When someone collects Social Security disability benefits, it's usually because they're unable to work due to mental or physical limitations. Both Social Security disability insurance (SSDI) and Supplemental Security Income (SSI) disability benefits provide monthly payments so that the recipient can maintain financial independence despite the disability.
Sometimes the Social Security Administration (SSA) determines that a disability recipient is unable to manage his or her payments. This can happen for a number of reasons, including cognitive difficulties, mental illness, or evidence of drug or alcohol abuse. In these cases, the SSA will assign a "representative payee" to the recipient. The payee's job is to receive the SSDI or SSI funds and make sure they are spent for the care and well-being of the recipient.
This guide for representative payees will explain what a representative payee is and why Social Security might appoint a "rep payee." It will also cover who can serve as a representative payee and what you must do if you're appointed as one.
Unfortunately, some people collecting Social Security disability benefits are mentally ill, addicted to alcohol or drugs, or have reached a point in their illness where they can no longer handle their own finances. When this happens, the Social Security Administration (SSA) will usually appoint a representative payee. A representative payee is a person or organization that receives someone's SSDI or SSI disability benefits on their behalf.
If you're serving as a representative payee, you must use the Social Security payments for the disabled person's support and care only. You can use the money for any of the following:
Social Security generally assumes that most adults can manage their own finances. But there are times when that isn't the case. The SSA might appoint a representative payee for a disabled person who is:
If there's reason to believe that a disabled adult can't handle their own money, the SSA will investigate to determine if the agency should appoint a rep payee. If you'd like to handle your own benefits, learn about how to prove you can be your own representative payee.
If you're serving as a Social Security representative payee, it's your job to see to the immediate needs of the SSDI or SSI recipient. You must also save any money that's not immediately needed, so it's available when it's needed to meet the disabled person's future needs. As a payee, you're also responsible for returning any funds that Social Security sends to the recipient in error (overpayments).
As a Social Security rep payee, you must always act in the best interests of the disabled person when spending their SSDI or SSI benefits. You'll 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 every year, the report should cover what you paid out and how much money was saved. (More on this below.)
As an SSA representative payee, your primary duties are to use the recipient's disability payments to do the following:
If you're the SSI representative payee for a child, you're also required to arrange for appropriate medical treatment for the child's condition.
If there are funds left over after paying the disabled person's expenses, you should place them in an interest-bearing account.
If the Social Security recipient has received a lump sum of benefits (like retroactive disability payments or backpay), as payee, you could use the payment to:
If you're the rep payee for a child who receives a lump-sum payment of SSI, you must open a dedicated SSI account.
If you're a Social Security representative payee, you can be reimbursed for expenses you paid from your own funds, but you shouldn't intermingle or mix your funds with the disabled person's funds. You're required to keep the Social Security benefits in a separate account.
You also can't sign legal documents or otherwise act as a representative of the SSDI or SSI disability recipient—becoming an SSA representative payee doesn't automatically give you power of attorney over all of the recipient's affairs. Here are some other things that you can't do as an SSA rep payee:
Any representative payee found misusing a recipient's funds must repay the misused funds. If you're found guilty of misusing the disability recipient's Social Security benefits, you'll be subject to fines and possible imprisonment.
If you're serving as someone's representative payee, it's your responsibility to report to Social Security any changes that might affect the recipient's eligibility for payments or the benefit amount. For example, you must tell the SSA if the recipient:
Social Security's payee guide lists other changes you must report as well.
Both individuals and organizations can become Social Security rep payees. When appointing a representative payee, the SSA generally prefers someone who lives with and helps care for the disabled person. If the disabled person lives alone, Social Security might select a family member, friend, legal guardian, or lawyer to serve as rep payee.
Social Security could choose you to serve as a representative payee if the disabled person knows you well and sees you frequently, and you're familiar with their needs and wants. For instance, if your child receives SSI disability benefits, you (as the parent) would usually serve as the SSI representative payee (unless Social Security determines that you're not capable of managing the money).
Sometimes, a disabled person has no family member or friend who can (or will) fill the role of a representative payee. In that case, Social Security will require the disabled person to have an organizational payee.
Learn more about how Social Security chooses an appropriate representative payee.
Organizations that can serve as Social Security representative payees include:
Whether a payee is eligible for payment of a fee differs between individual and organizational payees.
Individual payees. Individual payees are usually not entitled to receive payment for managing the beneficiary's money. But there are exceptions to this, such as where the court has awarded a payee the right to collect a "guardian fee" and in other limited situations.
Organizational payees. Organizational payees can apply to charge fees for services only if the organization is:
Organizational payees must meet numerous other requirements and apply to the SSA for permission to collect a fee. The SSA regulates how much an organization can collect as a fee, which is usually 10% of the disability recipient's monthly disability check, up to certain maximums.
Both individual and organizational payees must file reports with Social Security detailing how they spent the SSDI or SSI payments.
Individual payees. An individual payee should keep careful track of how the payments are spent on an "Income and Expense Worksheet" that details the month, the amount of money received, and payments made for food, shelter, clothing, recreation, and other costs. At the end of the year, the payee will enter the totals into an online individual payee form on the SSA's website.
Organizational payee. Reporting requirements for organizational payees are more extensive. An organization must file an annual report and keep the following information for at least two years:
And organization must also keep clear and up-to-date records that show how much the beneficiary has in his or her account and how the funds were used and provide all financial records to the SSA when the SSA asks for them.
Many, if not most, people who get Social Security or SSI benefits don't have to have to pay taxes on them (read more here). But even if a recipient does have to pay taxes, it's not the job of the payee to file a tax return.
The payee will, however, receive a Social Security Benefit Statement (Form SSA-1099) each January from the agency showing the total benefits that the recipient received during the previous year. The payee should give this statement to the recipient's tax preparer in case any taxes are due.
For an individual, the process of becoming a rep payee is fairly simple. When a loved one needs you to serve as a representative payee, you need to contact the nearest Social Security office and submit an application. You'll also need to:
Updated February 27, 2023