What Is a Representative Payee?

A representative payee, or substitute payee, accepts disability, or social security payments for someone who is not capable of managing their own benefits. The representative payee also assists the individual with money management and protects them from victimization or financial abuse.

Understanding a Representative Payee

Ideally, according to the Social Security Administration (SSA), family, friends, legal guardians, or lawyers typically serve as representative payees. Otherwise, the SSA has qualified organizations that can act as representative payees.

Individual and organizational representative payees are reviewed by the Information Systems Network & Corporation (ISN Corporation), a contractor that works on behalf of the SSA.

Who Needs a Representative Payee?

Minors, adults who are declared legally incompetent or adults who have drug or alcohol dependencies are required to have a representative payee. According to Nolo, approximately 10% of all Social Security recipients use a representative payee.

Duties of the Payee

Once a representative has been identified, the SSA will send the disabled or incapacitated person's social security or other benefit checks to the representative payee.

A representative payee must spend the benefits intended for the beneficiary according to the person's needs. They are expected to account for the money spent and report any changes in the person's living situation to the SSA. For example, if the beneficiary marries, moves, is hospitalized, starts working or stops working, receives or loses any other benefits such as child support, workers' compensation or a pension, is no longer disabled, is convicted of a crime or dies.

The beneficiary's checks must be deposited into a checking or savings account, and the money can be used to pay for the beneficiaries expenses such as housing, food, clothing, utilities, health and dental expenses, personal care items, rehabilitation, education, bills, family expenses or entertainment. Any remaining funds should be placed in an interest-bearing account.

Payment for Representative Payees

For a person to become a social security representative payee for a friend or family member, the must complete Form SSA-11, Request to Be Selected as a Payee. The applicant must explain why they consider the disabled or incapacitated person to be unable to manage their finances, and the applicant must provide their Social Security number. The applicant may be required to attend an interview with an SSA representative.

Individual representative payees are not paid for their services to the beneficiary. However, a legal guardian may be able to collect a guardian fee with the authorization of a court.