Social Security Benefits Payee Rules

Social Security Benefits Payee Rules
Sometimes Social Security beneficiaries need help managing their benefits.

Appropriate Expenditures

The Code of Federal Regulation 20 CFR §404.2035 - 404.2045, governs payee expenditure rules. Payees must first use benefits for the beneficiary's food, shelter and clothing. Next priority is medical expenses, then any expenses that improve the quality of life such as a trip to the movies or a better bed. Extra funds must be deposited in an interest-bearing bank account or no-risk investment like U.S. Savings Bonds. For recipients residing in nursing homes, the payee sets aside at least $30 monthly for their personal needs, like bedroom slippers or a robe. The rest of the benefit normally is the co-pay for the nursing home stay. The payee may use funds to pay past debts for Social Security overpayments, federal income taxes or garnishment authorized under section 459 of the Social Security Act. Otherwise, paying old debts is appropriate only for situations like mortgage or insurance payments needed to avoid foreclosure or policy cancellation.

Beneficiary Change Reports

The Code of Federal Regulations, 20 CFR §416.635 - 416.645 requires the payee to report changes that affect the beneficiary's payments. Such changes include address changes, income changes such as wages or changes in pension income, or improvement in the medical condition of a disability benefit recipient. The payee must report whenever the recipient spends over 30 consecutive days in a jail, is committed by court order to an institution for the criminally insane, or is outside the U.S. Payees should report immediately any change in marital status of an eligible beneficiary or the parents of an eligible beneficiary, or if a beneficiary dies.

Payee Change Reports

Payees must report changes in their own situation such as when the beneficiary leaves their custody or they are no longer responsible for him. Payees report changes in their own mailing or residence address or if for any reason, such as health, they are unable to continue as payee. Payees must report if they are convicted of a felony, or there is an outstanding arrest warrant for a felony offense or any parole or probation violation.

Representative Payee Accounting

Social Security Act Section 205(j) (3) and Section 1631(a) (2) (C) mandate that the agency obtain accountings from payees annually. Payees annually receive a reporting form SSA-623, which they must complete and return by mail, or complete online at SSA's website. Payees must keep track of expenditures in order to report the amount used for shelter, food, other necessities and any amount saved. They must explain whether conserved funds are kept in a checking or savings account or invested. The reporting form will ask how the bank account or any investment is titled.

Fees

Except for special situations, payees may not charge any fee. A payee may reimburse himself for out-of-pocket expenses incurred in order to get the beneficiary needed food, housing, medical care or other important items. The payee must keep records of the expense reimbursed.