are food, clothing, shelter and medical expenses. Once these needs have been satisfied, the beneficiary has the right to have some discretionary spending money, even if you do not approve of all of their choices.
Of course, you must exercise good judgment. For example, if the beneficiary has a substance abuse problem and you are concerned he will use the cash you give him for drugs or alcohol, you may want to limit the amounts of spending money you hand out, or purchase food and other personal items to give to the beneficiary, instead of giving cash.
So once current needs are met, allowing the beneficiary to use a reasonable amount of spending money on lottery tickets, candy, tobacco, etc., is acceptable.
You must use the funds you receive for the beneficiary, whether monthly payments or past-due benefits, for current needs such as food, clothing, shelter, and medical expenses before you attempt to satisfy any of the beneficiary’s outstanding debts.
Social Security and SSI payments are generally exempt from seizure by creditors but if the failure to pay an old debt could result in negative consequences like homelessness, you should do your best to settle the debts.
If your organization is also a creditor, you may not use the beneficiary’s funds to reimburse yourself for any debts the beneficiary owes your organization without first obtaining our approval.
If you have any question regarding this requirement, contact your local SSA office.When A Representative Payee Manages Your Money
SSA Publication No. 05-10097
ICN 468634
https://www.ssa.gov/pubs/EN-05-10097.pdf
Social Security: A Guide for Representative Payees
SSA Publication No. 05-10076
ICN 468025
https://www.ssa.gov/pubs/EN-05-10076.pdf
Understanding Supplemental Security Income
SSA Publication No. 17-008
ICN 443175
https://www.ssa.gov/ssi/text-understanding-ssi.htm
Social Security: What You Need to Know When You Get Retirement or Survivors Benefits
SSA Publication No. 05-10077
ICN 468300
https://www.ssa.gov/pubs/EN-05-10077.pdf
Social Security: What You Need To Know When You Get Social Security Disability Benefits
SSA Publication No. 05-10153
ICN 480165
https://www.ssa.gov/pubs/EN-05-10153.pdf
Social Security: What You Need To Know When You Get SSI
SSA Publication No. 05-11011
ICN 480265
https://www.ssa.gov/pubs/EN-05-11011.pdf
A Guide to SSI for Groups and Organizations
SSA Publication No. 05-11015
ICN 455360
https://www.ssa.gov/pubs/EN-05-11015.pdf
2023 Red Book: A Summary Guide To Employment Supports For Individuals With Disabilities Under The Social Security Disability Insurance And Supplemental Security Income Programs
SSA Publication #64-030
ICN 436900
https://www.ssa.gov/redbook/index.html
Your Ticket to Work
SSA Publication #05-10061
ICN 463262.
https://www.ssa.gov/pubs/EN-05-10061.pdf
To order any of these publications, call SSA at 800-772-1213 or visit
https://www.ssa.gov