TN 7 (03-02)

A. INTRODUCTION

The Social Security Act precludes compensating an individual or entity out of benefits for serving as representative payee; that is, compensating a payee for his/her time and effort or administrative expenses. The Act provides an exception and permits a qualified organization, authorized by SSA, to collect a fee from a beneficiary for expenses (including overhead) incurred by the organization in providing services performed as the beneficiary's representative payee. (See GN 00506.001 for Payment for Representative Payee Services)

B. POLICY - OUT-OF-POCKET EXPENSES

Any representative payee may be reimbursed for reasonable actual out-of-pocket expenses incurred on behalf of the beneficiary. Out-of-pocket expenses are actual expenses for food, housing, medical items, clothing, transportation, and personal needs items incurred on behalf of a particular beneficiary. The payee must keep records and receipts of the beneficiary's expenses.

REMINDER: A payee collecting a fee for representative payee services cannot recover separate “overhead” expenses such as postage, office equipment, photocopying, etc. The fee for representative payee services includes these expenses.

C. PROCEDURE – GUIDELINES FOR APPROVING OTHER OUT-OF-POCKET EXPENSES

A representative payee should obtain SSA approval before he/she uses benefits to pay for other out-of-pocket expenses incurred on behalf of a beneficiary for other than current or reasonably foreseeable needs. Consider the following guidelines when approving a payee's request for reimbursement for other out-of-pocket expenses:

• Current and reasonably foreseeable needs of the beneficiary must be met before any reimbursement is taken.

• There must be a correlation between the expense incurred and a direct benefit to the individual beneficiary.

• Unless current needs are met, there can be no withholding by a payee in anticipation of expenses that may be incurred on behalf of a beneficiary.

• The amount of the reimbursement must correspond to the actual expense for a particular beneficiary.

• A volume payee cannot add the expenses of all the beneficiaries together and divide by the number of beneficiaries served to determine the amount of reimbursement. Individual records must be maintained.

• Documentation of out-of-pocket expenses must be available for SSA review at any time.

If a payee notifies SSA that he/she will not carry out his/her fiduciary responsibilities without compensation, SSA will change payees, institute direct payment, or suspend benefits and develop for a new payee, as appropriate.