Millions of Americans receive some form of Social Security benefits, either retirement, Social Security Disability Insurance (SSDI), or Supplemental Security Income (SSI) benefits. Although these benefits are frequently financial lifelines for the people who receive them, not everyone who receives them has the ability to manage them.
Approximately 10% of Social Security benefits recipients need help managing their finances. In those instances, the Social Security Administration (SSA) appoints someone called a representative payee. A representative payee must be appointed for minors, adults with drug or alcohol problems, or adults who are declared legally incompetent.
When you are appointed someone’s representative payee, you are tasked with managing that person’s monthly benefits payments on his or her behalf. You cannot charge a fee for your services, and you must complete an annual Representative Payee Report to account for how you spent the beneficiary’s monthly payments. (Please note: you are no longer required to complete the Representative Payee Report if: 1) you are the natural or adopted parent of a minor child with whom you primarily reside; 2) you are the legal guardian of a minor child with whom you primarily reside; 3) you are the natural or adopted parent of a disabled adult beneficiary with whom you primarily reside; or 4) you are the spouse of the beneficiary.)
If you are a representative payee, you must spend the monthly benefits payments in a specific order. First, use the money to take care of the beneficiary’s day-to-day needs, like food and shelter. Next, use the money to pay for any medical or dental care not covered by insurance. Funds can then be used for any personal needs, such as clothing and recreation.
If there is any money leftover, funds must be saved for the beneficiary, preferably in an interest-bearing bank account or United States savings bonds. If you open a bank account, be sure to keep the beneficiary’s funds in a designated account separate from your own money.
In the event that any changes occur that may affect a beneficiary’s eligibility, you must report them to SSA. Such instances include if the beneficiary moves, starts or stops working, gets married, gets divorced, or his or her condition improves.
If you are interested in serving as a representative payee for someone or are concerned that someone you know may have become incapable of managing his or her finances, contact SSA at 1.800.772.1213 (TTY: 1.800.325.0778). SSA generally looks for friends or family members, since they likely know the person and his or her wishes better than others. You will need to fill out Form SSA-11, Request to be Selected as a Payee and explain why you think the individual you wish to help needs assistance managing his or her Social Security benefits.