20 C.F.R. Subpart F—Representative Payment
Title 20 - Employees' Benefits
Authority: Secs. 702(a)(5), 1631 (a)(2) and (d)(1) of the Social Security Act (42 U.S.C. 902(a)(5) and 1383 (a)(2) and (d)(1)).
Source: 47 FR 30475, July 14, 1982, unless otherwise noted.
(a) Explanation of representative payment. This subpart explains the principles and procedures that we follow in determining whether to make representative payment and in selecting a representative payee. It also explains the responsibilities that a representative payee has concerning the use of the funds he or she receives on behalf of a beneficiary. A representative payee may be either a person or an organization selected by us to receive benefits on behalf of a beneficiary. A representative payee will be selected if we believe that the interest of a beneficiary will be served by representative payment rather than direct payment of benefits. Generally, we appoint a representative payee if we have determined that the beneficiary is not able to manage or direct the management of benefit payments in his or her own interest. (b) Policy used to determine whether to make representative payment. (1) Our policy is that every beneficiary has the right to manage his or her own benefits. However, some beneficiaries due to a mental or physical condition or due to their youth may be unable to do so. Under these circumstances, we may determine that the interests of the beneficiary would be better served if we certified benefit payments to another person as a representative payee. However, we must select a representative payee for an individual who is eligible for benefits solely on the basis of disability if drug addiction or alcoholism is a contributing factor material to the determination of disability. (2) If we determine that representative payment is in the interest of a beneficiary, we will appoint a representative payee. We may appoint a representative payee even if the beneficiary is a legally competent individual. If the beneficiary is a legally incompetent individual, we may appoint the legal guardian or some other person as a representative payee. (3) If payment is being made directly to a beneficiary and a question arises concerning his or her ability to manage or direct the management of benefit payments, we will, if the beneficiary is 18 years old or older and has not been adjudged legally incompetent, continue to pay the beneficiary until we make a determination about his or her ability to manage or direct the management of benefit payments and the selection of a representative payee. [47 FR 30475, July 14, 1982, as amended at 60 FR 8150, Feb. 10, 1995] (a) We pay benefits to a representative payee on behalf of a beneficiary 18 years old or older when it appears to us that this method of payment will be in the interest of the beneficiary. We do this if we have information that the beneficiary is— (1) Legally incompetent or mentally incapable of managing benefit payments; or (2) Physically incapable of managing or directing the management of his or her benefit payments; or (3) Eligible for benefits solely on the basis of disability and drug addiction or alcoholism is a contributing factor material to the determination of disability. (b) Generally, if a beneficiary is under age 18, we will pay benefits to a representative payee. However, in certain situations, we will make direct payments to a beneficiary under age 18 who shows the ability to manage the benefits. For example, we make direct payment to a beneficiary under age 18 if the beneficiary is— (1) A parent and files for himself or herself and/or his or her child and he or she has experience in handling his or her own finances; or (2) Capable of using the benefits to provide for his or her current needs and no qualified payee is available; or (3) Within 7 months of attaining age 18 and is initially filing an application for benefits. [47 FR 30475, July 14, 1982, as amended at 54 FR 35483, Aug. 28, 1989; 60 FR 8150, Feb. 10, 1995] (a) We may pay you directly. We will pay current monthly benefits directly to you while finding a suitable representative payee unless we determine that paying you directly would cause substantial harm to you. We determine substantial harm as follows: (1) If you are receiving disability payments and we have determined that you have a drug addiction or alcoholism condition, or you are legally incompetent, or you are under age 15, we will presume that substantial harm exists. However, we will allow you to rebut this presumption by presenting evidence that direct payment would not cause you substantial harm. (2) If you do not fit any of these categories, we make findings of substantial harm on a case-by-case basis. We consider all matters that may affect your ability to manage your benefits in your own best interest. We decide that substantial harm exists if both of the following conditions exist: (i) Directly receiving benefits can be expected to cause you serious physical or mental injury. (ii) The possible effect of the injury would outweigh the effect of having no income to meet your basic needs. (b) We may delay or suspend your payments. If we find that direct payment will cause substantial harm to you, we may delay (in the case of initial eligibility for benefits) or suspend (in the case of existing eligibility for benefits) payments for as long as one month while we try to find a suitable representative payee. If we do not find a payee within one month, we will pay you directly. If you are receiving disability payments and we have determined that you have a drug addiction or alcoholism condition, or you are legally incompetent, or you are under age 15, we will withhold payment until a representative payee is appointed even if it takes longer than one month. We will, however, as noted in paragraph (a)(1) of this section, allow you to present evidence to rebut the presumption that direct payment would cause you substantial harm. See §416.601(b)(3) for our policy on suspending the benefits if you are currently receiving benefits directly. Example 1: Substantial Harm Exists. We are unable to find a representative payee for Mr. X, a 67 year old claimant receiving title XVI benefits based on age who is an alcoholic. Based on contacts with the doctor and beneficiary, we determine that Mr. X was hospitalized recently for his drinking. Paying him directly will cause serious injury, so we may delay payment for as long as one month based on substantial harm while we locate a suitable representative payee. Example 2: Substantial Harm Does Not Exist. We approve a claim for Mr. Y, a title XVI claimant who suffers from a combination of mental impairments but who is not legally incompetent. We determine that Mr. Y needs assistance in managing benefits, but we have not found a representative payee. Although we believe that Mr. Y may not use the money wisely, there is no indication that receiving funds directly would cause him substantial harm (i.e., serious physical or mental injury). We must pay current benefits directly to Mr. Y while we locate a suitable representative payee. (c) How we pay delayed or suspended benefits. Payment of benefits, which were delayed or suspended pending appointment of a representative payee, can be made to you or your representative payee as a single sum or in installments when we determine that installments are in your best interest. [69 FR 60236, Oct. 7, 2004] In determining whether to make representative payment we consider the following information: (a) Court determinations. If we learn that a beneficiary has been found to be legally incompetent, a certified copy of the court's determination will be the basis of our determination to make representative payment. (b) Medical evidence. When available, we will use medical evidence to determine if a beneficiary is capable of managing or directing the management of benefit payments. For example, a statement by a physician or other medical professional based upon his or her recent examination of the beneficiary and his or her knowledge of the beneficiary's present condition will be used in our determination, if it includes information concerning the nature of the beneficiary's illness, the beneficiary's chances for recovery and the opinion of the physician or other medical professional as to whether the beneficiary is able to manage or direct the management of benefit payments. (c) Other evidence. We will also consider any statements of relatives, friends and other people in a position to know and observe the beneficiary, which contain information helpful to us in deciding whether the beneficiary is able to manage or direct the management of benefit payments. In selecting a payee we try to select the person, agency, organization or institution that will best serve the interest of the beneficiary. In making our selection we consider— (a) The relationship of the person to the beneficiary; (b) The amount of interest that the person shows in the beneficiary; (c) Any legal authority the person, agency, organization or institution has to act on behalf of the beneficiary; (d) Whether the potential payee has custody of the beneficiary; and (e) Whether the potential payee is in a position to know of and look after the needs of the beneficiary. As a guide in selecting a representative payee, categories of preferred payees have been established. These preferences are flexible. Our primary concern is to select the payee who will best serve the beneficiary's interests. The preferences are: (a) For beneficiaries 18 years old or older (except those described in paragraph (b) of this section), our preference is— (1) A legal guardian, spouse (or other relative) who has custody of the beneficiary or who demonstrates strong concern for the personal welfare of the beneficiary; (2) A friend who has custody of the beneficiary or demonstrates strong concern for the personal welfare of the beneficiary; (3) A public or nonprofit agency or institution having custody of the beneficiary; (4) A private institution operated for profit and licensed under State law, which has custody of the beneficiary; and (5) Persons other than above who are qualified to carry out the responsibilities of a payee and who are able and willing to serve as a payee for the beneficiary; e.g., members of community groups or organizations who volunteer to serve as payee for a beneficiary. (b) For individuals who are disabled and who have a drug addiction or alcoholism condition our preference is— (1) A community-based nonprofit social service agency licensed by the State, or bonded; (2) A Federal, State or local government agency whose mission is to carry out income maintenance, social service, or health care-related activities; (3) A State or local government agency with fiduciary responsibilities; (4) A designee of an agency (other than a Federal agency) referred to in paragraphs (b)(1), (2), and (3) of this section, if appropriate; or (5) A family member. (c) For beneficiaries under age 18, our preference is— (1) A natural or adoptive parent who has custody of the beneficiary, or a guardian; (2) A natural or adoptive parent who does not have custody of the beneficiary, but is contributing toward the beneficiary's support and is demonstrating strong concern for the beneficiary's well being; (3) A natural or adoptive parent who does not have custody of the beneficiary and is not contributing toward his or her support but is demonstrating strong concern for the beneficiary's well being; (4) A relative or stepparent who has custody of the beneficiary; (5) A relative who does not have custody of the beneficiary but is contributing toward the beneficiary's support and is demonstrating concern for the beneficiary's well being; (6) A relative or close friend who does not have custody of the beneficiary but is demonstrating concern for the beneficiary's well being; and (7) An authorized social agency or custodial institution. [47 FR 30475, July 14, 1982, as amended at 69 FR 60237, Oct. 7, 2004] A representative payee applicant may not serve if he/she: (a) Has been convicted of a violation under section 208, 811 or 1632 of the Social Security Act. (b) Receives title II, VIII, or XVI benefits through a representative payee. (c) Previously served as a representative payee and was found by us, or a court of competent jurisdiction, to have misused title II, VIII or XVI benefits. However, if we decide to make an exception to the prohibition, we must evaluate the payee's performance at least every 3 months until we are satisfied that the payee poses no risk to the beneficiary's best interest. Exceptions are made on a case-by-case basis if all of the following are true: (1) Direct payment of benefits to the beneficiary is not in the beneficiary's best interest. (2) No suitable alternative payee is available. (3) Selecting the payee applicant as representative payee would be in the best interest of the beneficiary. (4) The information we have indicates the applicant is now suitable to serve as a representative payee. (5) The payee applicant has repaid the misused benefits or has a plan to repay them. (d) Is a creditor. A creditor is someone who provides you with goods or services for consideration. This restriction does not apply to the creditor who poses no risk to you and whose financial relationship with you presents no substantial conflict of interest, and is any of the following: (1) A relative living in the same household as you do. (2) Your legal guardian or legal representative. (3) A facility that is licensed or certified as a care facility under the law of a State or a political subdivision of a State. (4) A qualified organization authorized to collect a monthly fee from you for expenses incurred in providing representative payee services for you, under §416.640a. (5) An administrator, owner, or employee of the facility in which you live and we are unable to locate an alternative representative payee. (6) Any other individual we deem appropriate based on a written determination. Example 1: Sharon applies to be representative payee for Ron who we have determined needs assistance in managing his benefits. Sharon has been renting a room to Ron for several years and assists Ron in handling his other financial obligations, as needed. She charges Ron a reasonable amount of rent. Ron has no other family or friends willing to help manage his benefits or to act as representative payee. Sharon has demonstrated that her interest in and concern for Ron goes beyond her desire to collect the rent each month. In this instance, we may select Sharon as Ron's representative payee because a more suitable payee is not available, she appears to pose no risk to Ron and there is minimal conflict of interest. We will document this decision. Example 2: In a situation similar to the one above, Ron's landlord indicates that she is applying to be payee only to ensure receipt of her rent. If there is money left after payment of the rent, she will give it directly to Ron to manage on his own. In this situation, we would not select the landlord as Ron's representative payee because of the substantial conflict of interest and lack of interest in his well being. [69 FR 60237, Oct. 7, 2004] Before selecting an individual or organization to act as your representative payee, we will perform an investigation. (a) Nature of the investigation. As part of the investigation, we do the following: (1) Conduct a face-to-face interview with the payee applicant unless it is impracticable as explained in paragraph (b) of this section. (2) Require the payee applicant to submit documented proof of identity, unless information establishing identity has recently been submitted with an application for title II, VIII or XVI benefits. (3) Verify the payee applicant's Social Security account number or employer identification number. (4) Determine whether the payee applicant has been convicted of a violation of section 208, 811 or 1632 of the Social Security Act. (5) Determine whether the payee applicant has previously served as a representative payee and if any previous appointment as payee was revoked or terminated for misusing title II, VIII or XVI benefits. (6) Use our records to verify the payee applicant's employment and/or direct receipt of title II, VIII, or XVI benefits. (7) Verify the payee applicant's concern for the beneficiary with the beneficiary's custodian or other interested person. (8) Require the payee applicant to provide adequate information showing his or her relationship to the beneficiary and to describe his or her responsibility for the care of the beneficiary. (9) Determine whether the payee applicant is a creditor of the beneficiary (see §416.622(d)). (b) A face-to-face interview. We may consider a face-to-face interview impracticable if it would cause the payee applicant undue hardship. For example, the payee applicant would have to travel a great distance to the field office. In this situation, we may conduct the investigation to determine the payee applicant's suitability to serve as a representative payee without a face-to-face interview. We may decide subsequent face-to-face interviews are impracticable for an organizational representative payee applicant when the organization is known by the field office as a suitable payee. We base this decision on the organization's past performance, recent contacts, and its knowledge of and compliance with reporting requirements. [69 FR 60237, Oct. 7, 2004] Anytime after we select a representative payee for you, we may ask your payee to give us information showing a continuing relationship with you, a continuing responsibility for your care, and how he/she used the payments on your behalf. If your representative payee does not give us the requested information within a reasonable period of time, we may stop sending your benefit payment to him/her—unless we determine that he/she had a satisfactory reason for not meeting our request and we subsequently receive the requested information. If we decide to stop sending your benefit payment to your representative payee, we will consider paying you directly (in accordance with §416.611) while we look for a new payee. [69 FR 60238, Oct. 7, 2004] (a) We notify you in writing of our determination to make representative payment. This advance notice explains that we have determined that representative payment is in your interest, and it provides the name of the representative payee we have selected. We provide this notice before we actually appoint the payee. If you are under age 15, an unemancipated minor under the age of 18, or legally incompetent, our written notice goes to your legal guardian or legal representative. The advance notice: (1) Contains language that is easily understandable to the reader. (2) Identifies the person designated as your representative payee. (3) Explains that you, your legal guardian, or your legal representative can appeal our determination that you need a representative payee. (4) Explains that you, your legal guardian, or your legal representative can appeal our designation of a particular person to serve as your representative payee. (5) Explains that you, your legal guardian, or your legal representative can review the evidence upon which our designation of a particular representative payee is based and submit additional evidence. (b) If you, your legal guardian, or your legal representative objects to representative payment or to the designated payee, we will handle the objection as follows: (1) If you disagree with the decision and wish to file an appeal, we will process it under subpart N of this part. (2) If you received your advance notice by mail and you protest or file your appeal within 10 days after you receive the notice, we will delay the action until we make a decision on your protest or appeal. (If you received and signed your notice while you were in the local field office, our decision will be effective immediately.) [69 FR 60238, Oct. 7, 2004] A representative payee has a responsibility to— (a) Use the payments he or she receives only for the use and benefit of the beneficiary in a manner and for the purposes he or she determines, under the guidelines in this subpart, to be in the best interests of the beneficiary; (b) Notify us of any event that will affect the amount of benefits the beneficiary receives or the right of the beneficiary to receive benefits (See subpart G of this part concerning these reporting requirements); (c) Submit to us, upon our request, a written report accounting for the benefits received; (d) Notify us of any change in his or her circumstances that would affect performance of the payee responsibilities; and (e) In cases in which the beneficiary is an individual under age 18 (including cases in which the beneficiary is an individual whose low birth weight is a contributing factor material to our determination that the individual is disabled), ensure that the beneficiary is and has been receiving treatment to the extent considered medically necessary and available for the condition that was the basis for providing benefits (See §416.994a(i).) [47 FR 30475, July 14, 1982, as amended at 62 FR 6420, Feb. 11, 1997] (a) Current maintenance. We will consider that payments we certify to a representive payee have been used for the use and benefit of the beneficiary if they are used for the beneficiary's current maintenance. Current maintenance includes costs incurred in obtaining food, shelter, clothing, medical care and personal comfort items. Example: A Supplemental Security Income beneficiary is entitled to a monthly benefit of $264. The beneficiary's son, who is the representative payee, disburses the benefits in the following manner:
(b) Institution not receiving Medicaid funds on beneficiary's behalf. If a beneficiary is receiving care in a Federal, State, or private institution because of mental or physical incapacity, current maintenance will include the customary charges for the care and services provided by an institution, expenditures for those items which will aid in the beneficiary's recovery or release from the institution, and nominal expenses for personal needs (e.g., personal hygiene items, snacks, candy) which will improve the beneficiary's condition. Except as provided under §416.212, there is no restriction in using SSI benefits for a beneficiary's current maintenance in an institution. Any payments remaining from SSI benefits may be used for a temporary period to maintain the beneficiary's residence outside of the institution unless a physician has certified that the beneficiary is not likely to return home. Example: A hospitalized disabled beneficiary is entitled to a monthly benefit of $264. The beneficiary, who resides in a boarding home, has resided there for over 6 years. It is doubtful that the beneficiary will leave the boarding home in the near future. The boarding home charges $215 per month for the beneficiary's room and board.
The beneficiary's representative payee pays the boarding home $215 (assuming an unsuccessful effort was made to negotiate a lower rate during the beneficiary's absence) and uses the balance to purchase miscellaneous personal items for the beneficiary. There are no benefits remaining which can be conserved on behalf of the beneficiary. The payee's use of the benefits is consistent with our guidelines. (c) Institution receiving Medicaid funds on beneficiary's behalf. Except in the case of a beneficiary receiving benefits payable under §416.212, if a beneficiary resides throughout a month in an institution that receives more than 50 percent of the cost of care on behalf of the beneficiary from Medicaid, any payments due shall be used only for the personal needs of the beneficiary and not for other items of current maintenance. Example: A disabled beneficiary resides in a hospital. The superintendent of the hospital receives $30 per month as the beneficiary's payee. The benefit payment is disbursed in the following manner, which would be consistent with our guidelines:
(d) Claims of creditors. A payee may not be required to use benefit payments to satisfy a debt of the beneficiary, if the debt arose prior to the first month for which payments are certified to a payee. If the debt arose prior to this time, a payee may satisfy it only if the current and reasonably foreseeable needs of the beneficiary are met. Example: A disabled beneficiary was determined to be eligible for a monthly benefit payment of $208 effective April 1981. The benefits were certified to the beneficiary's brother who was appointed as the representative payee. The payee conserved $27 of the benefits received. In June 1981 the payee received a bill from a doctor who had treated the beneficiary in February and March 1981. The bill was for $175.
After reviewing the beneficiary's current needs and resources, the payee decided not to use any of the benefits to pay the doctor's bill. (Approximately $180 a month is required for the beneficiary's current monthly living expenses—rent, utilities, food, and insurance—and the beneficiary will need new shoes and a coat within the next few months.) Based upon the above, the payee's decision not to pay the doctor's bill is consistent with our guidelines. (e) Dedicated accounts for eligible individuals under age 18. (1) When past-due benefit payments are required to be paid into a separate dedicated account (see §416.546), the representative payee is required to establish in a financial institution an account dedicated to the purposes described in paragraph (e)(2) of this section. This dedicated account may be a checking, savings or money market account subject to the titling requirements set forth in §416.645. Dedicated accounts may not be in the form of certificates of deposit, mutual funds, stocks, bonds or trusts. (2) A representative payee shall use dedicated account funds, whether deposited on a mandatory or permissive basis (as described in §416.546), for the benefit of the child and only for the following allowable expenses— (i) Medical treatment and education or job skills training; (ii) If related to the child's impairment(s), personal needs assistance; special equipment; housing modification; and therapy or rehabilitation; or (iii) Other items and services related to the child's impairment(s) that we determine to be appropriate. The representative payee must explain why or how the other item or service relates to the impairment(s) of the child. (3) Representative payees must keep records and receipts of all deposits to and expenditures from dedicated accounts, and must submit these records to us upon our request, as explained in §§416.635 and 416.665. (4) The use of funds from a dedicated account in any manner not authorized by this section constitutes a misapplication of benefits. These misapplied benefits are not an overpayment as defined in §416.537; however, if we determine that a representative payee knowingly misapplied funds in a dedicated account, that representative payee shall be liable to us in an amount equal to the total amount of the misapplied funds. (5) The restrictions described in this section and the income and resource exclusions described in §§416.1124(c)(20) and 416.1247 shall continue to apply until all funds in the dedicated account are depleted or eligibility for benefits terminates, whichever comes first. This continuation of the restrictions and exclusions applies in situations where funds remain in the account in any of the following situations— (i) A child attains age 18, continues to be eligible and receives payments directly; (ii) A new representative payee is appointed. When funds remaining in a dedicated account are returned to us by the former representative payee, the new representative payee must establish an account in a financial institution into which we will deposit these funds, even if the amount is less than that prescribed in §416.546; or (iii) During a period of suspension due to ineligibility as described in §416.1320, administrative suspension, or a period of eligibility for which no payment is due. [47 FR 30475, July 14, 1982, as amended at 61 FR 10278, Mar. 13, 1996; 61 FR 67206, Dec. 20, 1996] (a) Organizations that can request compensation. A qualified organization can request us to authorize it to collect a monthly fee from your benefit payment. A qualified organization is: (1) Any State or local government agency with fiduciary responsibilities or whose mission is to carry out income maintenance, social service, or health care-related activities; or (2) Any community-based nonprofit social service organization founded for religious, charitable or social welfare purposes, that is tax exempt under section 50l(c) of the Internal Revenue Code and that is licensed in the State in which it serves as representative payee or bonded. (b) Requirements qualified organizations must meet. Organizations that are qualified under paragraphs (a)(1) or (a)(2) of this section must also meet the following requirements before we can authorize them to collect a monthly fee. (1) A qualified organization must regularly provide representative payee services concurrently to at least five beneficiaries. An organization which has received our authorization to collect a fee for representative payee services, but is temporarily (not more than 6 months) not a payee for at least five beneficiaries, may request our approval to continue to collect fees. (2) A qualified organization must demonstrate that it is not a creditor of the beneficiary. See paragraph (c) of this section for exceptions to the requirement regarding creditors. (c) Creditor relationship. On a case-by-case basis, we may authorize an organization to collect a fee for payee services despite the creditor relationship. (For example, the creditor is the beneficiary's landlord.) To provide this authorization, we will review all of the evidence submitted by the organization and authorize collection of a fee when: (1) The creditor services (e.g., providing housing) provided by the organization help to meet the current needs of the beneficiary; and (2) The amount the organization charges the beneficiary for these services is commensurate with the beneficiary's ability to pay. (d) Authorization process. (1) An organization must request in writing and receive an authorization from us before it may collect a fee. (2) An organization seeking authorization to collect a fee must also give us evidence to show that it is qualified, pursuant to paragraphs (a), (b), and (c) of this section, to collect a fee. (3) If the evidence provided to us by the organization shows that it meets the requirements of this section, and additional investigation by us proves it suitable to serve, we will notify the organization in writing that it is authorized to collect a fee. If we need more evidence, or if we are not able to authorize the collection of a fee, we will also notify the organization in writing that we have not authorized the collection of a fee. (e) Revocation and cancellation of the authorization. (1) We will revoke an authorization to collect a fee if we have evidence which establishes that an organization no longer meets the requirements of this section. We will issue a written notice to the organization explaining the reason(s) for the revocation. (2) An organization may cancel its authorization at any time upon written notice to us. (f) Notices. The written notice we will send to an organization authorizing the collection of a fee will contain an effective date for the collection of a fee pursuant to paragraphs (a), (b) and (c) of this section. The effective date will be no earlier than the month in which the organization asked for authorization to collect a fee. The notice will be applicable to all beneficiaries for whom the organization was payee at the time of our authorization and all beneficiaries for whom the organization becomes payee while the authorization is in effect. (g) Limitation on fees. (1) An organization authorized to collect a fee under this section may collect from a beneficiary a monthly fee for expenses (including overhead) it has incurred in providing payee services to a beneficiary. The limit on the fee a qualified organization may collect for providing payee services increases by the same percentage as the annual cost of living adjustment (COLA). The increased fee amount (rounded to the nearest dollar) is taken beginning with the payment for January. (2) Any agreement providing for a fee in excess of the amount permitted shall be void and treated as misuse of your benefits by the organization under §416.641. (3) A fee may be collected for any month during which the organization— (i) Provides representative payee services; (ii) Receives a benefit payment for the beneficiary; and (iii) Is authorized to receive a fee for representative payee services. (4) Fees for services may not be taken from any funds conserved for the beneficiary by a payee in accordance with §416.645. (5) Generally, an organization may not collect a fee for months in which it does not receive a benefit payment. However, an organization will be allowed to collect a fee for months in which it did not receive a payment if we later issue payment for these months and the organization: (i) Received our approval to collect a fee for the months for which payment is made; (ii) Provided payee services in the months for which payment is made; and (iii) Was the payee when the retroactive payment was paid by us. (6) An authorized organization can collect a fee for providing representative payee services from another source if the total amount of the fee collected from both the beneficiary and the other source does not exceed the amount authorized by us. [69 FR 60238, Oct. 7, 2004] (a) A representative payee who misuses your benefits is responsible for paying back misused benefits. We will make every reasonable effort to obtain restitution of misused benefits so that we can repay these benefits to you. (b) Whether or not we have obtained restitution from the misuser, we will repay benefits in cases when we determine that a representative payee misused benefits and the representative payee is an organization or an individual payee serving 15 or more beneficiaries. When we make restitution, we will pay you or your alternative representative payee an amount equal to the misused benefits less any amount we collected from the misuser and repaid to you. (c) Whether or not we have obtained restitution form the misuser, we will repay benefits in cases when we determine that an individual representative payee serving 14 or fewer beneficiaries misused benefits and our negligent failure in the investigation or monitoring of that representative payee results in the misuse. When we make restitution, we will pay you or your alternative representative payee an amount equal to the misused benefits less any amount we collected from the misuser and repaid to you. (d) The term “negligent failure” used in this subpart means that we failed to investigate or monitor a representative payee or that we did investigate or monitor a representative payee but did not follow established procedures in our investigation or monitoring. Examples of our negligent failure include, but are not limited to, the following: (1) We did not follow our established procedures in this subpart when investigating, appointing, or monitoring a representative payee; (2) We did not investigate timely a reported allegation of misuse; or (3) We did not take the steps necessary to prevent the issuance of payments to the representative payee after it was determined that the payee misused benefits. (e) Our repayment of misused benefits under these provisions does not alter the representative payee's liability and responsibility as described in paragraph (a) of this section. [69 FR 60239, Oct. 7, 2004] (a) General. If payments are not needed for the beneficiary's current maintenance or reasonably foreseeable needs, they shall be conserved or invested on behalf of the beneficiary. Conserved funds should be invested in accordance with the rules followed by trustees. Any investment must show clearly that the payee holds the property in trust for the beneficiary. Example: A State institution for mentally retarded children, which is receiving Medicaid funds, is representative payee for several beneficiaries. The checks the payee receives are deposited into one account which shows that the benefits are held in trust for the beneficiaries. The institution has supporting records which show the share each individual has in the account. Funds from this account are disbursed fairly quickly after receipt for the personal needs of the beneficiaries. However, not all those funds were disbursed for this purpose. As a result, several of the beneficiaries have significant accumulated resources in this account. For those beneficiaries whose benefits have accumulated over $150, the funds should be deposited in an interest-bearing account or invested relatively free of risk on behalf of the beneficiaries. (b) Preferred investments. Preferred investments for excess funds are U.S. Savings Bonds and deposits in an interest or dividend paying account in a bank, trust company, credit union, or savings and loan association which is insured under either Federal or State law. The account must be in a form which shows clearly that the representative payee has only a fiduciary and not a personal interest in the funds. If the payee is the legally appointed guardian or fiduciary of the beneficiary, the account may be established to indicate this relationship. If the payee is not the legally appointed guardian or fiduciary, the accounts may be established as follows: (1) For U.S. Savings Bonds—
______ (Name of beneficiary) ___ (Social Security Number), for whom ______ (Name of payee) is representative payee for Supplemental Security Income benefits; (2) For interest or dividend paying accounts—
______ (Name of beneficiary) by ______ (Name of payee), representative payee. (c) Interest and dividend payments. The interest and dividends which result from an investment are the property of the beneficiary and may not be considered to be the property of the payee. When we learn that your interest is not served by sending your benefit payment to your present representative payee or that your present payee is no longer able or willing to carry out payee responsibilities, we will promptly stop sending your payment to the payee. We will then send your benefit payment to an alternative payee or directly to you, until we find a suitable payee. We may suspend payment as explained in §416.611(c) if we find that paying you directly would cause substantial harm and we cannot find a suitable alternative representative payee before your next payment is due. We will terminate payment of benefits to your representative payee and find a new payee or pay you directly if the present payee: (a) Has been found by us or a court of competent jurisdiction to have misused your benefits; (b) Has not used the benefit payments on your behalf in accordance with the guidelines in this subpart; (c) Has not carried out the other responsibilities described in this subpart; (d) Dies; (e) No longer wishes to be your payee; (f) Is unable to manage your benefit payments; or (g) Fails to cooperate, within a reasonable time, in providing evidence, accounting, or other information we request. [69 FR 60239, Oct. 7, 2004] If a beneficiary receiving representative payment shows us that he or she is mentally and physically able to manage or direct the management of benefit payments, we will make direct payment. Information which the beneficiary may give us to support his or her request for direct payment include the following— (a) A physician's statement regarding the beneficiary's condition, or a statement by a medical officer of the institution where the beneficiary is or was confined, showing that the beneficiary is able to manage or direct the management of his or her funds; or (b) A certified copy of a court order restoring the beneficiary's rights in a case where a beneficiary was adjudged legally incompetent; or (c) Other evidence which establishes the beneficiary's ability to manage or direct the management of benefits. A representative payee who has conserved or invested benefit payments shall transfer these funds, and the interest earned from the invested funds, to either a successor payee, or to us, as we will specify. If the funds and the earned interest are returned to us, we will recertify them to a successor representative payee or to the beneficiary. A representative payee must account for the use of benefits. We require written reports from your representative payee no less than annually (except for certain State institutions which participate in a separate onsite review program). We may verify how your representative payee used the funds. Your representative payee should keep records of how benefits were used in order to make accounting reports and make those records available upon our request. We may ask your representative payee to give us the following information: (a) Where you lived during the accounting period; (b) Who made the decisions on how your benefits were spent or saved; (c) How your benefit payments were used; and (d) How much of your benefit payments were saved and how the savings were invested. [69 FR 60239, Oct. 7, 2004]
Title 20: Employees' Benefits
PART 416—SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND DISABLED
Subpart F—Representative Payment
§ 416.601 Introduction.
§ 416.610 When payment will be made to a representative payee.
§ 416.611 What happens to your monthly benefits while we are finding a suitable representative payee for you?
§ 416.615 Information considered in determining whether to make representative payment.
§ 416.620 Information considered in selecting a representative payee.
§ 416.621 What is our order of preference in selecting a representative payee for you?
§ 416.622 Who may not serve as a representative payee?
§ 416.624 How do we investigate a representative payee applicant?
§ 416.625 What information must a representative payee report to us?
§ 416.630 How will we notify you when we decide you need a representative payee?
§ 416.635 Responsibilities of a representative payee.
§ 416.640 Use of benefit payments.
Rent and $166 UtilitiesMedical 20 Food 60Clothing 10Miscellaneous 8
The above expenditures would represent proper disbursements on behalf of the beneficiary.
Miscellaneous $10 canteen itemsClothing 15Conserved for 5 future needs of the beneficiary
§ 416.640a Compensation for qualified organizations serving as representative payees.
§ 416.641 Who is liable if your representative payee misuses your benefits?
§ 416.645 Conservation and investment of benefit payments.
§ 416.650 When will we select a new representative payee for you?
§ 416.655 When representative payment will be stopped.
§ 416.660 Transfer of accumulated benefit payments.
§ 416.665 How does your representative payee account for the use of benefits?
