If a Social Security Disability beneficiary is unable to manage his or her resources and is unable to appoint someone to act on his or her behalf, the Social Security Administration (SSA) will appoint an individual or an organization to receive disability benefits on behalf of that person. The person appointed to receive Social Security Disability benefits (or any other Social Security benefit) is called a representative payee.
A representative payee is charged with the responsibility of using disability benefits for the exclusive benefit of the disabled person. The representative payee must keep a record of expenses and must be able to provide the SSA with a report that shows how these benefits were used. If benefits are not used for the beneficiary when received, they must be saved for his or her benefit in an interest bearing account. The representative payee is also expected to help the disabled person get medical treatment, to report any changes in the disabled person’s situation which would affect his or her eligibility for Social Security Disability benefits, and to return any benefits to which the disabled person is not entitled.
Although many people have named others to act for them by naming them in a power of attorney or adding them to a joint bank account, these actions do not make the person a representative payee for purposes of receiving and managing Social Security Disability benefits. A representative payee must apply to and be appointed by the SSA to act in this capacity. Representative payees are appointed for minor children and legally incompetent adults and sometimes for adults who have other reasons for being unable to manage their resources. However, the SSA assumes that adult beneficiaries who have not been found legally incompetent do not need the assistance of a representative payee.
Although a representative payee is entitled to be reimbursed for expenses incurred from caring for the disabled person other than overhead (rent, utilities, etc.), no individual who is acting as a representative payee is authorized to receive compensation for services. A qualified organization can apply to be compensated for services from the payee’s disability payments, but must be approved in writing by the SSA before taking any sort of payment.
A representative payee is not allowed to sign legal documents (other than those from the SSA) on behalf of the beneficiary, nor does the representative payee have any legal right to manage or distribute any resource other than Social Security Disability Insurance (SSDI). A representative payee is prohibited from using a minor beneficiary’s dedicated account funds for basic maintenance items such as food, clothing, shelter, and personal items that are not related to the child's disability. In some cases, a representative payee is required in order to receive benefits.