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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse 1 Introduction: The Representative Payee Program The Social Security Administration (SSA) provides Old Age, Survivors, and Disability Insurance benefits (known as Social Security, OASDI, or Title II) and Supplemental Security Income benefits (known as SSI or Title XVI) to many of the most vulnerable members of society: the young, the elderly, and people with disabilities. In December 2006 almost 54 million people received almost $50.5 billion in benefits: under OASDI, to retired or disabled workers and spouses and children of retired, disabled, or deceased workers; under SSI, to disabled adults and children with limited income and resources and to people aged 65 and older with limited income and resources. Congress recognized from the inception of these programs that some beneficiaries would need assistance in managing their benefits, and SSA’s Representative Payee Program is designed to provide this assistance. A representative payee is an individual or organization that receives OASDI or SSI benefits for someone who cannot manage, or direct someone else to manage, his or her money. Representative payees are required to use the funds in the best interest of the beneficiaries. Currently, there are about 5.3 million representative payees serving more than 7 million beneficiaries. SSA tries to select as a representative payee someone who wishes to help the beneficiary, and someone who can see the beneficiary often and who knows his or her needs. For that reason, if a beneficiary is living with someone who helps him or her, SSA usually selects that person to be the
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse payee. In most cases, someone who knows the beneficiary asks SSA if she or he can be the payee. It may be a family member, a friend, a legal guardian, or a lawyer. Sometimes, however, social service agencies, nursing homes, medical, religious, or custodial institutions are selected as payees. SSA requires beneficiaries who have a state-court-appointed guardian to have a representative payee. Guardians have typically already undertaken similar fiduciary responsibilities and reporting obligations and are subject to liabilities for mismanagement of funds. Therefore, in such cases, they are usually selected as the representative payee. In some cases in which a payee cannot be found, the beneficiary becomes of age, or the beneficiary recovers from a temporary incapacity, the beneficiary is placed in direct pay status and in effect, becomes his or her own payee in the SSA administrative system. BACKGROUND On March 2, 2004, President Bush signed the Social Security Protection Act of 2004 (Public Law 108-203). Section 107 of the law requires the commissioner of Social Security to conduct a one-time survey to determine how payments to individual and organizational representative payees are being managed and used on behalf of the beneficiaries. The commissioner was directed to (1) assess the extent to which representative payees are not performing their duties in accordance with SSA standards for representative payee conduct, (2) learn whether the representative payment policies are practical and appropriate, (3) identify the types of representative payees that have the highest risk of misuse of benefits, and (4) find ways to reduce the risk of misuse of benefits and ways to better protect beneficiaries (see Boxes 1-1 and 1-2). The committee structured its tasks and this report to meet that charge. Although the committee’s charge is nested within the larger realm of an ideal payee and what beneficiaries need and thus human and behavioral issues, the committee was not constituted and did not attempt to explore issues beyond the specific charge from SSA. Explicitly, the committee’s charge did not include a broad assessment that might lead to recommendations that would require substantially new resources or fundamentally change the program. Rather, the committee’s charge was directed to how the program is managed and for consideration of improved systems. The legislative history of Section 107 (“Manager’s Amendment,” Congressional Record, December 9, 2003) indicates that the required survey shall assess the extent to which representative payees are failing to perform their duties as payees in accordance with SSA standards of payee conduct, including whether the funds are being used for the benefit of the beneficiary. It also indicates that, to the extent possible, the types of payees who have the highest risk of misuse of benefits should be identified, along with
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse BOX 1-1 Authorization for Study SEC. 107. SURVEY OF USE OF PAYMENTS BY REPRESENTATIVE PAYEES. (a) IN GENERAL.—Section 1110 of the Social Security Act (42 U.S.C. 1310) is amended by adding at the end the following: “(c)(1) In addition to the amount otherwise appropriated in any other law to carry out subsection (a) for fiscal year 2004, up to $8,500,000 is authorized and appropriated and shall be used by the Commissioner of Social Security under this subsection for purposes of conducting a statistically valid survey to determine how payments made to individuals, organizations, and State or local government agencies that are representative payees for benefits paid under title II or XVI are being managed and used on behalf of the beneficiaries for whom such benefits are paid. “(2) Not later than 18 months after the date of enactment of this subsection, the Commissioner of Social Security shall submit a report on the survey conducted in accordance with paragraph (1) to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.” BOX 1-2 Definition of Misuse “Misuse occurs in any case in which the representative payee receives payment under this title for the use and benefit of another person and converts such payment, or any part thereof, to a use other than for the use and benefit of such other person.” Social Security Protection Act, §1631(a)(2)(A)(iv). suggestions of ways to reduce those risks and better protect the beneficiaries. According to the Manager’s Amendment, the survey should focus on representative payees who are not subject to triennial onsite review or other random review under SSA policy or law. Therefore, the groups to be included in the mandated study are individual representative payees who serve one or more but fewer than 15 beneficiaries and non-fee-for-service organizational payees who serve fewer than 50 beneficiaries. THE COMMITTEE’S WORK In September 2004 the National Academies accepted the charge from SSA to undertake the mandated study. The National Academies formed
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse a volunteer, interdisciplinary committee of 11 members with expertise in survey methodology, program and process evaluation, SSA policies, and the experiences of disadvantaged people (see Appendix G for biographical sketches of committee members and staff). The committee held 20 meetings and phone conferences between April 2005 and April 2007 to examine existing reports and legislation relevant to the Representative Payee Program and to analyze SSA administrative records, deliberate, and write this report. As part of its work, the committee developed and, after a competitive process, awarded a contract to Westat to conduct a survey of representative payees and beneficiaries. The sample design selected 5,098 representative payees and paired 2,543 beneficiaries with their representative payees using a complex, multistage sampling plan. Readers of this report can see the extensive methodology in Appendix A, available online, including the questionnaires, in order to understand how the survey was approached and implemented. Committee members visited 13 field offices, a regional office, a data operation center, and a payment center. Seven of the field offices were located in central cities of large metropolitan areas, one office was in a suburban area, and five were urban offices serving primarily rural areas. The offices were in eight different states (Arizona, California, Illinois, Iowa, Kentucky, Maryland, New York, and Virginia) and the District of Columbia. Numerous hours were spent interviewing SSA staff during these visits to obtain information on their experiences and perspectives on the Representative Payee Program. As a result of the committee’s visits and analyses, the committee submitted two lists of questions to SSA: the questions and SSA’s responses are in Appendixes B and C. Committee members also looked in depth at the administrative record system of the SSA, including a review of the folders of known misuser cases (see Appendix D), an analysis of lump-sum payments1 to beneficiaries and a review of the annual accounting form and how it is processed (see Chapter 4), and a review of the interactive Representative Payee System (RPS) (see Chapter 6). To specifically study the issue of misuse, the committee worked with a forensic auditor and Westat to develop a reinterview process of a small number of select respondents from the original survey of representative payees. The committee hypothesized potential characteristics of misusers in selecting the participants for reinterview. This follow-on activity allowed the interviewers to probe specific issues about how representative payees managed the funds of beneficiaries (see also Chapter 5). 1 A lump-sum payment to a beneficiary can be several thousands of dollars. Such a payment may arise when benefits have been withheld pending review of a disability claim or when benefits have been withheld pending the appointment of a representative payee.
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse The committee used all the available sources of information (site visits, administrative data, and surveys) to develop, understand, and assess information. The committee did not give undue emphasis (recognizing the limitations and shortcomings of each source) to any one source of information. The committee found that all the sources of information added value in answering the charge from SSA. The rest of this chapter describes the Representative Payee Program, and Chapter 2 describes the target universe of representative payees and beneficiaries. The subsequent chapters then address the four key areas specified by the commissioner of SSA: Chapter 3 covers representative payee performance; Chapter 4 looks at the characteristics of misuse and misusers; Chapter 5 covers ways to reduce the risk of misuse of benefits and to better protect beneficiaries; and Chapter 6 evaluates SSA policies and procedures for the Representative Payee Program. The committee’s conclusions and recommendations are included in Chapters 3 through 6. As with any study of a program of this magnitude, the committee’s conclusions and recommendations should be understood in the context of some deficits in practical information, such as accurate and timely names and addresses of payees, the inherent missing or errant data in huge administrative files, and the qualitative nature of interviewing SSA staff. PROGRAM OVERVIEW The Social Security Act Amendments of 1939 (ch. 666, § 205(j), 53 Stat. 1360, 1371) gave broad authority to the SSA to appoint representative payees for those beneficiaries who were deemed incapable of managing or directing the management of their benefits. SSA’s current statutory authority for the Representative Payee Program is found at 42 U.S.C. §§ 405(j), 1007, & 1383(a)(2). Children under age 18 are assumed to be unable to manage their funds. Beneficiaries aged 18 or older are generally assumed to be able to manage their funds unless convincing evidence is provided to rebut this assumption. In determining whether an individual is unable to manage or direct the management of benefit payments, SSA considers evidence from medical, legal, and lay sources. Other than children, most beneficiaries with payees are those whose mental or physical conditions prevent them from acting on their own behalf and those persons adjudged incapable under state guardianship laws. The size of the Representative Payee Program has grown along with the expansion of SSA’s responsibilities. Originally, SSA benefits were primarily provided to eligible retirees and their families. When SSA began issuing disability benefits in 1956 and SSI payments in 1974, the demographics of its beneficiary population changed from retirees and their families to include
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse TABLE 1-1 Number of People Receiving OASDI, SSI, or Both, March 2007 (in thousands) Type of Beneficiary Total OASDI Only SSI Only Both OASDI/SSI All beneficiaries 54,167 46,880 4,727 2,529 Aged 65 or older 35,541 33,531 864 1,147 Disabled, under age 65a 11,446 6,170 3,864 1,412 Otherb 7,180 7,180 N/A N/A NOTES: Data are for the end of the specified month. Only beneficiaries in current-payment status are included. Due to rounding, numbers may not add to the total. aIncludes children receiving SSI on the basis of their own disability. bBeneficiaries who are neither aged nor disabled (for example, early retirees, young survivors). SOURCE: Data from Social Security Administration, Master Beneficiary Record, 100 percent data and Social Security Administration, Supplemental Security Record, 100 percent data. persons with disabilities, blind individuals, and the elderly with limited income and resources. In March 2007, SSA served over 54 million beneficiaries (Table 1-1) with over 7 million (Table 1-2) having representative payees. Some payees serve more than one beneficiary, some payees are not entered into the administrative database, and beneficiaries are constantly changing payees, so SSA does not have a current, accurate count of payees. In its December 2005 statistical report SSA’s Office of Policy estimated there are 5.3 million representative payees. For almost 64 percent of beneficiaries with a representative payee, their payee is a natural, adoptive, or stepparent (Table 1-2). TABLE 1-2 Number and Percent of Beneficiaries by Representative Payee Type (December 2005) Type of Representative Payee Number Percent Spouse 256,902 3.6 Parent 4,528,668 63.7 Adult child 300,737 4.2 Other relative 944,100 13.3 Institution 562,210 7.9 Agency/financial organization 250,694 3.5 Other 264,876 3.7 Total 7,108,187 100.0 SOURCE: Data from Social Security Administration Representative Payee Program staff.
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse Of those beneficiaries with representative payees, approximately 64 percent receive OASDI benefits only (payments for retired and disabled workers, their survivors and dependents), approximately 28 percent receive SSI only (persons with limited income who are disabled, blind, or elderly) and approximately 8 percent receive benefits from both programs (Table 1-3). Approximately 4.1 million beneficiaries who have a representative payee are minor children. Of those, about 75 percent receive OASDI ben- TABLE 1-3 Number and Percent of Beneficiaries by Representative Payee Type Receiving OASDI, SSI, or Both (December 2005) Payee Type Type of Benefit Number Percent Spouse OASDI only 197,500 76.9 SSI only 44,212 17.2 Both OASDI/SSI 15,190 5.9 Parent OASDI only 3,063,310 67.7 SSI only 1,228,745 27.1 Both OASDI/SSI 236,613 5.2 Adult child OASDI only 204,390 68.0 SSI only 63,451 21.1 Both OASDI/SSI 32,896 10.9 Other relative OASDI only 492,940 52.2 SSI only 335,780 35.6 Both OASDI/SSI 115,380 12.2 Institution OASDI only 358,620 63.8 SSI only 135,305 24.1 Both OASDI/SSI 68,285 12.1 Agency/financial organization OASDI only 105,680 42.2 SSI only 91,973 36.7 Both OASDI/SSI 53,041 21.2 Other OASDI only 114,410 43.2 SSI only 107,532 40.6 Both OASDI/SSI 42,934 16.2 Total OASDI only 4,536,850 63.8 SSI only 2,006,998 28.2 Both OASDI/SSI 564,339 7.9 SOURCE: Data from Social Security Administration Representative Payee Program staff.
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse TABLE 1-4 Number and Percent of People Under 18 with a Representative Payee Receiving OASDI, SSI, or Both (December 2005) Type of Benefit Number Percent OASDI only 3,050,570 74.7 SSI only 961,556 23.5 Both OASDI/SSI 74,095 1.8 Total 4,086,221 100.0 SOURCE: Data from Social Security Administration Representative Payee Program staff. efits only, about 24 percent receive SSI only, and about 2 percent receive concurrent benefits (Table 1-4). Selection of Representative Payees SSA tries to select as a representative payee someone who knows and wishes to help the beneficiary. Some of the factors SSA considers in representative payee selection are the following: familial or custodial relationship with the beneficiary; demonstration of concern for the beneficiary; legal authority to act on behalf of the beneficiary; and a favorable record of prior service as a representative payee (or lack of any unfavorable record such as suspicion of mismanagement of beneficiary funds). SSA also reviews whether the potential payee is a creditor of the beneficiary and whether the payee has a criminal history. If possible, SSA seeks the beneficiary’s approval of the selected payee. Evaluating the criteria for selecting a payee was not part of the charge to the committee. The committee observed in site visits that claims representatives have a very difficult task to choose a representative payee in applying criteria among blood relationships (especially in the case of minor children), the competency of a representative payee, the living arrangement of the beneficiary, or simply a very caring person. There is no one perfect criterion. In many cases, SSA does not have the luxury of choosing among potential representative payees and is very satisfied to find one, even a less than optimal, willing payee. The payee selection process is initiated by written application generated by family members, Disability Determination Services,2 the courts, or other concerned individuals who perceive the need for a payee or directly by SSA field staff (typically claims representatives) when the agency has 2 Most disability claims are initially processed through a network of local SSA field offices and state agencies (usually called Disability Determination Services or DDSs).
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse received information indicating such a need. The SSA investigates and decides whether to appoint a payee based on its regulations, 20 C.F.R. §§ 404.2001-.2065, 416.601-.732 (2006), and its Program Operations Manual System,3 (GN 00502.105, Citations: 20 C.F.R., Sections 404.2021, 416.621 and GN 00502.130). Individuals who serve as representative payees include the spouse, parent, stepparent, grandparent, adult child, and other relatives of the payee, friends, legal guardians, attorneys, and nonrelatives. Organizational payees may be various types of community-based organizations, institutions, government agencies, and financial organizations. Examples of organizational payees include Department of Veterans Affairs hospitals, state psychiatric institutions, foster homes, and community social service groups. Some organizations are set up to handle specific types of beneficiaries such as those beneficiaries with severe head injuries. Individual payees cannot collect fees, but an approved fee-for-service organization may collect a fee from the monthly SSA benefit payments if the organization meets certain conditions. To qualify as a fee-for-service payee, the organization must: be a state or local government agency, or be a community-based, nonprofit social service agency, bonded and licensed in the state in which it serves as a representative payee, and regularly provide representative payee services to at least five beneficiaries, and not be a creditor of the beneficiary. Fee-for-service organizations are subject to regular reviews by SSA. The fee is limited to not more than 10 percent of the monthly benefit or $33 whichever is lower. An organization may not collect a fee if the organization is receiving compensation from another source, such as court or guardianship fees. SSA requires beneficiaries who have a state-court-appointed lawyer, conservator, or guardian to also have a representative payee. In such cases, these officials, who may have already undertaken similar fiduciary responsibilities and reporting obligations and who are subject to liabilities for mismanagement of funds, are typically asked to serve as the payee. 3 SSA employees refer to the operations manual to administer the OASDI and SSI programs. (See https://s044a90.ssa.gov/apps10/poms.nsf/aboutpoms [June 2007].)
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse Duties of Representative Payees According to SSA regulations (20 C.F.R. §§ 404.2035 and 416.635), the charge to representative payees is to use the funds in the best interest of the beneficiaries; that is, to pay for the current and foreseeable needs of beneficiaries. The required duties of representative payees are to determine the beneficiary’s needs and use his or her payments to meet those needs; save any money left after meeting the beneficiary’s current needs in an interest bearing account or savings bonds for the beneficiary’s future needs; report to SSA any changes or events which could affect the beneficiary’s eligibility for benefits or payment amount (such as time in prison, earning of significant wages, etc.); keep records of all payments received and how they are spent and/ or saved; provide benefit information to social service agencies or medical facilities that serve the beneficiary; help the beneficiary obtain medical treatment when necessary; notify SSA of any changes in the payee’s circumstances that would affect his or her performance or continuing as payee; complete and submit required written reports accounting for the use of funds; and return to SSA any payments to which the beneficiary is not entitled (such as payments made while beneficiary was in prison, death of the beneficiary, etc.). Among the duties of a payee is the proper handling and accounting for lump-sum payments. Most lump sums are retroactive benefits, i.e., benefits accrued prior to an award. In the Representative Payee Program, lump sums might also accrue while payment is suspended for selection of a new payee. Lump sums are usually paid as a one-time payment if the amount combined with the monthly benefit is less than $4,000. If the combined sum is more than $4,000, the accumulated or conserved funds must be paid in installments. Lump sums can be large, especially if there is a delay in determining disability status. During the time period 2000 to 2004, the largest lump sum paid to any payee was $125,000. This amount was received by an organization with 29 beneficiaries. The largest payment to an individual payee was in the amount of $67,130. Since 1974, the SSI children’s program has provided monthly benefits for children with disabilities and blind under age 18. Children who receive SSI
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse benefits because of a disability may have lump-sum retroactive awards that go into the thousands of dollars. SSA has clear instructions on the proper way to deal with such amounts (20 C.F.R. § 416.625). The payments must be paid directly into a dedicated account in a financial institution (20 C.F.R. § 416.546). The account must be maintained separately from any other savings or checking account set up for the child. The payee may use the funds only for certain expenses, primarily those related to the child’s disability (such as medical treatment, education, job training, rehabilitation, special equipment, or house modifications). The payee must be able to explain how the item or the service benefits the child and must keep records and receipts of all deposits to and expenditures from dedicated accounts. Monitoring and Support of Representative Payees Given that it is not feasible to determine directly from all beneficiaries whether their representative payees are acting in their best interests, SSA has developed policies that focus on selecting individuals who seem likely to be able to meet the program goals and policies designed to monitor the ongoing performance of the representative payees. All payee applicants are supposed to be interviewed face to face by SSA field office staff, although this does not always occur, and some organizations are exempt from the face-to-face requirement. Whether the interview is in person or by telephone, the applicant’s identity is checked and other information gathered. Only during the payee application process is there any attempt to establish an understanding of the responsibilities of the payeeship and to evaluate if the payee is capable of properly executing them. SSA really does not know, for example, if a prospective payee is even capable of managing his or her own finances. Research has shown there are potential problems in the selection process (Elbogen et al., 2005a, 2005b). For example, research on beneficiaries with psychiatric disabilities has shown that payeeship, if misunderstood or misapplied, can be used coercively, foster dependency, and lead to conflict and even violence. According to the survey and site visits, after a payee starts managing the Social Security funds of a beneficiary, there is little in the way of continuing, proactive support by SSA for the payee. Most payees have very little, if any, subsequent contact with SSA about their duties and responsibilities. There is no refresher training or follow-up meeting to assess payee behavior, quality of performance, or answer questions. A brochure that reminds the payee of their duties is included with the annual accounting form. SSA does maintain a website with information about payee duties. But in general, once a payee starts his/her service, there is no support or interaction between SSA and the payee unless the payee initiates the contact.
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse The current ongoing monitoring program requires all payees to file a two-page annual accounting report that is mailed to them. SSA tries to use the report to monitor how the payee spent or saved the benefits and to identify situations where the beneficiary may no longer need a payee or where the payee is no longer suitable. Approximately one-twelfth of the representative payees are mailed an accounting form each month from SSA’s Wilkes-Barre, PA, Data Operations Center. There are three main questions regarding how funds were saved or spent on food, housing, education, clothing, etc. during the accounting period. On the form SSA tells the payee the total funds received. Clerks manually review each form and decide if follow-up is necessary. If the amounts given for the three questions come close to adding up to the stated total, the report is deemed acceptable. In some cases, after a phone call from SSA staff in the processing center to the payee has not resolved apparent issues, the form is sent to a local office for follow-up. If the payee does not respond in a timely manner to the local office, beneficiary checks can be held until the payee appears at the local office to clear up any deficiencies. In addition to the annual accounting form, certain payees are also subject to triennial site reviews which are conducted through a face-to-face meeting. These reviews are conducted on “volume payees” (organizational payees serving 50 or more beneficiaries or individuals who are serving 15 or more beneficiaries), all fee-for-service payees, and state mental institution payees (none of these types of payees are part of this current study). SSA also conducts site reviews in response to events that raise concerns about a particular payee’s suitability or performance of duties. Representative Payee System A critical tool in the support and monitoring of representative payees is the RPS. The RPS is a database system used to enter and maintain information about representative payees and the beneficiaries they serve. The RPS is mandated by statute (42 U.S.C. § 405(j)(2)(B)(ii)) that requires SSA to establish and maintain a centralized file, readily retrievable by SSA offices. The RPS contains the names of almost all payees, their beneficiaries, type of benefit, dates of service, contact information, and information such as whether their status has been revoked by reason of misuse of funds or whether they did not serve their beneficiary according to SSA rules. This is a critical system in administering the Representative Payee Program, and is heavily used by SSA offices to document payee relationships and evaluate potential payees for service. However, the RPS is not easy or efficient to use for statistical analysis purposes.
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Improving the Social Security Representative Payee Program: Serving Beneﬁciaries and Minimizing Misuse CONCLUSION The Representative Payee Program is an important program that by its sheer size and shifting needs is difficult to administer, support, and monitor. As with many programs of this magnitude, SSA is limited by resources in its efforts to select, educate, support, and monitor representative payees. Representative payee policies and practices are oriented towards careful selection and monitoring of representative payees as effective ways to assure that the best interests of the beneficiaries are being served. In a program that involves over 5.3 million representative payees, more than 7 million beneficiaries, and almost $4 billion in monthly benefit payments, the selection and monitoring of the representative payees is a daunting task. According to SSA, for some beneficiaries and in some geographic areas, it is difficult to even find individuals or organizations willing to serve.
Representative terms from entire chapter: