A representative payee is an individual or organization appointed by SSA to receive Social Security benefits for someone who is unable to manage money. Generally, SSA looks for family or friends to serve as representative payees. If friends or family are not able to serve as payees, Social Security then looks for qualified organizations to be representative payees. The main responsibilities of a payee are to use the benefits to pay for the current and future needs of the beneficiary and to properly save benefits. A payee must also keep records of expenses. Benefits should be used for current needs such as food, clothing, shelter, utilities, dental and medical care and personal comfort items, or reasonably foreseeable needs. If not needed for these purposes, the benefits may be invested on behalf of the beneficiary. A payee must use benefits in the best interests of the beneficiary, according to his/her best judgment.
According to Social Security (SSA), when SSA requests a report, a payee must provide an accounting to SSA of how benefits were used or saved. Having power of attorney, being an authorized representative or having a joint bank account with the beneficiary is not the same thing as being a payee. These arrangements do not give legal authority to negotiate and manage a beneficiary’s Social Security and/or SSI payments. In order to be a payee a person or organization must apply for and be appointed by SSA. The law requires most minor children and all legally incompetent adults to have payees. In all other situations, adult beneficiaries are presumed to be capable of managing benefits. If there is evidence to the contrary, however, SSA may gather evidence and determine there is a need to appoint a representative payee.
A representative payee can never charge or accept a fee unless the representative payee is a qualified organization who has applied and been approved in writing by SSA to collect a fee. According to SSA, SSA never authorizes an individual payee to charge a fee for their payee services. SSA can authorize certain types of organizations to collect a fee from a beneficiary’s monthly payment for providing representative payee services if they are qualified to do so under the law, have applied and have been approved in writing by SSA. To qualify as a fee for service payee, your organization must be:
a) A community based, nonprofit social service organization, that is bonded and licensed in the state in which it serves as payee, or
b) A state or local government agency with responsibility for income maintenance, social service, health care, or fiduciary duties, and
c) Regularly serving as a representative payee for at least five beneficiaries, not be a creditor of the beneficiary (some exceptions apply), and must submit a SSA-445 application to collect a fee to SSA and be authorized in writing by SSA to collect a fee.
