Guide for Organizational Representative Payees

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INTRODUCTION

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The Social Security Administration (SSA) developed this guide as a “how-to” manual with instructions for serving as a representative payee (payee). Using this guide, you can tailor your payee system to fit your organization’s resources and the needs of your beneficiaries.

Members of your staff who are responsible for managing beneficiary funds and reporting to SSA should become familiar with this guide. For your convenience, this guide as well as other payee information is available on our website at http://www.socialsecurity.gov/payee.

If you cannot find the information you need on our website, or for further discussion of our representative payment program, please call us at

800-772-1213, or visit your local Social Security office. You can speak to a service representative between the hours of 7:00 A.M. and 7:00 P.M. on business days. Whenever you contact us with a specific inquiry, have the following identifying information available:

• Beneficiary’s name, and Social Security Number (SSN)
• Name of your organization, the address, and employer identification number (EIN)

The internet site at http://www.socialsecurity.gov/about.htm provides SSA publications and information on Social Security, the benefits we administer, our online claims and other services.

WHAT IS NEW FOR 2008?

Annual accounting will be available online for many payees in late 2008.

Be sure to read the instructions you receive with your annual accounting report for more details.

We made changes to bonding requirements for those payees who are required to carry bonding. (See: How Does a Qualified Organization Receive SSA Approval to be a FFS Payee?)

There is a new section on maintaining an effective representative payee accounting system as well as a new section that discusses identity theft and handling personal information. (See: Maintaining an Effective Representative Payee Accounting System and Protecting Beneficiaries from Identity Theft)

HELP US SERVE YOU BETTER

We need your ideas on what type of training and support we could provide to help you with your representative payee responsibilities. Please submit your ideas to us at http://www.socialsecurity.gov/payee and click “ Training for Organizational Payees” and then click “ Help Us Serve You Better”.

OVERVIEW

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The largest benefit program administered by SSA is the Retirement, Survivors and Disability Insurance (RSDI) program, commonly referred to as Social Security .The second largest program is the Supplemental Security Income (SSI) program. These programs may be the sole source of income for many Americans.

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 entitlements based on the earnings of workers who have made contributions into the system.

SSI is a Federal income maintenance program for aged, blind, and disabled persons with little or no income or resources. The United States Treasury’s general funds provide financing for this program; funding is NOT from Social Security contributions. SSI is a needs-based program and the amount of resources or income an individual has may affect eligibility to payments.

For ease of reference in this publication, we refer to Social Security beneficiaries and SSI recipients as "beneficiaries.” Some beneficiaries receive both Social Security benefits and SSI payments. We will also refer to Social Security

benefits and SSI payments as “benefits.” You must know which type of benefit a beneficiary is receiving, so that you will know what you must report to us. Our preference is to make payments directly to the adult beneficiary; however,

when an adult is unable to manage or direct the management of his or her own

funds, SSA may need to appoint a representative payee. SSA usually looks for a payee among the beneficiary’s family and friends. For a small segment of the population, these traditional networks of support are not available. We rely on state, local, or community sources to fill the need.

Payees play a vital role in serving our beneficiaries. They help to ensure that benefit payments are used for basic needs first, providing the beneficiary with a more stable living environment. Once a beneficiary’s daily needs are met, any funds leftover must be saved for that specific beneficiary’s future use. A caring payee can help motivate beneficiaries to work toward more independent living and can improve their response to therapy, rehabilitation and a relationship with their families.

 Terms Used in this Guide

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Conserved Funds -- Benefits in excess of the amount needed to meet a beneficiary's immediate or reasonably foreseeable needs remain the property of the beneficiary. Conserve or invest these benefits on behalf of the beneficiary in a manner that clearly shows the funds belong to the beneficiary.

Custody -- Refers to the control, supervision and care of the beneficiary. "Physical custody" means that the beneficiary actually lives with the person or in the care of the organization. "Legal custody" means that a court has placed a person in the custody of an individual, institution, or other agency. For an example, when the court places a child in the custody of a foster care agency, the agency has “legal custody” of the child. SSA does not consider temporary changes in custody such as vacations or short trips as a change in custody.

Drug Addiction or Alcohol Condition (DAA) -- An SSA determination that a disabled beneficiary has a drug addiction and/or alcoholism disorder. While SSA may determine a disabled beneficiary has a DAA condition, SSA does not pay disability benefits based on a DAA condition.

Incapable -- A decision made by SSA that a beneficiary is unable to manage or direct the management of his or her funds. SSA bases this incapability determination on a variety of evidence and uses it to determine the need for a representative payee. An incapable beneficiary is not always “legally incompetent.”

Incompetence -- A decision made by a court that a beneficiary is unable to manage his or her affairs. A beneficiary found to be legally incompetent by the court must have a payee. SSA requires a copy of the court ruling as part of the documentation to support the application for payment by a representative payee.

Legal Guardian/Conservator -- Someone appointed by a court of law to be responsible for a minor or an incompetent adult. The legal guardian can be the payee for a beneficiary or someone else can serve as the payee. In some States, the term “guardian” or “conservator” has the same meaning with regard to persons placed in charge of the affairs of an adult who is incapable of managing his/her affairs.

Power of Attorney -- This is a legal process where one individual grants a third party the authority to transact certain business for that individual. It does not diminish the rights of the individual and need not involve capability or competence. The Treasury Department does not recognize power of attorney for the purpose of negotiating Federal payments, including Social Security or Supplemental Security Income checks. Persons with power of attorney must file an application to be a representative payee.

What is a Representative Payee?

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A representative payee is an individual or organization appointed by SSA to receive Social Security and/or SSI benefits for someone who cannot manage or direct someone else to manage his or her money. Your main responsibilities as a payee are to use the benefits to pay for the current and foreseeable needs of the beneficiary (refer to What are Your Duties as a Representative Payee? for the duties of a representative payee) and properly save any benefits not needed to meet current needs. You must provide to us an accounting of your use of benefits and savings when we request a report from you; therefore, keep records of expenses.

NOTE: 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 you legal authority to negotiate and manage a beneficiary’s Social Security and/or SSI payments. You must apply for and be appointed as a payee by SSA.

With certain exceptions, a payee cannot collect a fee for payee services.

SSA may authorize certain qualified organizations to collect a fee. See: Payment for Representative Payee Services and How Does a Qualified Organization Receive SSA Approval to be a FFS payee?for a description of what kinds of organizations might qualify and of the written fee authorization process.

SSA categorizes payees into two groups:

Individual representative payee - This could be a family member or someone that a beneficiary lives with or a friend who does not live with the beneficiary. It could also be a lawyer, a legal guardian, or a volunteer for a government or non-profit agency. SSA never authorizes an individual payee to charge a fee for their payee services, though some may receive a fee for the services they perform as a court appointed legal guardian.

Organizational representative payee - This category includes social service agencies, institutions, an official of a State or local government agency, or a financial organization. While most organizational payees may not collect a fee for providing payee services, there are a small number of qualified organizations who may decide to file a separate application (SSA-445) to receive authorization by SSA to collect a fee. These payees must receive written authorization from SSA before they can collect a fee from the beneficiary for their services. (See: Payment for Representative Payee Services and How Does a Qualified Organization Receive SSA Approval to be a FFS payee?)

Who is a Beneficiary?

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A beneficiary is a person who receives Social Security and/or SSI benefits.

Social Security

Workers qualify for Social Security benefits after they have worked and paid Federal Insurance Compensation Act (FICA) taxes for a specified period. When the worker retires or is unable to work due to a disabling condition, he or she may be eligible for Social Security benefits. A worker's spouse and children may also become eligible for Social Security benefits if the worker retires, is unable to work due to a disability or dies. The amount an entitled beneficiary receives depends on the age at which the worker retires, becomes disabled, or dies; how long he or she worked under the Social Security program; and the amount of his or her FICA-covered earnings.

SSI

To receive SSI, a person must be age 65 or older, blind or disabled and must have limited income and resources. In order to qualify, he or she also cannot have over $2,000 ($3,000 for a couple) in countable resources. (NOTE: SSA usually does not count the beneficiary’s home and one car as resources.) Children may receive SSI due to disability or blindness. SSI is paid out of Federal general revenues, not the Social Security Trust Fund. Some States supplement the maximum SSI Federal payment. Any income such as Social Security, a pension or help from others in the form of food or housing, may reduce the SSI payment.

Some individuals may receive both Social Security and SSI benefits. Eligibility depends on the individual meeting the requirements for each program. You need to know what type of benefit(s) a beneficiary is receiving and what events or changes you need to report to SSA. (See What Changes Must You Report to SSA? for a payee’s reporting responsibilities.)

Please refer to Other Available Publications for publications that provide more information on the Social Security and SSI programs.

Who Needs a Representative Payee?

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SSA assumes adult beneficiaries are capable of managing their money unless there is evidence to the contrary. When SSA determines a beneficiary cannot manage or direct someone else to manage his or her Social Security and/or SSI benefits, we appoint a payee. SSA will never appoint a representative payee solely for a beneficiary’s convenience or personal preference.

Beneficiaries who are unable to manage or direct the management of their money need a payee. These beneficiaries fall into three categories:

• minor children;
• legally incompetent adults (if your organization is the legal guardian for a beneficiary, you will need to submit a copy of the court appointment document to the local SSA office when you file the application to become a payee); and
• adult beneficiaries SSA has determined are incapable of handling their money.

If you are serving as a payee for someone who is showing signs of improvement, and you think they may be able to manage their own money, report this to SSA. We will schedule an interview with the beneficiary to determine whether he or she is now capable of handling his or her own money.

Likewise, if you have a beneficiary in your care who is receiving Social Security, and/or SSI benefits who loses the ability to manage money, you should promptly report this to SSA. When this occurs, SSA will obtain evidence to determine if the beneficiary is capable of managing his or her benefits. SSA will also interview the beneficiary. If SSA determines that the beneficiary is incapable, a payee will be needed and your organization may apply to be the payee.

Beneficiaries with a Drug Addiction or Alcohol Condition (DAA)

If a disabled adult has a DAA condition, but SSA determines that they are capable of handling their own funds, then SSA will make direct payments and will not appoint a payee.

Disabled adults with a DAA condition whom SSA determines are incapable must have a payee. Organizations and agencies are preferred payees for these beneficiaries because they may already serve the mentally ill, substance abusing

and homeless populations. These organizations and agencies are usually aware of these individuals’ special needs, SSA’s policies, and know how to direct financial resources to help meet these needs. SSA and many local organizations and agencies have established mutually beneficial working relationships to help these beneficiaries.

 How Do You Apply to be a Representative Payee?

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To apply to be a payee for a Social Security and/or SSI beneficiary, your organization should contact your local Social Security office to file an application. SSA requires you to complete this application in a face-to-face interview, but may waive this requirement for certain organizations that have an established relationship with their local office.

SSA uses a face-to-face interview to:

• determine your organization's relationship to and interest in the beneficiary;
• discuss your organization's qualifications;
• discuss your organization's ability to carry out the responsibilities of a payee;
• explain the duties of a payee;
• explain the reporting responsibilities of a payee; and
• explain the liability for not reporting changes to SSA. (See: What Changes Must You Report to SSA? for a list of changes that a payee must report and What is Your Liability and Responsibility for an Overpayment? for liability and responsibility for an overpayment.)

You must provide accurate information so that SSA can determine your organization's suitability to serve as a payee.

If you are a legal guardian or conservator, you must give us a copy of the court documents so that we can verify your appointment by the court.

If you are a qualified organization and want to charge a fee for your services, see Payment for Representative Payee Services for the requirements and instructions on how to apply and receive authorization in writing by SSA to charge a fee.

What are Your Duties as a Representative Payee?

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Required Duties

• Determine the beneficiary's current needs for day-to-day living (e.g., food, clothing, housing, medical expenses and personal items) and use his or her payments to meet those needs.
• Save any money left after meeting the beneficiary's current needs in a checking or savings account (preferably interest bearing), U.S. savings bonds, or other appropriate investment(s).
• If you receive a large payment representing several months or even years of benefits, you should plan to spend or conserve the money wisely, in the best interests of the beneficiary.
• You must report any event that affects the beneficiary’s payment or entitlement to benefits and promptly return any payment that the beneficiary is not due. Do not rely on the beneficiary to report these changes. See: What Changes Must You Report to SSA?
• Keep written records for at least 2 years of all payments received from SSA, bank statements and cancelled checks, receipts or cancelled checks for rent, utilities, and major purchases made for the beneficiary. For example, if you withdraw $100 from the beneficiary’s account and buy an $80 item, then there must be a receipt for the $80 and a record reflecting the disposition of the remaining $20.
• Notify SSA of any changes or circumstances that would affect your performance as a payee or your decision to continue to serve as a payee (for example, you sell or transfer your business).
• If you are a payee for an SSI beneficiary, be aware of all income, funds and items a beneficiary may own that can be converted to cash because income and/or resources may impact the beneficiary's payments and/or eligibility.
• Return any conserved funds (funds owned by the beneficiary) to SSA if you stop serving as the beneficiary’s payee.
• Notify SSA if a beneficiary dies while you are payee, and give any conserved funds owned by the beneficiary to the legal representative of the beneficiary’s estate for disposition under state law. If you received checks after the death of a beneficiary and they are not due, you must return them to SSA. See: Checks Received After the Death of a Beneficiary for additional information about returning checks after a beneficiary dies.
• Assist in obtaining treatment for an SSI child beneficiary that was prescribed by a physician, psychologist or other acceptable medical source and that is expected to improve or restore the child's functioning. Failure to provide help in obtaining necessary medical treatment for the child may result in SSA removing you as the child’s payee.
• Notify SSA when a beneficiary’s condition improves to a point where you believe he or she no longer needs a payee.
• A payee must complete forms for:

• annual accountings of benefits received. The completed forms must be returned to SSA. See Exhibits 3 and 4 for examples of accounting reports;
• NOTE: Online payee reporting will be available for many representative payees in late 2008. Be sure to read the instructions you receive with your annual accounting report for more details.
• periodic reviews of non-medical eligibility factors for SSI called "redeterminations." The redetermination form asks for information about the beneficiary’s income, resources and living arrangements. The information is used to help determine whether the SSI beneficiary is still eligible for SSI and receiving the correct payment amount; and
• continuing disability reviews to help SSA determine if a beneficiary is still blind or disabled.

Suggestions for Other Ways Representative Payees Can Help

SSA encourages you to go beyond managing finances and to be actively involved in the beneficiary's life. Other ways to help the beneficiary include:

• Establish a budget, discuss it with the beneficiary, and involve him or her as much as possible in financial decisions;
• Explain Social Security and SSI payments and the beneficiary's expenses to him or her;
• Advise the beneficiary of current and past due benefits;
• Help the beneficiary find other benefits and services he or she needs (for example, food stamps, housing subsidies, etc.) and cooperate with caseworkers;
• Learn about the various impairment-related and blind work expenses as well as earned income exclusions. Report to SSA when required so that the beneficiary can take advantage of work incentives in the disability program and perhaps receive higher benefit payments;
• Negotiate with landlords and others to get "the best possible deal" for the beneficiary;
• Help the beneficiary obtain medical treatment when necessary;
• Help the beneficiary with Medicare to get assistance with prescription drug expenses; and
• Recommend an alternate person or agency if you can no longer serve as a payee.

What Changes Must You Report to SSA?

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You must promptly report changes to SSA that may affect the beneficiary's eligibility for Social Security and/or SSI benefits. Also, report to SSA any changes in your (the payee’s) circumstances that would affect your performance as payee. Be sure to notify SSA if your organization’s address changes. To report changes, call our toll-free number, 800-772-1213, or call, fax or visit your local Social Security office. Have your organization’s name, address and employer identification number (EIN) on hand when you call. You must report the following:

• the beneficiary dies;
• the beneficiary moves;
• you are unable to contact the beneficiary and you do not know where the beneficiary is;
• the beneficiary marries or divorces or marriage is annulled;
• the beneficiary’s name changes;
• the beneficiary starts or stops working;
• the disabled beneficiary's condition improves;
• the beneficiary leaves or plans to leave the U.S. for 30 consecutive days or more;
• the beneficiary's immigration or citizenship status changes;
• the beneficiary is confined to a correctional institution or has an unsatisfied warrant:
• the child beneficiary’s custody changes or the child is adopted;
• the child beneficiary’s parents or step-parents divorce or a parent or step parent dies;
• your organization can no longer serve as a payee;
• the beneficiary no longer needs a payee; or
• employee theft of beneficiary funds.

NOTE: SSA may hold a payee who does not report changes timely liable for repaying an overpayment.

On Other Available Publications is a list of publications that you may order from SSA or download from our website. These publications provide in-depth reporting instructions for Social Security and SSI beneficiaries.

Additional Events to Report for SSI Beneficiaries

You must also report the following events if the beneficiary receives SSI payments:

• the beneficiary acquires countable resources that exceed $2,000 for an individual or $3,000 for a couple;
• the beneficiary moves, even temporarily, to or from a hospital, nursing home or other institution;
• a married beneficiary separates from his or her spouse, or they begin living together after a separation;
• someone moves into or out of the beneficiary's household; or
• the beneficiary has any change in income (wages, government payment, pension, etc.) or resources (for example, a child's SSI payment may change if there are any changes in family income or resources, such as the parents’ savings.).

Are There Limits to What a Representative Payee Can Do?

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There are some limits to what a payee can do. SSA appoints a payee to manage Social Security and SSI benefits only. This appointment carries no legal authority to manage non-Social Security income or medical matters.

Being a payee does not give you authority to:

• use a beneficiary's money for anything other than the beneficiary's needs;
• spend a beneficiary's funds in a way that would leave him or her without necessary items or services (housing, food, clothing, medical care);
• deposit a beneficiary's Social Security and/or SSI benefits in your or another person's account or your organization’s operating account;
• lend a beneficiary’s money to anyone else, including other beneficiaries you serve (this includes using funds held in a collective account to make up a shortfall when a beneficiary’s expenses exceed his/her ownership interest in the account);
• use a beneficiary's "dedicated account" funds (see: Dedicated Accounts – Minor Children Receiving SSI) for purposes not related to the child's impairment;
• keep the beneficiary's conserved funds if you are no longer the payee;

charge the beneficiary for payee services unless your organization has SSA’s written authorization to do this (see: How Does a Qualified Organization Receive SSA Approval to be a FFS payee?);

• make medical decisions;
• sign legal documents, other than Social Security documents, on behalf of a beneficiary; or
• legally manage or control wages, pensions, or any income from sources other than Social Security and/or SSI benefits.

What is Proper Use of Benefits?

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You are responsible for using the Social Security and/or SSI benefits for the use and benefit of the beneficiary and in the beneficiary’s best interests. You must use the benefits for the beneficiary’s current maintenance needs for food, housing, clothing, and medical and dental care not covered by Medicare, Medicaid or provided by a residential institution. After these needs are met, you may also use the benefits for personal comfort items, recreation and miscellaneous expenses. If not needed for these purposes, you must conserve the remaining benefits on behalf of the beneficiary.

Each year, we will mail you a form that you will use to report to us about your use of your beneficiaries’ funds. We may also conduct site visits periodically as part of our monitoring efforts. In order to facilitate our monitoring, you should establish an accounting system (See Monitoring Representative Payees, and Developing an Accounting System) to document your management of beneficiary finances.

NOTE: Special instructions apply to the proper use of benefits for children whose SSI benefits are managed in dedicated accounts. (See Dedicated Accounts – Minor Children Receiving SSI for additional information on dedicated accounts.)

You must be aware of the beneficiary’s current and reasonably foreseeable needs and ensure these needs are met to the extent possible based on the available funds. Never sacrifice current needs to pay other expenses, a past debt, or use as a means to accumulate conserved funds.

How to Handle Large Sums of Money

Sometimes a Social Security and/or SSI beneficiary receives a large payment covering several months, or even years, of benefits. Your first responsibility is to ensure the beneficiary’s current needs are met. After these expenses are paid, you may spend the money on things that will improve the beneficiary’s daily living conditions or provide better medical care. You could arrange for schooling or special training that will help the beneficiary become more self-sufficient and have a more rewarding future. You may decide to use some of the funds for recreation items and activities. You should also consider the beneficiary’s future needs in your decision-making.

It is important that you spend the money wisely and in the beneficiary's best interest. Save any remaining funds on behalf of the beneficiary. NOTE: Conserved funds over $2,000 ($3,000 for a couple) can cause a break or end to SSI eligibility.

Institutionalized Beneficiaries

Personal Needs Spending

Representative payees should set aside a minimum of $30 a month for personal needs for all beneficiaries residing in an institution such as a hospital, nursing home, or other type of group living facility. You should not use these funds to purchase items normally provided to the beneficiary by the institution or covered under a State or Federal program.

Examples of Personal Needs Spending

Some examples of acceptable personal needs expenditures are:

• health and hygiene items - soaps, toiletries, cosmetics, combs, brushes, bath scale, dermatology treatments, cosmetic surgery, elective or cosmetic dental treatments, etc.;
• clothing such as caps, scarves, gloves, bathing suits and caps, seasonal garments, shoes, boots, slippers, athletic shoes, disability-related adaptive clothing, etc.;
• convenience items such as radios, TVs, clocks, cassette/CD players, clothes hamper, stationery, wristwatches, etc.;
• living area furnishings such as carpets, curtains, blankets, bedspreads, quilts, pictures, posters, mirrors, pillows, lockable chest/truck, rocking chair, recliner, etc.;
• therapeutic equipment - if recommended by a doctor or appropriate therapist, and not covered by any other source: hearing aids, electric wheelchairs, orthopedic shoes, shower and bathroom chairs, walkers, crawlers, book holders, feeding aids, toilet aids, etc.;
• transportation expenses - trips to visit family or for relatives to visit the beneficiary in special cases, trips to amusement parks, State Fairs, summer camps, etc.;
• hobby and craft items - art supplies, photo albums, cameras, film, cassette tapes, video cassettes, etc.; and
• miscellaneous items - magazine subscriptions, reasonably priced holiday presents for family/friends, telephone calls to or from out-of-town relatives, restaurant meals, etc.

Group Purchases

You may pool the personal funds of several institutionalized beneficiaries to make group purchases provided you obtain SSA’s approval prior to making the purchase. Submit your request to your local Social Security office.

Customary Charges

If the beneficiary is receiving care in a Federal, State or private institution and not receiving Medicaid payments for his or her care, current maintenance includes the institution’s customary charges and expenditures for items that will aid in the beneficiary’s recovery or release from the institution, or improve the beneficiary’s condition while in the institution.

Legal Dependents

For institutionalized Social Security (not SSI) beneficiaries whose current maintenance needs are being met, you may use part of the funds to support the beneficiary’s legally dependent spouse, child and/or parent. If you have any questions on this provision, contact your local Social Security office.

Additional Information about Use of Benefits

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Claims of Creditors

You may satisfy a beneficiary’s outstanding past debt that occurred before the first month you started to receive the Social Security and/or SSI benefits if the beneficiary’s current and reasonably foreseeable needs are met. If your organization is also a creditor, such as the beneficiary’s landlord or an institution in which the beneficiary is residing, you must obtain SSA’s approval before reimbursing your organization for any debts owed to the organization.

Guardianship Fees

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 funds for customary guardianship fees, provided the guardianship is in the beneficiary’s best interests.

Paying legal guardianship fees would not constitute a proper use of benefits if the beneficiary’s funds will be depleted by the guardianship costs to the point where the beneficiary’s current maintenance needs are not being met.

Payment for Representative Payee Services

Only qualified organizational payees authorized by SSA (in writing) are permitted to collect a fee from the beneficiary’s monthly benefits for providing payee services. We refer to these payees as “fee-for-service” (FFS) payees. (See Payment for Representative Payee Services for additional information on FFS payees.)

Out-of-Pocket Expenses

You may be reimbursed for reasonable actual out-of-pocket expenses incurred on behalf of the beneficiary. For example, if the cost of transporting the beneficiary to a doctor’s appointment (such as bus fare or mileage and tolls) is paid from your organization’s funds, this is considered an out-of-pocket expense. The amount your organization may be reimbursed must correspond to the actual expense incurred for the individual beneficiary. You must keep records of your out-of-pocket expenses. (See What are Your Duties as a Representative Payee? for additional information on recordkeeping.)

You are not allowed to be reimbursed for any expenses that are considered “overhead.” By overhead, we mean the normal costs associated with doing business. For example, expenses such as utilities, office rent, office equipment and supplies cannot be collected from beneficiaries. 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.

NOTE: If you are an authorized FFS payee (see Payment for Representative Payee Services), the cost of postage stamps is considered overhead and is not reimbursable.

Life Insurance and Prepaid Burial Contract

Purchasing life insurance or a prepaid burial contract is an acceptable use of benefits, unless the premiums diminish funds to the point where the beneficiary’s current needs are not being met, there is a conflict of interest (for example, if the payee is the beneficiary of the life insurance policy), or the institution/agency would normally use funds from another source to purchase such a policy for a non-beneficiary. The beneficiary must always be the owner of the policy. If you plan to purchase life insurance or a prepaid burial contract for an SSI beneficiary, you should contact your local Social Security office to find out how this purchase may affect SSI eligibility.

Trusts

If you plan to use benefits to establish a trust or fund an existing trust on behalf of the beneficiary, you are required to submit a copy of the trust document to your local Social Security office for review and approval. We must ensure the terms of the trust comply with SSA’s representative payment use of benefits policies and determine what effect the trust may have on SSI eligibility, if applicable.

 What is Misuse of Benefits?

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Misuse of benefits occurs when the payee uses any portion of a beneficiary’s benefits for something other than the use and benefit of that beneficiary. If money is left after meeting the beneficiary’s current needs, save it for future

needs. Misuse of benefits also occurs when a payee charges unauthorized fees and deducts the amount from the beneficiary’s monthly payment or when an employee or volunteer of an organization steals beneficiary funds.

SSA investigates all allegations of misuse, gathers facts and evidence, and makes a formal determination of whether or not misuse has occurred in order to protect the best interests of the beneficiary. If SSA determines benefits have been misused, SSA may appoint a new representative payee or make direct payment to the beneficiary.

If you or an employee of your organization misuses a beneficiary's funds, you must immediately report it to SSA. Your organization has a legal obligation to repay the misused funds. If your organization is an approved FFS payee, your organization must also forfeit the fee(s) charged for the month(s) of misuse. If your organization does not repay the misused funds immediately, the law allows SSA to collect the misused amount from you.

SSA will refer all determinations finding misuse for consideration of criminal prosecution. The penalty upon conviction may be a fine of up to $250,000, imprisonment up to 10 years, or both. SSA 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.

 Managing and Conserving Funds

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You should hold beneficiaries' funds that you use to meet current and foreseeable needs in an interest bearing checking or savings account at a financial institution insured under federal or state law. We encourage you to conserve beneficiaries' funds not needed for current needs in a similar account, or other safe investment, in order to help beneficiaries save for large purchases or unforeseen needs. You should make every effort to set up an account that minimizes fees and enables you to keep clear records. Any interest earned on the account belongs to the beneficiary(ies).

We encourage you to use the safety and convenience of direct deposit to receive benefits. Any account you use to hold beneficiaries' funds must be set up and titled so that it is clear that you hold the funds in trust for the beneficiary and that you have only a fiduciary interest in the account. The beneficiary must not have direct access to the account.

You must keep beneficiary funds in an account that is separate from other organizational funds, and keep records that enable you to track each beneficiary's Social Security or SSI income, your use of his/her funds, and remaining balances.

Subcontracts for Accounting Functions

You may enter into contracts with third parties to manage client/resident fund accounts and to provide accounting services. However, as the payee, you remain responsible for exercising oversight over any contractor or volunteer who performs accounting services for you.

While third party accounting services may be cost effective, you cannot outsource your payee responsibilities. We will not pay beneficiary funds into an account owned by a third party contractor. We will hold your organization responsible for proper account titling, directing the use of funds to meet the needs of the beneficiary and submitting timely annual accounting reports to SSA.

Type of Bank Account

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. A fiduciary account is an account established by a person or entity for the benefit of another party. We may request that you provide the depository account records from your financial institution to prove the existence of a fiduciary account.

You may use a collective account (described below) if you serve as payee for more than one beneficiary.

Account Titling Requirements

Any account title authorized or approved under State law that shows beneficiary ownership and the payee as fiduciary is acceptable. Do not use joint accounts because they allow a beneficiary direct access. If possible, do not use the name of an individual staff person on the title of the bank account; use your organization’s name.

Example of Individual Account Title:

Sunnydale Nursing Home, representative payee for John Q. Public Examples of Collective Account Titles:

• Sunnydale Nursing Home Resident Trust Account
• Sunnydale Patients’ Fund for Social Security Beneficiaries

Collective Accounts

You may request payment into a master checking or savings account with individual sub-accounts to serve many beneficiaries, which we call a “collective account.” For some organizations, collective accounts are more efficient

because they:

• Centralize the individual accounts;
• May earn larger amounts of interest to allocate to the beneficiaries; and
• May avoid checking account service charges.

You must ask SSA for permission before depositing funds in a collective account . Usually, your local SSA office will approve your request provided:

• The account title shows that the funds belong to the beneficiaries and not the payee;
• The account is separate from the organization’s operating account;
• Any interest earned is credited to the beneficiaries;

You have clear and current records showing the amount of each beneficiary’s share, and follow proper procedures for documenting credits, debits, and allocation of interest; and

• You agree to make the account and supporting records available, upon request, to Social Security.

Funds deposited by a fiduciary on behalf of a beneficiary are owned by the beneficiary. The Federal Deposit Insurance Corporation (FDIC) will insure funds deposited into a collective account by a fiduciary on behalf of one or more parties, provided the financial institution’s depository account records reveal the existence of a fiduciary relationship and the interests of the parties in the account.

Dedicated Accounts for SSI Recipients under Age 18

If you serve as payee for beneficiaries subject to the dedicated account provisions of the Social Security Act, (see Dedicated Accounts – Minor Children Receiving SSI) you must establish a fiduciary account separate from the account for regular monthly SSI deposits. We call this a “dedicated account” because, unlike regular monthly SSI payments, the Social Security Act restricts how you can use “dedicated account” funds.

The dedicated account may be a checking, savings or money market account established at a financial institution that preferably earns interest. You cannot use certificate of deposits, mutual funds, stocks, or bonds because generally they are not considered as accounts at a financial institution.

You can use a collective “dedicated account” provided it meets the conditions described above and you get SSA approval.

Depositing Funds Other Than Social Security or SSI Funds

Often organizations establish fiduciary accounts for the use of all clients including those who receive Social Security and/or SSI benefits but do not have a payee. In addition, beneficiaries may authorize the deposit of other monies (pensions, VA payments, etc.) into the same collective account. We prefer, for accounting purposes, that the account contain only funds your organization receives as a representative payee for our beneficiaries. However, if others use the account, we will expect you to have adequate accounting procedures for each Social Security or SSI beneficiary for whom you serve as payee.

Disposing of Conserved Funds After You Stop Being the Payee

Social Security/SSI funds that you conserved on behalf of a beneficiary belong to that beneficiary. When you no longer serve as payee for the beneficiary, you must return any conserved funds, including interest and cash on hand, to SSA so that we can transfer the conserved funds to a new payee or to the beneficiary directly if he or she no longer needs a payee.

Disposing of Conserved Funds After Death of Beneficiary

Upon the death of the beneficiary, any conserved funds you have belonging to the beneficiary become the property of his or her estate. You must give them to the legal representative of the beneficiary’s estate for disposition under state law. If there is no legal representative, contact the State probate court for instructions on what to do with remaining conserved funds. If you need information about state law, contact the probate court or an attorney. Do not return these funds to SSA. See Checks Received After the Death of a Beneficiary.

Checks Received After the Death of a Beneficiary

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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 he or she dies on the last day of the month. For example, if a Social Security beneficiary dies in June, the payment for June, which is paid in July, must be returned. Promptly return any payment received for the month of death or later whether in the form of an electronic fund transfer or paper check. Do not destroy paper checks. Remember to respond to any notices SSA might send you concerning overpayments and cooperate with SSA to clear up overpayment issues.

SSI benefits are paid each month for that month. An SSI benefit is due for the month of death. You must return any SSI benefits you receive for months after the month of death. For example, you receive an SSI payment on June 1, 2008, the beneficiary dies on June 25, 2008 and you receive an SSI payment on July 1, 2008. You must return the July 1, 2008 payment.

If you received and failed to return payments issued after the death of a beneficiary, you are liable for the debt.

Dedicated Accounts – Minor Children Receiving SSI

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The law requires that representative payees establish and maintain a separate account at a financial institution for certain large SSI past-due benefits for blind/disabled children under the age of 18. We refer to this account as a “dedicated account” because it must be separate from any other savings or checking account you have set up for the beneficiary. We will notify you when we pay the past-due benefits if they must be maintained in a dedicated account. (See Managing and Conserving Funds for additional information on the acceptable types of accounts you may establish to hold dedicated account funds.)

You may not deposit any additional money into the dedicated account unless we notify you that additional benefits payable may be deposited into the dedicated account. We do not count the money and any interest earned on the money in the dedicated account as income or resources for SSI purposes.

NOTE: Dedicated account requirements continue to apply until all funds in the dedicated account are depleted or eligibility for SSI benefits terminates.

Use of Dedicated Account Funds

The law also restricts the items and services that you may purchase for the beneficiary using dedicated account funds.

You can use money in the dedicated account only for the following categories of expenses:

• medical treatment;
• expenses related to the child’s impairment(s), personal needs assistance, special equipment, housing modification, and therapy or rehabilitation; or
• other items or services related to the child’s impairment(s) that SSA determines to be appropriate.

NOTE: We encourage you to obtain approval from your local Social Security office prior to 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.

Expenditures Not Permitted from Dedicated Accounts

Do not use dedicated account funds as payment for items or services not listed under Use of Dedicated Account funds. For example, you may not use dedicated account funds to meet the beneficiary’s current maintenance needs for food, housing, clothing, and personal items if they are not related to the child’s impairment(s). You should use the ongoing monthly SSI benefits for these expenditures. SSI overpayments may not be paid with dedicated account funds.

NOTE: In emergency situations, SSA may approve the use of dedicated account funds for basic living expenses to prevent the child from becoming homeless or malnourished. You should contact your local Social Security office if an mergency exists.

Examples of approved requests for expenditures from dedicated accounts:

• 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 was related to the child’s blindness. The software allows the child to use the computer and to keep up with the other children in her class.
• The payee requested approval for purchases of large quantities of gluten- free products for a child with celiac disease. Other residents in the group home did not commonly eat these foods. We approved the request because the child could not eat a regular diet due to the impairment.
• The payee requested approval to pay for attorney fees incurred in pursuit of the child’s SSI disability claim. The past-due benefits were paid directly into the dedicated account; the attorney was not paid prior to release. We approved the request because the attorney fees were incurred in pursuit of the child’s disability claim.

Examples of denied requests for expenditures from dedicated accounts:

• The payee requested approval to buy a new pair of shoes for the disabled child. We denied the request because the shoes are not related to the child’s impairment. The child should have shoes, but the payee must pay for them from the child’s ongoing monthly SSI benefits.
• The beneficiary has a Social Security overpayment due to a parent’s wages. The payee requested approval to pay the overpayment from the beneficiary’s dedicated account funds. We denied the request because the overpayment is not related to the child’s impairment.

Misapplication of Dedicated Account Funds

If you knowingly use money from the dedicated account for anything other than the categories of expenses described above (see “Use of Dedicated Account Funds”), your organization must repay SSA from its own funds. We give you a copy of the “Dedicated Account Use of Funds Statement” to reinforce the applicable rules governing dedicated accounts that you must adhere to for the particular SSI beneficiary.

Reporting on Monthly Benefits and the Use of Dedicated Account Funds

You must keep records on how you used and/or saved the monthly benefits you received on behalf of the beneficiary. You must keep separate records of all money deposited or taken from the dedicated account and receipts for the items and services you purchased. (See Maintaining an Effective Representative Payee Accounting System for additional information on recordkeeping and Does SSA Monitor Representative Payees? on monitoring payee performance.)

If you have any questions about dedicated accounts, contact your local Social Security office.

What is Your Liability and Responsibility for an Overpayment?

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An overpayment is an amount of money received for any period that exceeds the total amount of money that SSA should have paid. The overpaid amount is a debt owed to the U.S. Government.

If you are a non-governmental payee and SSA determines that you have misused the beneficiary’s payments, SSA considers the misused payments an overpayment to you, and not to the beneficiary, and you will be liable for repayment.

When a beneficiary is overpaid, the current payee may request a waiver or make an appeal to contest the facts of the overpayment on behalf of the beneficiary. 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.

SSA will determine the beneficiary's liability for repayment of the total overpayment amount and the payee’s liability for repayment.

If the beneficiary is overpaid through no fault of your organization and you used the incorrect payments to meet the beneficiary's needs, you may request a waiver of recovery of the overpayment.

If you received and failed to return payments issued after the death of the beneficiary, you are liable for the debt.

If SSA determines that a former payee is liable for repayment of the overpayment (or a portion thereof), SSA initiates recovery against the former payee and not the current payee.

If SSA determines that the beneficiary's payments should be suspended or terminated, the beneficiary often has the right to request that his payments continue while he/she appeals SSA’s action. If the beneficiary loses the appeal, SSA will determine the amount of any resulting overpayment and if any resulting overpayment has to be repaid to SSA.

Best Practices

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To help you provide good service to the beneficiaries in the most efficient manner, here are some “best practices” that other representative payees have employed:

• Maintain a line of communication with the local Social Security office.
• Develop internal procedures and guidelines governing how their organization manages beneficiary funds and make sure their employees follow them.
• Purchase an insurance policy or bond providing protection from employee dishonesty even though their organization is not authorized to collect a payee fee. As payee, you are liable for misuse of benefits or employee theft. See FFS payee? for a description of bonds that would provide protection to your organization.
• Negotiate with financial institutions to provide checking accounts with no or minimal service charges. Sometimes the financial institution waives monthly fees in lieu of paying interest. An organization with a substantial number of beneficiaries may be able to get a more favorable group rate.
• Flag the financial accounts of SSI beneficiaries when conserved funds reach $1,500. This alerts the payee to assess the beneficiary’s needs and to spend funds to meet these needs while keeping countable resources below the $2,000 limit. Remember, you must report to SSA if an SSI beneficiary’s countable resources exceed $2,000 for an individual and $3,000 for a couple.
• Use a “Representative Payee Reporting Form” developed by the local Social Security office that the organization could complete and FAX back to Social Security for reporting. See Exhibit 1. NOTE: This sample form does not include all the changes that you may need to report.
• Arrange to report beneficiary changes by FAX to their local Social Security office instead of reporting by phone or mail.
• Negotiate arrangements with local merchants to purchase goods such as food, clothing or household furnishings. The beneficiary can select his or her items and buy them with a pre-approved credit voucher, or after the merchant verifies the purchase with the representative payee. The payee will set up the arrangement so that the beneficiary cannot buy alcohol or anything else that may be detrimental to his or her health or welfare.
• Use gift cards, debit cards from a retail store, or disburse by cash small amounts of spending money instead of giving a beneficiary a check that he/she may have to pay to cash.
• Engrave items such as TVs, MP3 players, radios and computers with the beneficiary’s name.
• Use a written contract stating the terms of their relationship with the beneficiary. We included a sample contract (see Exhibit 2) that organizations and agencies can adapt to their own needs.

Developing a Representative Payee Accounting System

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Your organization must establish some form of a payee accounting system that will track the following for each beneficiary:

• how much money was received;
• how much money was spent;
• how it was spent; and
• the balance saved for each beneficiary.

Post the amounts of all income received and disbursements of beneficiary funds to your records shortly after the transaction occurred.

In addition, you must keep documentation of disbursements to support how you spent the funds. Documents that you must keep include bank statements and cancelled checks, receipts or cancelled checks for rent, utilities, and major purchases. You should have internal controls in place to ensure the integrity of your financial records.

You may wish to use a computer program that will:

• alert you when an SSI beneficiary's conserved funds balance is approaching the $2,000 resource limit;
• prorate interest earned based on each beneficiary's portion of a collective account balance; and
• provide understandable and up-to-date reports so SSA and the beneficiary know how much money was received, how the money was spent, and how much money remains.

Save your records (e.g., bank statements, cancelled checks, receipts for rent and utilities, etc.) for at least 2 calendar years and make them available to SSA upon request. A video is available on our website at http://www.socialsecurity.gov/payee to help you set up your system.

You will be required to file annual accounting reports with SSA. In addition, SSA may contact you about conducting a site review of your organization that will include a review of the records you keep to account for how you receive, spend and conserve beneficiary funds.

Maintaining an Effective Representative Payee Accounting System

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In Best Practices, we recommend that your organization establish internal procedures and guidelines governing how your organization manages beneficiary funds. These internal procedures should include internal controls to help ensure the integrity and accuracy of your accounting system.

What follows is a brief description of some common practices for ensuring the integrity and accuracy of an accounting system, whether it is manual or automated. Many of these practices are standard in a well-designed accounting system. Your organization may already follow many of these best practices, but you may also find some useful new ideas.

Separation of Employee Duties

Separation of employee duties helps deter both check fraud and employee theft. When establishing or re-evaluating your internal procedures, consider the best way to separate employee duties. Ideally, assign a different person to perform each of the following basic duties:

• Logging paper checks into the organization as soon as received;
• Promptly depositing paper checks into properly entitled beneficiary owned bank accounts;
• Maintaining ledgers and bank records;
• Making requests for goods and services on behalf of beneficiaries;
• Holding blank check stock;
• Writing checks for approved disbursements;
• Signing checks for approved disbursements; and
• Reconciling ledgers and banks accounts.

We realize that the size of your staff can affect your ability to achieve separation of duties.

Oversight of Accounting Functions

Your internal procedures should provide for adequate review and supervision of accounting functions. For example, you should require a second employee’s approval when a proposed disbursement exceeds a certain limit, assign a second employee to review bills for propriety before a check can be written, and establish a countersignature requirement for all checks written or those that exceed a certain threshold.

You should perform monthly reconciliations of ledgers and bank records as soon as you receive bank statements. Monthly reconciliations will give you the opportunity to adjust for any differences in your records. The reconciliation should include explanations for any differences you find and be kept to document your accounting records. You should not assign an employee who is authorized to deposit or withdraw beneficiary funds to perform this duty. Have someone other than the preparer certify that the reconciliation is complete and accurate.

Besides monthly reconciliations, you should conduct internal audits of financial and bank records regularly. The person who performs the internal audit should be someone who can verify the accuracy and completeness of your records, but not the same person responsible for the daily upkeep of ledgers and bank accounts. Finally, you should have an outside contractor or entity conduct annual audits of your financial and bank records.

Keeping Checks Secure

In a secure cabinet or container, preferably in an access-controlled area, lock up:

• Checks for beneficiaries, until deposited;
• Stock of blank checks; and
• Check signature stamps.

Be sure to change the key or combination to the cabinet or container periodically Remember: If your organization receives paper checks, record them in your accounting system right away and deposit them promptly.

Paper and Electronic File Security

Your organization should have a backup procedure and disaster recovery plan whether its accounting system is manual or automated. You should regularly (daily, weekly, or monthly, as appropriate) make backup copies of computer and/or paper records and files so you can recover records if your master files are lost, stolen, or destroyed. Arrange to store backup copies in a safe place, such

as a fireproof, locking cabinet. You should also have a disaster recovery plan so that procedures are in place for using backup copies to restore records and files if this ever becomes necessary.

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. Protecting Beneficiaries from Identity Theft has more information about protecting records kept on a computer.

Protecting Beneficiary Bank Accounts

On Managing and Conserving Funds, we explain how representative payees must title bank accounts holding beneficiary funds. Keep in mind that proper account titling will ensure FDIC protection of up to $100,000 per depositor in an FDIC insured bank.

SSA has received reports from representative payees that some beneficiaries have gained access to bank accounts even though the accounts were titled correctly. To prevent beneficiaries from making unauthorized telephone and internet transactions, do not reveal the bank account numbers to them.

Occasionally organizations report internal fraud or check fraud to SSA. Fraud might take the form of embezzlement, forged signatures on checks, theft of check stock, and forged check endorsements. We recommend that you work with your bank to help prevent fraud. You may be able to arrange for your bank to check for two signatures whenever a check exceeding a certain amount is presented for payment. Your bank should also be able to advise you about check security features and any fraud prevention programs it has. For example,

if a bank has a “positive pay 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.

Does SSA Monitor Representative Payees?

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Yes, we actively monitor you through reports and visits to ensure you are fulfilling your payee responsibilities.

Under the law, you are required to submit a form SSA-6234, Representative Payee Report for each beneficiary for whom you are payee (See Exhibit 4). This form asks you for information about your management of the beneficiary’s money, such as how you used the beneficiary's payments, how much (if any) you saved, and whether or not the beneficiary's custody changed. Only certain State mental institutions are monitored in a different way. NOTE:Check our website because we soon expect you will be able to submit a report using the Internet.

If you are a FFS payee, we require you to show each year that you continue to meet the requirements for charging a fee for your representative payee services. For example, you are required to present proof of current bonding and licensing, where licensing is available, and that you continue to serve at least five beneficiaries. See Payment for Representative Payee Services.

In addition, we regularly visit certain payees, including FFS payees. Before we visit you, we will call and make an appointment.

When we visit, we will interview you about how you manage beneficiary funds and what you do to make sure beneficiaries’ needs are met. We will then review the records you keep to document payments you received and how you spend and save beneficiary funds. The records we will review include bank records and ledgers that document your management of beneficiary funds. We will also review receipts and cancelled checks for purchases you have made for beneficiaries. We will also ask the beneficiaries you serve about your performance.

These visits also help us maintain effective lines of communication with you. We use some of this time to review your payee responsibilities. You will have the opportunity to ask us questions and to ask us for help to resolve any problems related to your representative payee responsibilities. Finally, we will send you a report documenting our review findings. In our experience, most payees are doing a good job. Sometimes we may make recommendations to help a payee improve recordkeeping. If we find that a payee is not following SSA’s rules, the report will tell the payee about any practices that it must change. If we suspect a payee has misused beneficiary funds, we may consider criminal prosecution.

Payment for Representative Payee Services

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SSA can authorize certain types of organizations to collect a fee from a beneficiary's monthly payment for providing representative payee services. We refer to these organizations as "fee-for-service" (FFS) representative payees.

To qualify as a FFS payee, your organization must be a:

• State or local government agency with responsibility for income maintenance, social service, health care, or fiduciary duties; or
• community based, nonprofit social service organization that is bonded (see FFS payee? for bonding requirements) and licensed (providing licensing is available) in the state in which you serve as a payee.

In addition, the organization must:

• regularly serve as a payee for at least five beneficiaries; and
• not be a creditor of the beneficiary; and
• submit a SSA-445 application to collect a fee to SSA; and
• be authorized in writing by SSA to collect a fee.

SSA may grant an exception to the creditor restriction when:

• The goods or services that create the creditor relationship meet the current needs of the beneficiary. To meet this condition, these items must be for the immediate needs of the beneficiary, such as food, clothing and housing. Creditor relationships that are established to discharge past debts do not meet this requirement; and
• The cost(s) of goods and services provided by the organization are equitable. This means that the amount the beneficiary is charged for the organization's services is consistent with rates charged other individuals and is reasonable for the services provided.

Important: A creditor organization's authorization to collect a fee for serving as a payee for one beneficiary does not extend to subsequent applications for other beneficiaries for whom it is creditor. A creditor organization must request an authorization to collect a fee from SSA each time it applies to be payee. SSA will advise a creditor payee of its decision on a case-by-case basis.

How Does a Qualified Organization Receive SSA Approval to be a FFS Payee?

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Before your organization can collect a fee for representative payee services, you must complete a form SSA-445, Application to Collect a Fee for Payee Services, and submit it to your local Social Security office. SSA must approve your request in writing. We suggest you keep a copy of the approval letter for your records. You cannot collect fees for any month prior to the month that SSA issued the fee approval notice to you.

The following items are required from the organizational payee as part of the FFS application process :

• the SSA-445, Application to Collect a Fee for Payee Services;
• your EIN or your own SSN (if applying as an individual doing business as a sole proprietorship);
• your organization's statement of purpose (mission statement);
• your organization's service area (include the neighborhoods, cities and counties served);
• a list of the names, SSNs, and residence addresses of beneficiaries for whom you are already serving as a payee;
• a statement as to whether or not your organization currently charges any of the beneficiaries for its services; and
• the signature of the director of your organization or another individual who can legally act for the organization.

If your organization is not a State or local government agency, you must also submit the following documents with the request:

• proof of tax-exempt status under Section 501(c) of the Internal Revenue Code;
• a copy of your organization's current bond/insurance policy. The minimum bond amount is based on the amount of money you handle for social security beneficiaries on a monthly basis plus conserved funds on hand. The bond must cover embezzlement or theft by officers/owners and employees and show SSA as an insured party. EXAMPLE: ABC organization is holding conserved funds of $5,000 for its beneficiaries and receives an average of $12,000 a month in social security payments. The minimum bond/insured amount should be $17,000.
• a copy of your organization’s current license, if licensing is available in the State you operate in, that allows you to provide services within the State. Representatives from SSA will visit your organization 6 months after we authorize you as a FFS payee to make sure you are complying with your new responsibilities.

Fee Amounts

Effective December 2007, the monthly fee for payee services is the lesser of 10% of the monthly benefit amount or $35. For individuals determined by SSA to have a DAA condition, the monthly fee is the lesser of 10% of the monthly payment or $68. SSA must authorize the higher fee for individuals with a DAA condition. Each year, SSA sends a letter to FFS payees notifying them of any fee increase due to our annual Cost-of-Living Adjustment (COLA). An increased fee may first be collected from the check paid in January.

An SSA-approved FFS payee may not collect a fee if any of the following conditions apply:

• The beneficiary doesn’t receive a payment in the month;
• Your organization receives compensation from another source, including guardianship fees, for performing representative payee services;
• Your organization did not provide payee services for the month;
• We have determined that you have misused a beneficiary’s funds; or
• You serve less than five beneficiaries.

A FFS payee may not collect fees for past months from current payments. In addition, a beneficiary's conserved funds (saved) or an institutionalized beneficiary's personal needs funds cannot be used to pay fees for payee services.

NOTE: In limited circumstances, an organization may collect a fee from payment of past due benefits. The exception applies when a past due benefit is made for a prior period of nonpayment or incorrect payment and the organization: is approved by SSA to collect a fee for the months for which the payment is made;

• did not collect a fee or collected a reduced fee;
• provided representative payee services for the month for which payment is made; and
• is the representative payee of record when the past due payment is received.

Example: A county mental association was a FFS payee for a beneficiary whose disability payments were terminated effective January 2008. Members of the association staff assisted the individual in processing an appeal of the termination. They also visited him at least monthly to ensure that his county assistance payments were used for his basic needs. In March 2008, the individual was reinstated and received past due payments for January through March. The payments were issued to the association, which continued providing payee services. After obtaining SSA approval, the association can charge the individual $35 for each month covered in the past due payments.

NOTE: Refer to Additional Information about Use of Benefits for a discussion on out-of pocket and overhead expenses.

Frequently Asked Questions

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Can I Collect a Fee for Serving as a Representative Payee?

SSA never authorizes an individual payee to charge a fee for providing 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 State or local government agency with responsibility for income maintenance, social service, health care, or fiduciary duties, or
• a community based, nonprofit social service organization that is bonded and licensed in the state in which it serves as payee. In addition, your organization must:
• regularly serve as a representative payee for at least five beneficiaries; not be a creditor of the beneficiary (some exceptions apply); submit a SSA- 445 application to collect a fee to SSA; and be authorized in writing by SSA to collect a fee.

How often do I have to report to SSA on how funds have been used?

We will send you a "Representative Payee Report" periodically for each beneficiary you serve, usually once a year. The report is simple to complete if you keep clear records of payments received and how you spent and/or saved the money. You must complete and return the report you receive or, beginning in late 2008, you may be able to report to SSA using the Internet. Be sure to read the instructions you receive with your annual accounting report for more details regarding online reporting. SSA also regularly visits certain payees to find out how they are managing beneficiary funds.

What type of bank account should I set up?

You must establish an account that shows clearly that you are acting in a fiduciary role and that the money belongs to the beneficiary. A checking account may be best because you will have cancelled checks and/or statements that show how you spent the funds. However, some beneficiaries cannot maintain high enough balances to avoid service charges. Cashier's checks and money orders also have charges associated with them. Make every effort to set up an account that earns interest, minimizes fees and enables you to keep clear records. If you serve as a representative payee for a large number of beneficiaries, you may want to establish a collective account.

How do I set up a collective account?

You should contact SSA for guidance. Your local Social Security office must approve your use of a collective account and is responsible for ensuring that the collective account is set up in accordance with SSA’s policies and procedures. You will need to set up an accounting system in order to maintain accurate records for each beneficiary. SSA reviews collective accounts every 3 years to ensure they meet our requirements.

The beneficiary for whom I am a payee moves around a lot. Since you have my mailing address, why do I have to notify you every time he moves?

We know it is difficult to keep track of the whereabouts of some beneficiaries, but the law requires SSA to 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 his or her SSI payment. In addition, SSA sometimes needs to send notices not only to you, but also to the beneficiary. If you are unable to contact the beneficiary, call SSA toll free at 800-772-1213, visit your local Social Security office, notify SSA by mail or FAX to report a change of mailing or residence address, or if whereabouts are unknown.

I am a residential facility, serving as a representative payee. One resident has expressed an interest in going on a vacation; however, the resident cannot go without close care and supervision. A staff member would accompany the resident and provide the necessary oversight and care.

Can the beneficiary’s conserved funds be used to pay for the staff member’s travel expenses for transportation, food and lodging?

Any use of the beneficiary's funds must show a correlation between the expense incurred and a direct benefit to the beneficiary. The expense must be reasonable in relation to the beneficiary's funds and the beneficiary must not have unmet current or foreseeable needs. You must obtain SSA's approval before using conserved funds for this purpose. We will make a decision to approve or deny our request on a case-by-case basis. If you have questions about the appropriateness of an expense, contact your local SSA office for assistance.

What "out-of-pocket" expenses can I be reimbursed for?

You can be reimbursed from the beneficiary's funds for actual expenses incurred in providing services for the beneficiary such as long distance phone calls, cost of money orders, transportation costs (e.g., cab fare or mileage), etc. You must keep records of your expenses.

You are not permitted to be reimbursed for any expenses that are considered part of "overhead” or operating expenses. For example, expenses such as utilities, office equipment and supplies, photocopying, etc., cannot be collected from beneficiaries. If you are a FFS payee, the cost of postage is considered overhead and is not reimbursable.

The beneficiary for whom I am representative payee wants to spend money on things that I think are unwise (alcohol, cigarettes, lottery tickets, candy, etc.). What is my responsibility?

Your main obligation is to ensure that the current needs (food, clothing and housing) of the beneficiary are met. Once that has been done, the beneficiary has the right to have some discretionary spending money, even if you do not approve of all of his or her choices. If the beneficiary has a drug or alcohol abuse problem, you may want to give the beneficiary only small amounts of spending money, or purchase food and other personal items to give to the beneficiary, rather than cash.

When I became representative payee, I found out that the beneficiary has many outstanding debts. What is my obligation concerning those debts?

You must use the money that you receive for the beneficiary, whether monthly or past-due benefits, to meet current needs such as housing, food, utilities, and medical and dental expenses before you may spend funds on the beneficiary’s outstanding debts. Social Security and SSI payments are exempt from seizure by creditors. If failure to pay an old debt could result in negative consequences like homelessness, you should attempt to settle the debts.

If your organization is also a creditor, you must first obtain SSA's approval before using the beneficiary's funds to reimburse your organization for any debts owed to the organization. If you have any question regarding this requirement, contact your local Social Security office.

Protecting Beneficiaries from Identity Theft

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Identity theft is a common crime. Careless handling of personal information makes identity theft easier. As a representative payee, your organization keeps records that have personal information for Social Security and SSI beneficiaries. Examples of personal information include a person’s name, date of birth, Social Security Number, Medicare claim number, bank account information, address, health records and Social Security and SSI benefit payment data.

To prevent identity theft or accidental loss or disclosure of confidential information, you should have documented procedures in place that protect personal information. If contractors or volunteers perform services for you or your organization, these procedures also should cover their activities. SSA expects you to oversee the performance of any representative payee duties that you assign to volunteers or contract out.

Below are the most common practices used to deter identity theft. You should include these practices in your procedures for protecting personal information, if you do not already follow them.

Actions Managers Should Take to Prevent Identity Theft

• Screen your organization’s employees, volunteers and contractors before allowing them to access confidential paper or electronic records;
• Explain to employees, volunteers and contractors that they are responsible for protecting personal information at all times, both on and off duty. Only permit them to access the personal information they need to do their jobs and to disclose personal information only when appropriate (for example, a bank needs a beneficiary’s Social Security number to set up an account or a health care provider needs the beneficiary’s date of birth for patient identification);
• Train employees, volunteers and contractors to handle personal information responsibly and remind them periodically of their responsibilities;
• Educate employees, volunteers and contractors about which confidential records can be taken off site and when they can be taken off site. This includes any records and information on laptop computers or other electronic devices as well as paper files;
• Have a system that tracks any confidential records taken off site (for example, an employee must take work home) to ensure their timely return to the office;
• Require the records be transported and stored when not in use in a locking device such as a briefcase; and
• Train managers to recognize situations where employees, volunteers, or contractors have failed to adequately safeguard personal information by failing to secure it from theft, loss, or accidental disclosure. If theft, loss, or accidental disclosure occurs, document each case for future reference, and consider notifying law enforcement, when appropriate.

Actions Everyone Should Take to Prevent Identity Theft

• Avoid leaving paper documents and records containing personal information unprotected on desktops;
• Store confidential records in locking file cabinets or locking desks both on and off site. When taking records or laptops off site, lock them in the car trunk. Do not leave them in the passenger compartment; and
• Shred papers with personal information, preferably with a cross-cutting shredder, before throwing them out.

Protecting Records Kept on a Computer

• Do not send personal information via E-Mail unless encrypted. Send reports and documents with personal information via regular mail or send them to a secure FAX location;
• Install firewalls, anti-spyware, and anti-virus software to protect your computer from hacking and keep this software up-to-date;
• Use password protection and encryption software to protect confidential files from unauthorized access. Choose a password that others cannot guess and change it frequently. Peripheral data storage devices, such as CDs and flash drives, with records containing personal information should be password protected and encrypted as well. Password protect and encrypt personal information stored on these devices both on and off the work site;
• Encrypt files with personal information before deleting them from your computer or a peripheral storage device. This will ensure that unauthorized users cannot recover the files; and
• Lock or log off the computer when leaving it unattended.

Contact Information

If you believe one of your clients is 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 SSA if you think someone is using a client’s Social Security number for work purposes. For more ideas on preventing identity theft and to learn what else you can do if identity theft occurs, visit the Federal Trade Commission’s (FTC) website, Fighting Back Against Identity Theft. The FTC is the lead government agency on identity theft issues.

Medicare and Medicaid

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As a payee, you should know some things about Medicare and Medicaid coverage because you may need to help the beneficiary get medical services or treatment.

Medicare and Medicaid, although similar, are two different programs.

Medicare is a Federal health insurance program, administered by the Centers for Medicare and Medicaid Services (CMS). The program helps with the cost of health care, but it does not cover all medical expenses or the cost of most longterm care. For information about Medicare, visit our web site at

http://www.socialsecurity.gov/pubs/10043.pdf

Each year, you or the beneficiary’s household will receive a copy of “Medicare and You”. If you do not receive a copy, or have other questions, call 1-800- MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.

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. Some people qualify for both Medicare and Medicaid. For more information about the Medicaid program, contact your local medical assistance agency, social services or welfare office.

Other Available Publications

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When A Representative Payee Manages Your Money
SSA Publication No. 05-10097
ICN 468634
http://www.socialsecurity.gov/pubs/10097.html

Social Security: A Guide for Representative Payees
SSA Publication No. 05-10076
ICN 468025
http://www.socialsecurity.gov/pubs/10076.html

Understanding Supplemental Security Income
SSA Publication No. 17-008
ICN 443175
http://www.socialsecurity.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
http://www.socialsecurity.gov/pubs/10077.html

Social Security: What You Need To Know When You Get Social Security Disability Benefits
SSA Publication No. 05-10153
ICN 480165
http://www.socialsecurity.gov/pubs/10153.html

Social Security: What You Need To Know When You Get SSI
SSA Publication No. 05-11011
ICN 480265
http://www.socialsecurity.gov/pubs/11011.html

A Guide to SSI for Groups and Organizations
SSA Publication No. 05-11015
ICN 455360
http://www.socialsecurity.gov/pubs/11015.html

RED BOOK: A SUMMARY GUIDE TO EMPLOYMENT SUPPORT FOR INDIVIDUALS WITH DISABILITIES UNDER THE SOCIAL SECURITY DISABILITY INSURANCE AND SUPPLEMENTAL SECURITY INCOME PROGRAMS
SSA Publication #64-030
ICN 436900
http://www.socialsecurity.gov/redbook/index.html

Your Ticket to Work
SSA Publication #05-10061
ICN 463262.
http://www.socialsecurity.gov/pubs/10061.html

To order any of these publications, call SSA at 800-772-1213 or visit
http://www.socialsecurity.gov

Exhibits

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Exhibit 1 –	Sample of a Representative Payee Reporting Form
Exhibit 2 –	Sample Contract
Exhibit 3 –	Form SSA-6233-BK Representative Payee Report of Benefits and Dedicated Account ( PDF File)
Exhibit 4 –	Form SSA-6234-F6 Representative Payee Report ( PDF File)