TN 4 (03-11)

The relationship between the applicant or payee and the beneficiary is an important factor in determining the suitability of a payee applicant and in future monitoring of that payee's performance. We record the relationship on the Master Beneficiary Record and the Supplemental Security Record (MBR and SSR) using the Type of Payee Code.

Correct payee coding is critical to payee operations (including accounting and targeted monitoring of high-risk payees). It is important to ensure the initial coding is accurate.

Most payee-beneficiary relationships are straightforward and easily determined. However, in some cases, it is difficult to determine the payee-beneficiary relationship. Factors include determining how the check legend displays or whether a social security number (SSN) or employer identification number (EIN) is an appropriate identifier for the payee.

A. Definitions of the various applicants or payees

1. Individual applicant or payee

An individual applicant or payee is a person applying or serving as payee based on his or her personal relationship with the beneficiary.

2. Organizational applicant or payee

An organizational applicant or payee is an entity serving or applying as payee as the agent, representative or official of an institution, agency or other organization.

3. Institutional applicant or payee

An institutional applicant or payee is a specific type of organizational payee that provides care and treatment for the beneficiaries who reside in the institution or in off-site facilities affiliated with the institution.

B. How to identify a payee

NOTE: Your decision of whether a payee is an individual or an organization will affect the payment legend, the structure of certain organizations, and the specific type of relationship.

1. Individual applicant or payee

An individual applicant or payee is not serving or applying as the agent, representative, or official of an institution, agency, or other organization. We identify individual payees by his or her SSN on the Master Representative Payee File (MRPF).

2. Organizational applicant or payee

The zip code of its actual physical location on the MRPF identifies an organizational applicant/payee.

3. Payment legends

The payment legend must accurately reflect whether the payee is an individual or an organization. When the payee is an individual, the legend must reflect the individual's name. When the payee is an organization, the legend must reflect the business name of the organization.

4. Small businesses

In cases involving owners or operators of small businesses, it is difficult to determine whether they are applying or serving as an individual or an organization. Generally, if the small business employs only a few people and the owner is the only person who will have access to the beneficiary's funds or has no employees (no EIN), we treat the owner as an individual applicant or payee. If the small business employs a substantial number of people and other employees could have access to the beneficiary's funds, the small business, rather than the owner is the organizational applicant or payee.

C. Reference

SM 00613.000 Miscellaneous Corrections (MISOR) Subchapter Table of Contents