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Rules for Managing Social Security for Others

Set the priorities on what needs to be paid first


First, you must make sure the beneficiary’s day-to-day needs for food and shelter are met.

Then, the money can be used for any of the beneficiary’s medical and dental care that is not covered by health insurance, and for personal needs, like clothing and recreation.

If there is money left after you pay for the beneficiary’s needs, it must be saved, preferably in an interest-bearing account or U.S. Savings Bonds.

If the beneficiary is in a nursing home or other institution, you should use the benefits to pay the usual charges for care. In this case, you should set aside a minimum of $30 each month to be used for the beneficiary’s personal needs.

Also, if the beneficiary lives in an institution and is eligible for Medicaid or is a member of a family that receives payments from the Temporary Assistance for Needy Families program, you should contact your local Social Security office about using the beneficiary’s Social Security benefits to support the family.

As a general rule, you may not take a fee from the beneficiary’s money for your services as a representative payee.

Direct Deposit

It is a good idea to ask the Social Security Administration to directly deposit monthly benefits into a bank account.

It’s recommended that you hold benefits in a checking or savings account to protect against loss or theft.

Also, do not mix the beneficiary’s money with your own or other money.

If any money is left after meeting the beneficiary’s day-to-day and personal needs, it must be saved. The preferred ways of saving are U.S. Savings Bonds or an interest-paying bank account that is insured under either federal or state law. Interest earned belongs to the beneficiary.

To protect the beneficiary’s money, the checking or savings accounts title must reflect the beneficiary’s ownership of the money and your relationship as a fiduciary (financial agent). Neither the representative payee nor any other third party can have ownership interest in the account. The beneficiary must never have direct access to the account. Any account title (under state law) that shows beneficiary ownership of the account with you as fiduciary is acceptable. Do not use joint accounts. Here are two ways we 
recommend to title the accounts:

  • “(Beneficiary’s name) by (your name),
representative payee.”
  • “(Your name), representative payee for (beneficiary’s name).”

Your bank will provide help if you have additional questions.

An Exception for Parents Who Are Representative Payees

A common checking account for all family members living in the same household who receive benefits may show a parent as the owner of the account. Children’s savings, however, must be held in a separate savings account for each child, with the child’s name shown as the owner of the account.

Keeping Records

As a representative payee, you are responsible for keeping records and reporting on how you spend the benefits by completing a Representative Payee Report. The appropriate form can be mailed to you about once a year.

You must complete the report even if you are the beneficiary’s legal guardian.

You may choose to use this worksheet to help you keep track of the money you spend. When you need to fill out the Representative Payee Report, you can add the amounts in each column of your worksheet and put the totals on the accounting form.

Paying Income Tax

Some people who get Social Security will have to pay federal income tax on their benefits. At the beginning of each year, Social Security will mail you a Social Security Benefit Statement (Form SSA-1099) that shows the amount of benefits paid during the previous year. Give this statement to the person who prepares the beneficiary’s tax returns to use in figuring out if any tax must be paid on the beneficiary’s Social Security benefits.

Organizations That Serve as Payees

Sometimes nursing homes or other organizations place funds for several beneficiaries in a single checking or savings account. This is called a “collective account.” This is usually acceptable, but special rules apply to these accounts:

  • The account title must show that the funds belong to the beneficiary and not the representative payee.
  • The account must be separate from the organization’s operating account.
  • Any interest earned belongs to the beneficiaries.
  • There must be clear and current records showing the amount of each beneficiary’s share and proper procedures for documenting credits and debits.
  • The account and supporting records must be made available to us when we ask for them.
  • Some examples of collective account titles are: “Sunnydale Nursing Home, representative 
payee for Social Security beneficiaries.” “Sunnydale patients’ fund for Social Security beneficiaries.”

If you have any questions about collective accounts, contact the Social Security Administration.

If your organization is serving as a representative payee and you are considering charging the beneficiary for past care and maintenance costs, you will need to get approval from the Social Security Administration first. We also need to approve any decision to “pool” the personal funds of several beneficiaries for an item such as a television that will benefit the group.

A Special Note About Beneficiaries Receiving SSI

If Medicaid is paying more than half the cost of an SSI beneficiary’s care, or private health insurance is paying for the care, the SSI payment is usually limited to $30 per month, plus any additional money paid by the state. This entire payment must be used for the beneficiary’s personal needs or saved on his or her behalf if personal needs have been met.

Changes Affecting Benefits

If you are managing Social Security for someone who is unable to do so for himself, you are required to report any changes affecting benefits to the Social Security Administration.

You must tell the Social Security Administration if:

  • The beneficiary moves.
  • The beneficiary starts or stops working, no matter how little the amount of earnings.
  • A disabled beneficiary’s medical condition improves.
  • The beneficiary starts receiving another government benefit or the amount of the benefit changes.
  • The beneficiary will be outside the United States for 30 days or more.
  • The beneficiary is imprisoned for a crime that 
carries a sentence of more than one month.
  • The beneficiary is committed to an institution by court order for a crime committed because of a mental impairment.
  • Custody of a child beneficiary changes or a child is adopted.
  • The beneficiary is a stepchild, and the parents divorce.
  • The beneficiary gets married.
  • The beneficiary no longer needs a payee.
  • The beneficiary dies.

You also must say if:

  • You are no longer responsible for the beneficiary.
  • You move.
  • You no longer wish to be payee.
  • You are convicted of a felony.
  • You are violating a condition of your probation or parole imposed under federal or state law.
  • You or the benficiary has an outstanding arrest warrant for a felony.

As a representative payee, you are responsible for repaying money you received on behalf of the beneficiary if you did not report any of the events listed above.

For Supplemental Security Income Benefits

In addition to the events listed above, the following changes must be reported if the beneficiary is getting SSI benefits:

  • The beneficiary moves to or from a hospital, nursing home, correctional facility or other institution.
  • A married beneficiary separates from his or her spouse, or they begin living together again after 
a separation.
  • Someone moves into or out of the beneficiary’s household.
  • The beneficiary or the spouse has a change in income or resources.

Penalties for Failure to Report

As a payee, if you fail to report any of the actions to Social Security, the beneficiary may be paid too much money. In that case, you may have to return the money the beneficiary was not due and the payments may stop. If Social Security determines that you intentionally withheld information to 
continue to receive payments, you may be criminally prosecuted. Criminal penalties can include fines and imprisonment.

If you are a representative payee for a person who gets SSI, you should be aware that savings and other resources are limited to $2,000 ($3,000 for a couple) under the SSI program. Interest earned on savings counts toward that limit. In determining a child’s resources, money in the child’s dedicated savings account does not count toward the resource limit. A child’s SSI benefit amount may change if there are any changes in the family’s income or resources.

Medicare and Medicaid

As a representative payee, you may need to help the beneficiary get medical services or treatment. This assistance is required by law for children ­receiving SSI. You should keep a record of medical services and medical expenses not covered by Medicare and Medicaid.

If the beneficiary has low income and few resources, the state may pay Medicare premiums and some out-of-pocket medical expenses. A person may qualify even if his or her income or resources are too high for SSI.

The beneficiary also may be able to get extra help paying for the annual deductibles, monthly premiums and prescription co-payments related to the Medicare prescription drug program (Part D). The beneficiary may qualify for extra help if he or she has limited income and resources. These income and resource limits change each year.

If the beneficiary has both Medicaid with prescription drug coverage and Medicare, Medicare and Supplemental Security Income, or if the state pays for his or her Medicare premiums, they automatically will get this extra help and don’t have to apply.

For more information about getting extra help with Medicare prescription drug plan costs, call Social Security’s toll-free number or visit our website. You also can help the beneficiary apply for extra help online at Social Security’s website.

If You Are No Longer the Payee

If you will no longer be the payee, you must notify Social Security immediately. This is important because a new payee will have to be selected as soon as possible. When you are no longer responsible for the beneficiary, you must return any benefits, including interest and cash on hand, to Social Security. The money will then be reissued to the beneficiary or to a new payee.

If the Beneficiary Dies

If the beneficiary dies, any saved benefits belong to his or her estate. They must be given to the legal representative of the estate or otherwise handled according to state law. If you need information about state law, contact the probate court or an attorney.

When a person who receives Social Security benefits dies, no check is payable for the month of death, even if he or she dies on the last day of the month. Any check received for the month of death or later must be returned. An SSI check, however, is payable for the month of death. But you must return any SSI checks that come after the month of death.

Resources:
Social Security Representative Payee Accounting Report
Social Security Income and Expenses Reporting Worksheet

Based on editorial content provided by the Social Security Administration from its booklet “A Guide For Representative Payees.”

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