Social Security: Representative Payees and Power of Attorney

Social Security: Representative Payees and Power of Attorney

May 9, 2024
Social Security: Representative Payees and Power of Attorney
Social Security beneficiaries and Supplemental Security
Treasury Regulations
Income (SSI) recipients (referred to herein as
SSA’s policy guidance cites Title 31, Section 240.17, of the
“beneficiaries” for both programs) may require additional
Code of Federal Regulations as the rationale for not
help managing their finances and may grant power of
recognizing power of attorney. Paragraph (c) speaks to the
attorney to family, friends, or professionals to act on their
need for a special power of attorney to manage recurring
behalf. One common question is why individuals with
benefit payments, which would include Social Security and
power of attorney are not recognized by the Social Security
SSI payments:
Administration (SSA) as having authority to receive and
manage beneficiaries’ Social Security or SSI payments.
Checks issued for classes of payments other than
those specified in paragraph (b) of this section, such
Briefly, Treasury Department regulations do not recognize
as a recurring benefit payment, may be
general powers of attorney for negotiating recurring federal
negotiated under a special power of attorney
benefit payments, including Social Security and SSI
executed in accordance with applicable State or
payments. Instead, SSA appoints representative payees
Federal law, which describes the purpose for which
(“payees”) to receive and manage program payments for
the checks are issued, names a person as attorney-
beneficiaries whom the agency deems incapable of
in-fact, and recites that the special power of attorney
managing their own benefits. For some populations,
is not given to carry into effect an assignment of the
granting power of attorney is more common than
right to receive such payment, either to the attorney-
appointing a representative payee. A 2016 study found that
in-fact or to any other person (emphasis added).
approximately 63% of retirees age 70 or older with
dementia or mild cognitive impairment had granted a health
Treasury explains part of the rationale behind the
power of attorney, while about 9% with dementia and 2%
mandatory use of special powers of attorney in the final rule
with mild cognitive impairment had been assigned a payee.
on Indorsement and Payment of Checks Drawn on the
United States Treasury posted in the Federal Register on
This In Focus provides an overview of power of attorney
April 1, 2004:
and the underlying Treasury regulations regarding the use
of power of attorney to negotiate Social Security and SSI
This final rule retains the general provision that
payments. It also describes SSA’s payee designation and
general powers of attorney may be used only to
highlights the agency’s responsibilities for making
negotiate certain enumerated checks, the right to
beneficiary capability determinations, appointing payees,
which does not expire upon the death of the
and monitoring payees to ensure proper use of beneficiary
payee/beneficiary. For all other checks, such as
funds.
recurring benefit payments, a special power of
Power of Attorney
attorney is required.… The reason for this decision
is two-fold: first, a general power of attorney is
Power of attorney is a legal instrument that grants a third
more easily abused by the attorney-in-fact; and
party the authority to make certain decisions on an
individual’s
second, a special power of attorney must explicitly
behalf, such as decisions about finances or
state that it does not purport to assign the right to
medical care. SSA explains, however, that power of
receive payments to the attorney-in-fact or to any
attorney “does not lessen the rights of the individual and
does not usually grant the third-party the right to manage
other person. Requiring use of a special power of
the individual’s assets.”
attorney for payments such as recurring benefit
payments ensures both that the intended recipient
Treasury does not recognize power of attorney for
has a clear intent to authorize an attorney-in-fact to
negotiating recurring benefit payments, including those
negotiate such payments, and that all parties
from Social Security or SSI. The Social Security Act also
seeking to rely on the power of attorney are aware
generally prohibits the transfer of control of Social Security
that it cannot be used as a means of assigning the
or SSI payments to individuals other than beneficiaries or
right to receive payment.
their SSA-appointed payees. This means that an individual
Representative Payees
with power of attorney for someone else does not have the
A payee is a person or organization that SSA appoints to
authority to manage that person’s Social Security or SSI
receive and manage Social Security or SSI benefits on
payments unless SSA has also made the individual with
behalf of an individual whom the agency deems incapable
power of attorney the beneficiary’s payee.
of doing so. A payee’s main duties are to use the benefits to
pay for the current and future needs of the beneficiary and
properly save any benefits not needed to meet current
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Social Security: Representative Payees and Power of Attorney
needs. A payee must also keep records of expenses to
A person with power of attorney interested in becoming an
provide an accounting of how benefits were used or saved.
individual’s payee must file a payee application, provide
proof of the power of attorney, and be certified by SSA.
SSA reported that, as of September 11, 2023, there were
SSA regulations dictate a preferred payee order of
approximately 5.6 million payees serving 7.7 million
selection. Policy also states that the presence of a power of
beneficiaries and managing $77.9 billion in annual benefits.
attorney indicates that a favorable, trusted relationship
According to SSA, in December 2022, 2.1% of adult Social
exists between a beneficiary and the person holding the
Security beneficiaries had payees, including 1.0% of retired
power of attorney.
workers and 9.5% of workers with disabilities. During the
same period, about 26.7% of adult SSI recipients had
Payee Monitoring
payees, including 36.5% of SSI recipients ages 18-64 and
Once appointed, a payee receives the beneficiary’s
about 9.1% of recipients age 65 or older. SSA deems almost
payments and is given the authority to use them on the
all minor children to require payees. In December 2022,
beneficiary’s behalf. A payee is required to use benefits in
89.4% of children under age 18 receiving Social Security
the beneficiary’s best interest and maintain records of
had payees, and 99.9% of children under age 18 receiving
income and expenses. The payee must inform SSA of any
SSI had payees.
relevant program-specific changes that may affect the
beneficiary’s payment, which may include changes in
Appointing a Representative Payee
earnings or other income, living arrangements, or family
SSA is responsible for (1) determining a beneficiary’s need
relationships (e.g., marriage, child custody). Additional
for a payee; (2) selecting the most appropriate payee for a
requirements apply for payees of children receiving SSI.
beneficiary requiring one; and (3) monitoring payees to
Payees may not collect fees from SSA or beneficiaries for
ensure proper use of beneficiaries’ funds. For a person with
their service, unless they are specifically approved in
power of attorney to be appointed payee, SSA must
writing by SSA or are legal guardians court-authorized to
determine that the beneficiary is incapable. SSA must then
charge a guardian fee.
decide that the holder of power of attorney is in the best
position to serve the beneficiary.
Some payees must report to SSA on how they used
beneficiaries’ funds by completing an annual
Determining a Beneficiary’s Need for a Payee
Representative Payee Report. Section 102 of the
Subject to current law and SSA regulations and policies,
Strengthening Protections for Social Security Beneficiaries
agency employees determine whether an individual is
Act of 2018 (P.L. 115-165) eased reporting requirements
incapable and requires a payee. SSA presumes that legally
for certain types of family members serving as payees.
competent adults can manage their own benefits unless
These payees must still keep records of how they spend or
information available to SSA suggests otherwise. The
save beneficiaries’ funds and provide these records to SSA
agency may consider legal, medical, or lay evidence when
if requested.
determining whether a beneficiary requires a payee. A past
determination of (in)capability may be updated if SSA has
SSA uses the annual accounting process, along with site
reason to believe a beneficiary’s circumstances and need for
reviews and other types of reviews, to monitor payee
a payee have changed.
performance. SSA may remove or replace a beneficiary’s
payee if the agency determines that the current payee is no
Selecting the Appropriate Payee
longer suitable. If a payee misuses benefits, the payee must
Once SSA has determined that an individual requires a
repay the misused funds. A payee convicted of misusing
payee, the agency must designate one. Potential payees
funds may be fined and imprisoned.
must complete a payee application and be certified by SSA
to receive beneficiaries’ funds. Generally speaking, current
For Additional Information
law directs SSA to certify payees based on (1) an
For more information on Social Security, see CRS In Focus
investigation of the person seeking to be a payee that
IF10426, Social Security Overview, and CRS Report
includes a face-to-face interview (to the extent practicable)
R42035, Social Security Primer. For more information on
and (2) adequate evidence that payee certification is in the
SSI, see CRS In Focus IF10482, Supplemental Security
beneficiary’s best interest. The investigation of a potential
Income (SSI).
payee must:
For more information on payees, see SSA, A Guide for
• verify his or her identity;
Representative Payees, March 2022, https://www.ssa.gov/
pubs/EN-05-10076.pdf; and CRS Report R46975, Children
• obtain information on criminal history involving
in Foster Care and Social Security Administration Benefits:
felony convictions, including any attempt or
Frequently Asked Questions.
conspiracy to commit a felony, or offenses
resulting in imprisonment for more than one year;
T. Lynn Sears, Analyst in Social Policy
and
Emma K. Tatem, Analyst in Social Policy
• determine whether the individual was previously
IF12658
revoked as a representative payee for misuse of
funds.
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Social Security: Representative Payees and Power of Attorney

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