Collecting SSDI Payments: The Social Security Representative Payee

People collect Social Security Disability benefits for a number of different reasons, including having a physical or mental disability that causes them to be unable to work. Disability benefits allow the recipient to receive monthly payments of a predetermined amount so that he or she may be financially independent despite the disability.

Unfortunately, those who collect Social Security on a permanent basis can often come to a point in their illness in which they are no longer able to handle their own finances. If this occurs, it may be necessary to appoint someone else to manage the spending of SSA benefits. This where the help of a Social Security Representative Payee can come in handy.

Examples of situations where this can happen include:

• Parents being appointed representative payees for minor children
• Recipents with mental defects or dementia
• Recipents whose physical condition may make them more vulnerable to unscrupulous persons, or
• Recipents who are addicted to alcohol or drugs.

What Does the Representative Payee Do?

The job of the representative payee is to see to the immediate needs of the social security recipient and to retain any money that is not needed immediately so that it can be used to meet future needs. The payee will need to keep accurate records of all financial transactions, both incoming and outgoing.

When the SSA asks for a report of expenses, which it does yearly, the report will cover what expenses were paid and how much money was saved. This report, called the Representative Payee Report, will be sent every year to the representative payee. It needs to be filled out and returned promptly, and it may be mailed or can be submitted online. Additional duties include reporting to the SSA any changes that may affect the beneficiary’s eligibility for payments or the amount of payments.

The representative payee should also help the beneficiary get medical treatment and return any funds that are sent to the beneficiary in error.

What the Payee Cannot Do

There are also some things that a payee cannot do:

• He/she cannot sign any legal documents except Social Security documents. 
• The beneficiary's money cannot be spent for the payee's personal expenses. 
• He/she cannot spend money that is needed for food or other basic necessities. 
• He/she is not allowed to put the funds in anyone else’s account. 
• Lastly, he/she cannot charge a fee for his/her services unless the SSA has authorized the payee to do so.

Primary Duties of the Representative Payee

The primary duties of the representative payee are to use the benefits of the beneficiary for the following:

• Make sure day to day needs of food and shelter are met
• Provide medical or dental care not covered by insurance
• Personal needs such as clothing and recreation

If there are any funds left over, the payee is required to place them in an interest bearing account. In situations where the beneficiary may have received a lump sum of benefits, the representative payee could use the payment to:

• Improve the beneficiary's living arrangements
• Purchase durable medical equipment not covered by insurance, like wheelchairs
• Arrange for the beneficiary to go to school or special training
• Spend some of the money on recreational activities like movies, video games or cable (for the beneficiary)
• Leftover funds should be placed in an interest bearing account

Annual Reporting

The representative payee is required to file a report each year with the Social Security Administration indicating how the beneficiary's benefits have been used. This report can be filed online or in writing. Any representative found misusing a beneficiary's funds must repay misused funds, and is subject to fines and imprisonment if found guilty. The representative payee is also required to report changes that affect the beneficiary. Some of the changes that must be reported are:

• The beneficiary moves
• The beneficiary starts or stops working regardless of the amount earned
• A disabled beneficiary medical condition improves
• The beneficiary receives other benefits.

Who Needs a Representative Payee?

Typically, any minor child would need a representative payee. An adult who is legally incompetent would also need a payee. Other than these two situations, it is assumed that most adults are able to handle their financial affairs. However, if the need is there, the SSA will investigate and look at the evidence to determine if a payee should be appointed.  

How to Become a Social Security Representative Payee

The first step in the process is to make an appointment with the local Social Security office. At the appointment, it will be necessary for the designated representative to be present in order to fill out an application.

A representative payee must always act in the best interests of the SSA recipient when distributing funds to be spend on his/her care. The payee may be reimbursed for expenses but should receive no compensation and should not intermingle or mix his or her funds. A payee also may not sign legal documents or otherwise act as a representative of the SSA recipient, as becoming an SSA representative payee does not automatically give him/her power of attorney.

Who Can Be a Payee?

Either an individual or an organization can become a payee. For an individual, the process of becoming a payee is simple. You need to contact the nearest SSA office and submit an application. You will need to bring proof of identification and provide your Social Security number. The last requirement is an interview.

Associated Fees

An organization that wishes to become a payee is allowed to collect a fee for services to the Social Security beneficiary. It needs to provide services to at least five people and not be a creditor to any of them. An application needs to be submitted to the SSA and approval granted by the SSA in writing. On the application, the organization will need to provide their identification number, a mission statement, including areas the organization serves, names of others it serves as a payee, proof of tax exempt status, a copy of the bond/insurance policy, and a copy of its state license if one is required in the state.