Social Security Organizational Representative Payee 447-10-20-20-20

(Revised 4/3/2023 ML #3714)

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Definitions:

Social Security Administration (SSA): is an independent Federal government agency that administers two major benefit programs.

 

SSA or RSDI Benefits – Retirement, Survivors and Disability Insurance: Benefits paid by SSA under Title II of the Social Security Act. These are commonly called social security (SSA) benefits. They are based on the earnings of a worker who has paid into the system by paying Federal Insurance Contributions Act (FICA) tax for a specified period of time. A worker, or his or her family, can receive RSDI benefits upon the worker’s attainment of a certain retirement age, disability, or death.

 

SSI Benefits – Supplemental Security Income: Benefits paid by SSA under Title XVI of the Social Security Act for aged, blind, and disabled persons with little or no income or resources.

 

Representative Payee – an individual or organization appointed by SSA to receive and manage the social security or SSI benefits of another person. A representative payee must use the funds they manage for the exclusive use and benefit, and in the best interest of the beneficiary.

 

Representative Payees are categorized into two broad groups:

 

Please refer to the Social Security Administration website for a complete description of Representative Payee responsibilities.

 

Normally children under the age of 18 already have a designated payee. The representative payee (RP) is responsible for the oversite and distribution of the social security benefit on behalf of the child. It is not necessary for a custodial agency to change the RP if the current payee is active in the case planning of the child. The custodian must work closely with the current RP to evaluate the needs of the child and the use of the social security benefits for agreed upon purchases and expenditures.

The custodial agency should only become the organizational representative payee (ORP) if the current RP refuses to participate in the planning for the child and is not willing to make the child’s social security benefits available to the child/agency for expenditures.

There are three exceptions to the agency becoming the organizational representative payee

  1. The agency has applied to become the ORP and the request is denied by Social Security Administration. In this situation, the agency must send a written request to the representative payee notifying them of the agency’s custody and request their involvement and cooperation in the case planning of the child.
  1. The current representative payee is willing to fully cooperate and has agreed to forward the SSI or Social Security benefits received on behalf of the child to the agency. In this situation, some form of an agreement of understanding should be outlined and signed by both parties. The agency should send Social Security Administration a copy of the custody order, the agreement with the current representative payee and an explanation of the child’s current living arrangement for their records.
  1. Short term placement as defined below.

 

NOTE: In exceptions 1 and 2, if the current representative payee refuses or fails to participate and cooperate with the custodial agency, the agency must contact Social Security Administration and notify them of the representative payee’s failure to cooperate.

 

Prior to an agency’s request to become the ORP, the best interest and needs of the child must be considered, as does the effect it may have on their social security eligibility.

 

To apply to be an ORP, contact the local Social Security Administration office. They will be able to explain the requirements and provide the necessary forms for becoming an organizational representative payee. It may be necessary for a specific representative from the agency to handle this function each time. It takes approximately 30-60 days, possibly more, for the representative payee to be changed.

 

The custodian must make the child aware they receive Social Security benefits. If age appropriate, the child should be included in the planning, budgeting, and decisions for spending or saving their SS benefits. Anything purchased with the money is the child’s property. See “What You Need to Know When you Get Retirement or Survivors Benefits” for additional explanation.

 

Short Term Placements

The definition of short term placement is a placement in foster care that is generally 60 days or less.

 

In the event of a short term placement, it would not be considered in the best interest of the child and the family for the agency to become the organizational representative payee of the child’s Social Security or SSI benefits. This is due to the amount of time it takes for Social Security Administration to make the representative payee change and that a bank account must be established for direct deposit of the funds. Also, by changing the representative payee, it may cause a delay of benefits to the child if the agency should receive the payment after the child has already returned home. If this is the case, benefits must be returned to Social Security Administration to be reissued.

 

EXTENDED PLACEMENTS

If the child is not expected to return home or it is determined at any time during a short-term placement the child will continue in care, the agency should apply to become the organizational representative payee with the exception of #1 or #2 listed above.

 

DIRECT DEPOSIT

When an agency becomes an organizational representative payee (ORP), a checking or savings accounts at a bank, credit union, or financial institution must be set up for direct deposit of the funds. Contact your local financial institution to discuss options. An ORP does do not have the option of a Direct Express Card.

 

ACCOUNT TITLING AND TYPES OF BANK ACCOUNTS

Accounts must be established in a way that shows the beneficiary owns the account and the payee have only a fiduciary interest.

 

Do not use a joint account format because this allows a beneficiary direct access to their funds.

 

When establishing the account, use the name of the organization on the title, not the name of an individual employee.

 

Here are two recommended titles:

“(Beneficiary's name) by (agency name), representative payee,” or

 

“(Agency name), representative payee for (beneficiary's name).”

 

Although these are the most common methods of identifying accounts, other account titles, which show beneficiary ownership and the agency as fiduciary, are acceptable. When in doubt, ask your bank.

 

Try to set up an account that earns interest, minimizes fees and helps keep clear records.

 

If an agency serves as an organizational representative payee for a large number of beneficiaries, Social Security Administration may allow them to establish a collective account. Payments may be deposited into a master checking or savings account with individual sub-accounts for each beneficiary. This kind of account is called a collective account. Do not confuse this kind of account with your organization’s operating account. An agency may not mix a beneficiary’s funds with the agency’s funds.

 

Social Security Administration must approve a collective account before it is set up. Therefore, contact your local Social Security Administration office for guidance. The office will ensure that the collective account is established in accordance with SSA rules.

 

HOW TO APPLY FOR DIRECT DEPOSIT

Beneficiaries or representative payees receiving benefits on behalf of a beneficiary with an established bank or credit union account can sign up by calling 1-800-333-1795.

 

To apply for direct deposit, the recipient will be required to have an existing financial institution account and provide the following:

SSI Benefits – Supplemental Security Income

SSI dollars are meant to meet the daily living and medical expenses for a child. These dollars are not meant to be banked. Federal dollars are used to fund SSI benefits and as a result, foster care children eligible under Title IV-E and Emergency Assistance (EA) are eligible for reimbursement of their care with SSI or foster care funds through Title IV-E or EA but are not eligible to receive both. In any month a child is in receipt of SSI dollars, foster care is payable through regular foster care funds.

 

Through case planning and frequent evaluation of the child’s needs, the SSI dollars should be used every month to meet the child’s daily needs and improve their living conditions or for medical care. See “A Guide for Representative Payee” for additional explanation.

 

Social Security Administration allows a maximum asset limit is $2000 for SSI recipients. The amount retained in the following month in a savings or checking account cannot exceed $2000. A minimum of $30 should be retained from every check and given to the child for personal use. If the child is older and has additional expenses or a specific item they wish to purchase, SS money can be allocated for that purchase.

 

The representative payee is responsible to keep records of how the dollars are use. They will be required to report out annually to Social Security Administration how the dollars were spent. To eliminate jeopardizing the monthly benefits and to maintain the asset limit, SSI dollars must be used before foster care dollars. Any amount that is not used that exceeds the $2000 asset limit, must be sent to the state to offset foster care dollars expended for the care of the child.

 

A child that is in a medical placement may be required to pay a recipient liability. Any dollars that are retained over $2000 must be returned back to social security and the child may be subject to a reduction in benefits. Therefore, it is important to plan carefully and forward any excess towards the current foster care expenditures that are meeting the child’s daily needs. Any amount retained when the child returns home or to another planned living arrangement in which the agency will no longer have custody, must be returned to Social Security Administration for disbursement to the new representative payee. The custodial agency cannot give the money to a family member or another party at the time custody ends.

 

SSA Benefits – Retirement, Survivors and Disability Insurance

SSA benefits are considered unearned income for the child. Careful consideration must be made as to how the dollars will be saved or used on behalf of the child. Social Security does not have a maximum asset limit for SSA recipients, but Title IV-E foster care does. The maximum asset limit for a foster care child is $10,000 under foster care guidelines. Once the asset maximum is reached, the case is no longer reimbursable under Title IVE and general funds must be used to reimburse foster care expenditures. The agency must “spend down” any excess amount over $10,000 for the case to again be Title IV-E reimbursable. This can be done by making purchases for the child in lieu of using foster care dollars or submitting payment to the state to offset the foster care expenditures.

 

Any money that is banked when the child returns to their home or another living arrangement in which the agency will no longer be the organizational representative payee must be returned to Social Security Administration for disbursement to the new representative payee. The money cannot be given to a family member or another party. If the child is old enough, it is possible they can be their own representative payee. The ORP should contact Social Security Administration with questions.

 

APPLYING SOCIAL SECURITY AND SSI PAYMENTS

In general, SSI/Social Security funds for the child are to be applied to the cost of the child’s care, including irregular care costs, and meeting the personal needs of the child. As payee, the beneficiary’s Social Security or SSI funds may not be used for anything other than his or her use and benefit. But more than that, the payee must use reasoned judgments and use the funds in the beneficiary’s best interest. To be able to do this, the payee must be aware of the beneficiary’s basic current and reasonably foreseeable needs.

 

“Current and foreseeable needs” means primarily food, shelter, clothing, and medical expenses not covered by Medicare, Medicaid or provided by a residential institution. Once the current and foreseeable needs have been satisfied, a payee may use the remaining funds for the beneficiary’s personal comfort items, recreation and miscellaneous expenses.

 

It is recommended that an agency should establish internal procedures and guidelines governing how beneficiary funds will be managed. These internal procedures should also include internal controls to help ensure the integrity and accuracy of the accounting system. The Social Security website provides a brief description of common practices.

 

The Social Security Administration requires the representative payee to complete a Representative Payee Report about once every year. It will be necessary for the agency to keep accurate records for reporting how the beneficiary’s benefits were spent over a specific time frame indicated on the report.

 

At least $30 per month of the Social Security or SSI funds should be set aside and spent for the personal needs of the beneficiary. If the beneficiary is receiving SSI benefits and living in an institution, this is required by the Social Security Administration.

 

The $30 per month “personal needs” funds may not be used to buy items that the institution ordinarily provides, or for items that are paid for by a State or Federal program. See the “Guide for Organizational Rep Payees” on the Social Security Administration website for examples of appropriate personal needs spending.

 

REACHING ALLOWABLE ASSET MAXIMUMS

The amount of SSI or SSA retained in a checking or savings account should be monitored closely to ensure the case does not exceed the allowable asset maximum. A case in which the maximum is reached is not reimbursable under Title IV-E. The amount received over the allowable maximum must be used in the month it is received towards the child’s expenditures. Foster care payments will continue to be disbursed monthly through the payment system.

 

For all children, regardless of their eligibility determination, in receipt of SSI benefits and that reach the allowable $2000 maximum, the overage must be returned to Social Security Administration with an explanation as to why the benefits are being returned. This will prompt Social Security to reevaluate the monthly benefit and it may result in a reduction due to the child’s needs being met under another federally funded program.

 

For a Title IV-E child only in receipt of SSA benefits that reaches the $10,000 maximum under foster care guidelines, the amount exceeding the allowable maximum must be sent to the state to offset the expenditures incurred as a result of the foster care placement. Once the balance of the reserved SSA benefits is below $10,000, the state may again claim Title IV-E when authorizing payments.

 

Payments should be in the form of a cashier check or money order payable to the Department of Human Services, along with an SFN 827 Credit Form.

 

SSI VERSUS TITLE IV-E OR EA FUNDING SOURCE

When a child is eligible for both SSI and Title IV-E or EA funding, the agency must determine, based on the best interest of the child, which federal funding source to elect for the foster care income maintenance costs. Federal guidelines prohibit an agency from claiming reimbursement from two federally funded programs for the same eligible case.

 

The Social Security Administration must be notified of the child’s placement, the amount expended for the child’s care and which funding source will be used. An agency cannot claim both SSI and Title IV-E or EA. If the child’s living arrangement should change and it affects the amount expended, consideration must again be given to the federal funding source. Social Security Administration must be notified so adjustments can be made. If the child returns home or to a non-paid foster care placement, Social Security Administration must be notified immediately so benefits can be redetermined and reinstated to the full allowable amount as soon as possible.

 

NOTE: if SSI payments are offset past the annual SSI review/renewal date, resumption of SSI payments may require a redetermination or review.

 

NOTE: offset SSI payments are permanently lost to the child or agency, not merely delayed or “banked.”

 

The first and primary concern of the representative payee in this decision must always be in the best interests of the child. SSI should not be offset if:

 

(a) the SSI payments are significantly greater than the cost of the child’s foster care and the child’s appropriate access to the difference would be impaired;

(b) the foster care placement is expected to be very short term and reinstating SSI payments would disrupt the child’s support; or

(c) for any reason it is known that offsetting SSI payments would jeopardize future eligibility for such benefits by the child.

 

Consider the following when determining which funding source to use. The agency should consider the fiscal interest of the state in electing IV-E or EA funding in lieu of SSI payments as well as the child’s cost of care. As a rule of thumb, whenever the cost of care is double the child’s monthly SSI payment, it will always be in the State’s fiscal interest to offset SSI and claim IV-E or EA funding. (In 1999, the IV-E income maintenance federal share is about 70%, so it is currently in the state’s fiscal interest to claim IV-E whenever the cost of care equals more than 170% of the SSI payment.)

 

EXAMPLE 1: A disabled child in residential care receives monthly SSI of $552. The cost of care for this child is $1500 per month, which the state partially offsets with the $552 SSI received as ORP. It is in the fiscal interest of the state to offset the SSI and claim IV-E income maintenance instead, which will bring $1500 x 70% = $1050 per month federal to the state – twice as much as the $552 SSI.

 

EXAMPLE 2: A disabled child in foster care receives monthly SSI of $552. The child’s therapeutic foster care costs the state $600 per month. It is in the state’s interest to retain the $552 SSI, since IV-E would bring less:  $600 x 70% = $420.

 

EXAMPLE 3: A disabled child in foster care receives monthly SSI of $552.00. The child’s family foster care cost is $357.74 per month. The cost of care is less than the SSI benefit. Therefore, the SSI benefit would not be suspended and foster care would be paid out of general funds. If it is in the best interest of the child, the agency would need to apply to become the payee for the SSI and each month submit the care cost of $357.74 to the state. The remaining balance of $194.26 would then be put into an established savings account for the child. In this same instance, $100.00 child care costs are also being paid for as an irregular expense. $100.00 would be sent into the state for reimbursement of this expense and the remaining balance of $94.26 would be deposited into the child’s bank account.

 

Even when the federal claim is only marginally above the SSI amount, the IV-E or EA election may be wise. Placements of disabled children are more frequently longer-term than others, and the cumulative state costs of making the “wrong” IV-E or EA versus SSI election can be enormous over time.  Given the potential fiscal consequences, agency staff should seek supervisory or state office guidance where judgments on this election seem particularly difficult.

 

NOTE: Regardless of whether SSI or IV-E is claimed for the foster care cost, IV-E administration can be claimed for this case. This is accomplished by counting such a case either as a IV-E reimbursable case (FM), or as one which is IV-E eligible but not IV-E reimbursable (FN) for the months in which SSI is claimed.

 

EXCESS SOCIAL SECURITY AND SSI FUNDS

As organizational representative payee (ORP), the agency must deposit any amounts not expended for such care or personal needs in an account for the child. Upon the child’s discharge from foster care, the ORP must turn over any conserved benefits, savings, or other investments and any interest earned on the benefits to Social Security Administration. Social Security Administration will reissue the returned benefits to either a new representative payee or to a beneficiary currently receiving direct payment. The Social Security Administration requires periodic reports of such Representative Payee stewardship.

 

MATCH SYMBOL FM/FN OR EA/RM

The payment authorization match symbol identifies the funding source of payments for Title IV-E and Emergency Assistance (EA) eligible children. Title IV-E and EA are both federally funded programs. Based on the child’s eligibility determination, all payments in the month in which a child does not receive SSI benefits (payment suspended or becomes ineligible) are coded with a match symbol of FM (Title IV-E) or EA (Emergency Assistance).

 

Federal guidelines prohibit a state to claim federal dollars from two federally funded programs for the same individual’s care. Therefore, the match symbol for all payments in the month in which a child receives SSI benefits must be changed from FM to FN (Title IV-E non-reimbursable) or EA to RM (Regular Match-state general funds) depending on the eligibility determination of the child.

 

MATCH SYMBOL NA

A match symbol of NA is used in the foster care payment authorization to identify funds expended for a child under Tribal custody that is Title IV-E eligible and reimbursable. A child that meets the foster care eligibility requirements and is not in receipt of SSI benefits may be reimbursed, as per the state agreement, using the NA match symbol.

 

A child that is determined eligible under Title IV-E but is in receipt of SSI benefits is not eligible for reimbursement through the state payment system. The case will remain Title IV-E eligible but is not reimbursable until the SSI benefit has been suspended. The Tribal Nation is responsible to reimburse the foster care expenditures for any month in which the child is in receipt of SSI benefits.

 

Resources:

The Official Website of the U.S. Social Security Administration http://www.ssa.gov/

 

Training Organizational Representative Payees http://www.ssa.gov/payee/LessonPlan-2005-2.htm#WHATISORG

 

Guide for Organizational Payees - http://www.ssa.gov/payee/NewGuide/toc.htm