More than eight million people who receive Social Security or Supplemental Security Income (SSI) benefits need help managing their money. When a recipient of SSDI or SSI is incapable of managing their own money, Social Security can appoint a representative payee to manage the benefits on their behalf.
The representative payee is often a legal guardian, parent, or family member who has regular interactions with the beneficiary and know what they need on a monthly basis. Non-family members, social service organizations, and financial institutions can also be payees.
Being the representative payee means you are the voice of that person to Social Security. It becomes the payee’s responsibility to report changes to Social Security as soon as they occur. This includes a change in living arrangement, a change in income, or resources.
As representative payee, you must act in the beneficiary’s best interest. The beneficiary’s money belongs only to them so you must use the money for their daily needs. You cannot pay yourself or use the money for anyone else’s benefit. You must keep the money separate from your own money in a specific type of account. Finally, you must keep good records of everything you do with the beneficiary’s money, which mean keeping track of all money you spend and making annual reports to SSA.
Representative payees are required to maintain detailed records of all funds received and spent and some representative payees with get an annual Representative Payee Report which asks the payee to report in the following categories.
- How much of the total money received, was used on the beneficiary’s food and shelter expenses? If a beneficiary has a separate rental agreement, they should be paying a complete rent at a fair market value and paying for all of their own food. If the beneficiary is receiving Supplemental Security Income (SSI) and they are not paying for all of their own food or shelter costs, then they might be receiving a reduction for the “value of food and shelter” assistance that someone else is providing. A payee would report the actual value that was spent on food and shelter during the requested time period and make sure they have some sort of documentation to back it up.
- How much of the total money received, was used for other things for the beneficiary such as clothing, education, medical, and dental expenses? The money received should support the beneficiary’s lifestyle and can cover just about anything a person might need. This can include specialized equipment for a job or hobby, a cell phone, or spending money. The representative payee may consult with the beneficiary on how the money should be spent, but it is the payee’s responsibility to determine how to best spend the money to satisfy the essential needs of the beneficiary first and foremost.
- How much of the total money received was saved for the beneficiary? If they do not need all of the money for their current monthly needs the money can be saved or invested for the beneficiary. The payee can put it in a savings account in the beneficiary’s name or in an ABLE account. If they are receiving SSI funds, however, there may be restrictions on how the money can be saved and it can affect their eligibility if it is determined to put them over the $2,000 resource limit.
Due to a recent law change, Social Security no longer requires natural or adoptive parents who live in the same household as the beneficiary to complete an annual Representative Payee Report. The law also provided additional funds to the state Protection and Advocacy Agency to conduct reviews of payees and investigate violations of federal laws. Even if you are exempt from completing a Representative Payee report, Social Security reserves the right to audit a recipient’s bank account to ensure proper use of funds and, if they are receiving SSI, to ensure that the account balance is below $2,000. Please remember that failure to follow the guidelines set by the Social Security Administration can result in losing representative payee status or losing eligibility for benefits entirely. For any questions about appropriate spending, please contact your local Social Security office.