Anyone eligible for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) meets the federal definition of disability – meaning that they have a severe physical or mental medical impairment or combination of impairments expected to last at least a year or result in death and that prevents them from working. These benefits are monthly payments that are often spent on important personal expenses like rent, food, clothing and more.
Money management issues
But problems could arise if a recipient who has trouble managing money or who is vulnerable to financial exploitation received their cash benefits directly. To protect the money benefits of such a person, the Social Security Administration (SSA) will seek to appoint a “representative payee” to manage the payments on behalf of the beneficiary and in their best interests.
Examples of SSDI or SSI beneficiaries who may need representative payees can include those with cognitive disabilities, dementia, advanced physical impairments, certain mental illnesses, substance addictions or other similar problems.
According to the SSA, the “law requires most minor children and all legally incompetent adults to have payees.” A potential rep payee must submit an application to the SSA. The agency first looks to family or close friends of the beneficiary. If no one in the person’s life is available, the agency will consider a qualified organization as payee like an agency that provides services or supports.
Rep payee responsibilities
An appointed payee must open a bank account solely for the SSDI or SSI benefits that is titled appropriately to show that the payee holds the funds for the benefit of the beneficiary-owner. The payee must keep records of expenditures for annual reporting (with some exception) and in case they are selected for an “educational visit and payee review.”
The payee must remain active in the beneficiary’s life to understand their financial and personal needs. Expenditures often include rent or room and board, food, clothing, medical expenses not otherwise covered by insurance or public benefits, and recreation and leisure. Payees have responsibility After paying for necessary and appropriate expenses, the representative payee should save the extra money in an interest-bearing account or instrument.
Except for reimbursement for “reasonable, actual out-of-pocket expenses” spent to assist the beneficiary (mileage for transporting them to an appointment, for example), payees may not use benefits to pay themselves fees, with narrow exception.
This is an overview of the rep payee role, which is more complicated when the beneficiary is a child receiving SSI or the beneficiary receives a large lump-sum payment of past-due benefits. Your SSDI or SSI attorney can provide guidance.