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An Independent View of Social Security
Use of Benefit Payments
1617.1 What is the proper disbursement of funds?
A representative payee must apply the payments for the use and benefit of the entitled individual. Social Security and/or SSI funds are properly disbursed if they are:
Spent for the beneficiary's current and reasonably foreseeable needs (see §1618); or
Saved or invested for the beneficiary, after current needs have been met (see §1620).
1617.2 May payments be applied to the needs of other individuals?
Yes. If the current and reasonably foreseeable future needs of a Social Security beneficiary are being met, part of the benefits may also be used to support a spouse, child, or parent who is the beneficiary's legal dependent.
1617.3 How may funds be used if a beneficiary is institutionalized?
For institutionalized beneficiaries whose current needs are being met part of the beneficiary's Social Security funds may be used for:
The support of the community spouse (the legal spouse of the beneficiary); and
Any dependent family member as specified in the Medicaid determination.
Note: SSI funds may not be used to support a beneficiary's dependents.
1617.4 What expenditures are given priority for beneficiaries in institutions or nursing homes?
If a beneficiary is in an institution or nursing home that is not receiving Medicaid funds on behalf of the beneficiary, the representative payee will give priority to using funds for the current maintenance of the beneficiary. Current maintenance includes:
Customary charges made by an institution/nursing home for the beneficiary's care;
Items that will aid in the beneficiary's recovery or release; and
Personal needs to improve the beneficiary's condition while in the institution.
1617.5 How much money should be set aside for personal needs of beneficiaries who are in institutions or nursing homes?
The representative payee is required to set aside at least $30 each month for a beneficiary living in an institution or nursing home, to be used for the beneficiary's personal needs or saved on his or her behalf.
1617.6 What is misuse of Social Security funds?
Misuse occurs when a representative payee converts Social Security and/or SSI payments for purposes other than the "use and benefit" of the beneficiary.
1617.7 Does a representative payee who misuses funds owe the beneficiary the money?
A representative payee who misuses Social Security and/or SSI payments owes the beneficiary the amount of misused funds. However, SSA will make restitution to the beneficiary for the amount of misused funds when:
It has been determined that the representative payee has misused funds and the payee is an organization or an individual payee serving 15 or more beneficiaries; or
It has been determined that an individual representative payee serving 14 or fewer beneficiaries has misused funds and SSA was negligent in following procedures to investigate or monitor the representative payee's actions.
In both cases described above, SSA will seek recovery of the misused funds from the representative payee and make restitution without regard to the payee's ability to repay the misused funds.
1617.8 What are the penalties for misused Social Security or SSI funds?
When a representative payee misuses funds, we may refer the case for criminal prosecution. The penalty upon conviction for a payee's misuse of funds may be a fine of up to $25,000, imprisonment up to five years, or both.
SSA may also impose a civil monetary penalty for offenses involving a payee's misuse of funds on behalf of another individual. The penalty may equal up to $5,000 for each violation. In addition, the representative payee shall be subject to an assessment of not more than twice the amount of the misused payments.
Last Revised: Feb. 1, 2008