2
Representative Payees and Their Beneficiaries

The committee’s survey of representative payees and beneficiaries provided information on the populations that are the focus of this report. The first section of this chapter describes the survey selection criteria. The second section reports on the characteristics associated with payeeship, including time as a payee and beneficiary volume, demographic characteristics, educational attainment, measures of financial situation (income and source of income), and other characteristics that might be associated with payee performance, such as stability in community (frequency of move) and criminal background. The third section looks at some of the characteristics of beneficiaries. (For details of the survey of payees and beneficiaries, see Appendix A.)

SURVEY SELECTION CRITERIA

As described in Chapter 1, the population for the committee’s survey was individual representative payees serving fewer than 15 beneficiaries and non-fee-for-service organizational payees serving fewer than 50 beneficiaries. Our survey covered all such payees serving on January 1, 2006. To make the survey manageable and meaningful, we restricted our population of payees to those who satisfied all of the following conditions: (1) resided in the 48 contiguous states, (2) had one or more current beneficiaries, (3) had an address with a valid state and county code on the administrative



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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse 2 Representative Payees and Their Beneficiaries The committee’s survey of representative payees and beneficiaries provided information on the populations that are the focus of this report. The first section of this chapter describes the survey selection criteria. The second section reports on the characteristics associated with payeeship, including time as a payee and beneficiary volume, demographic characteristics, educational attainment, measures of financial situation (income and source of income), and other characteristics that might be associated with payee performance, such as stability in community (frequency of move) and criminal background. The third section looks at some of the characteristics of beneficiaries. (For details of the survey of payees and beneficiaries, see Appendix A.) SURVEY SELECTION CRITERIA As described in Chapter 1, the population for the committee’s survey was individual representative payees serving fewer than 15 beneficiaries and non-fee-for-service organizational payees serving fewer than 50 beneficiaries. Our survey covered all such payees serving on January 1, 2006. To make the survey manageable and meaningful, we restricted our population of payees to those who satisfied all of the following conditions: (1) resided in the 48 contiguous states, (2) had one or more current beneficiaries, (3) had an address with a valid state and county code on the administrative

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse records, and (4) managed funds of more than $50 each month for one or more beneficiaries. The population of beneficiaries was restricted to all persons who on January 1, 2006, were (1) managed by a survey eligible payee, (2) age 14 and older, and (3) received more than $50 in benefits each month. If a payee served more than one beneficiary, a beneficiary was randomly selected to form a dyad with the payee. This strategy allowed questions to be asked of a payee in relation to a specific beneficiary. Because over 4 million of the 7 million beneficiaries who need payees are less than 18 years of age, a strictly random sample would contain a very large number of payees whose beneficiaries are children. Thus, the committee identified specific domains of study to ensure that the survey sample would include a wide variety of other types of payees beyond parents of beneficiary children. With these specifications, the committee commissioned Westat to select a multistage sample of 5,098 payees and attach a beneficiary to 2,543 of those payees. Table 2-1 lists the domains we selected and the counts of payees and beneficiaries included in the study. The domains represent about 3.5 million payees serving 4.6 million beneficiaries of which 2.8 million are age 14 or older. If a beneficiary who was selected to be interviewed was deemed to be incapable of participating in the survey, a proxy was used.1 The responses to survey questions collected from proxies were compared to the responses obtained from beneficiaries. The review of the data revealed that differences between the two were either not statistically significant or differences were no greater than three percentage points. Thus, a breakdown of these small differences in the survey results is not shown. CHARACTERISTICS OF REPRESENTATIVE PAYEES Over time, an individual payee rarely served for more than a few beneficiaries. An estimated 65.8 percent (1.2)2 of representative payees had served only one beneficiary in their lifetime, 30.3 percent (1.1) had served two or three beneficiaries, and 3.9 percent (0.5) had served four or more 1 A proxy is a capable adult who is close enough to the beneficiary’s daily life that he or she can complete an interview on the beneficiary’s behalf. In this survey, neither the representative payee nor the spouse of the payee could serve as a beneficiary’s proxy. If the beneficiary lived in group quarters, a caregiver, caseworker, or nurse was preferred to a family member. 2 For all estimates in this chapter, the number in parentheses following the estimate is the standard error of the estimate. As a general rule, users can approximate a 95-percent confidence interval for the estimate by adding and subtracting two standard errors to the estimate. When two estimates have confidence intervals that overlap, the two estimates are not statistically different at the .05 level of significance.

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse TABLE 2-1 Domains and Number of Representative Payees and Beneficiary Cases   Number Repesentative Payees by Type of Beneficiaries Unweighted Weighted Payees Beneficiariesa Payees Beneficiaries With child beneficiaries (14-17) 884 438 134,583 127,749 With beneficiaries aged 18-64 2,601 1,446 1,407,417 1,637,553 With beneficiaries aged 65+ 1,032 578 332,900 403,593 With unrelated beneficiaries 1,465 519 2,502,119 1,381,854 With only one unrelated beneficiary 858 451 28,959 63,575 Who are either an adult child or another relative of the beneficiary 1,390 716 1,083,520 1,068,158 Who are a parent of the beneficiary 1,501 701 2,969,738 2,047,260 Who live with the beneficiary or unknown living arrangement 3,622 1,775 4,000,197 3,086,899 Who do not live with beneficiary 1,011 531 216,603 219,843 With a beneficiary who receives SSI 2,485 786 1,622,642 1,330,480 With a beneficiary who receives OASDI 3,133 1,618 2,283,017 1,963,247 Who are individuals 4,633 2,306 4,216,800 3,306,742 Who are organizations 465 237 25,636 116,258 NOTE: The domains include 707,573 representative payees and 584,386 beneficiaries whom the committee excluded from the survey because (1) their monthly benefit was less than $50, (2) benefit issuance date was missing, (3) there was a disagreement in files about beneficiary name, (4) beneficiary had two payees, or (5) field-determined ineligibility; see Appendix A for details. aAged 14 or older. SOURCE: Data from the national survey of representative payees and beneficiaries conducted for the National Academies Committee on Social Security Representative Payees (2006).

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse beneficiaries. From the other perspective, most beneficiaries, 81.1 percent (1.2) had had only one payee in their lifetimes, 13.4 percent (1.3) had two, and 4.7 percent (0.7) had had three or more. As expected, organizational payees had a higher volume. An estimated 11.1 percent (4.0) of the organizations in our sample had served only one beneficiary, 5.7 percent (1.8) had served two or three, and 83.2 percent (4.4) had served more than four. It should be kept in mind that an organization may also have had other clients in their care for whom they did not serve as a representative payee. The average length of service to all current and prior beneficiaries for the representative payees was between 4 and 5 years, but a few payees had been involved with the program for close to 40 years. Table 2-2 shows the length of time as payee by type of payee. In the sampled universe, organizations had served longer than individuals. An estimated 31.2 percent (1.6) of individual payees had served for more than 10 years compared with 53.2 percent (4.2) of organizations. In the survey, close to 50 percent of the payees managed only Old Age, Survivors, and Disability Insurance (OASDI) benefits, 45 percent (1.4) managed only Supplemental Security Income (SSI) benefits, and the rest managed both OASDI and SSI monthly benefits. The committee was interested in other payee characteristics, which were included in the survey. One such characteristic was the fraction of representative payees who had access to the Internet. It is important to determine whether the Social Security Administration (SSA) might be able to rely on the Internet for monitoring payee performance or to provide additional tools to assist representative payees. An estimated 61.3 percent (1.4) of representative payees had access to the Internet; of that group, an estimated 84 percent (1.1) had access to the Internet at home, 35.9 percent (2.1) at work, 50.2 percent (2.6) at the library, and 19.4 percent (1.5) somewhere else. TABLE 2-2 Length of Time as a Representative Payee by Type of Payee Time Individual Organization   Percent Percent Less than 2 years 9.2 (1.0) 6.8 (2.2) 2 to 5 years 29.2 (1.8) 20.5 (3.4) 5 to 10 years 30.4 (1.4) 19.6 (3.7) 10 or more years 31.2 (1.6) 53.2 (4.2) Total 100.0   100.0   NOTE: Numbers in parentheses are the standard errors of the estimates. SOURCE: Data from the national survey of representative payees and beneficiaries conducted for the National Academies Committee on Social Security Representative Payees (2006).

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse TABLE 2-3 Representative Payee and Beneficiary Race and Ethnicity Race and Ethnicitya Payees Beneficiaries Hispanic 13.4 (2.5) 16.2 (2.8) White 67.7 (3.6) 66.7 (4.2) Black or African American 25.3 (3.7) 27.0 (4.3) American Indian or Alaska Native 8.1 (1.1) 9.5 (1.0) Asian 2.7 (0.5) 2.5 (0.5) Native Hawaiian or Pacific Islander 0.5 (0.2) 1.2 (0.4) NOTE: Numbers in parentheses are the standard errors of the estimates. aA respondent can be in more than one race category. SOURCE: Data from the national survey of representative payees and beneficiaries conducted for the National Academies Committee on Social Security Representative Payees (2006). The payees in the survey were most likely to be under age 50 and female. About 13 percent (2.5) were of Hispanic or Latino origin, which is similar to the national population. About 68 percent (3.6) identified themselves as white, 25 percent (3.7) as black or African American, 8 percent (1.1) as American Indian or Alaska Native, 2.7 percent (0.5) as Asian, and 0.5 percent (0.2) as Native Hawaiian or other Pacific Islander (see Table 2-3). For comparison, nationally, in 2003, for people reporting one race alone, 78 percent identified themselves as white, 12 percent as black or African American, 1 percent as American Indian and Alaska Native; 4 percent as Asian; less than 0.5 percent as Native Hawaiian or other Pacific Islander, and 5 percent as “some other race” (U.S. Census Bureau, 2003). The educational level of representative payees is somewhat lower than the national average with 76.6 percent having graduated from high school and only 13.3 percent having a college degree. For comparison, in 2003, nationally, 84 percent of people 25 years and older had at least graduated from high school and 27 percent had a bachelor’s degree or higher (U.S. Census Bureau, 2003). The survey asked several questions about characteristics that are important in selecting a representative payee or that may be related to the risk that a representative payee will misuse beneficiary funds. These questions included the representative payee’s income, sources of income, frequency of residential changes, and criminal record. The representative payees reported personal incomes significantly lower than the national average. More than 25 percent (1.8) of the payees reported annual 2005 incomes of less than $5,000, and close to 33 percent reported between $5,000 and $15,000. Nationwide in 2003, only 8 percent of the population reported individual incomes below $5,000, and only 17 percent reported between $5,000 and $15,000 (U.S. Census Bureau, 2004). Simi-

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse larly, of representative payees, 33 percent had incomes between $15,000 and $50,000, compared with 46 percent in the nation. In the survey, very few payees reported incomes of more than $50,000, compared with 27 percent in the nation. (It should be noted that the reporting of individual incomes may not reflect potentially much larger household incomes.) For income, 9 percent (0.7) of representatives were self-employed, and almost 50 percent (2.2) said they received income from employers. Interestingly, close to 50 percent received their own OASDI benefits, SSI benefits, benefits from the U.S. Department of Veterans Affairs, or a pension. And more than 17 percent received income from the Temporary Assistance to Needy Families (TANF) Program or some other assistance program. An estimated 28.4 percent (1.5) of payees had moved in the previous 2 years, with 19.6 percent (1.1) moving once and 6.7 percent (0.6) moving twice. In comparison, nationally in 2003, about 15 percent of the population reported moving in the past year (U.S. Census Bureau, 2004). Since the survey asked about the payees’ moving in the past 2 years and the Census Bureau data are for 1 year, it is difficult to assess whether the mobility of payees differs from that of the general population. An estimated 14.9 percent (2.3) of payees in the survey used a mailing address that was different from their home address, suggesting that they either picked up mail at a post office box or had a business address. Some payees had criminal backgrounds, but in that regard they do not appear to be different from the national population. Nationally in 2001, an estimated 2.7 percent of adults in the United States had served time in prison (Bureau of Justice Statistics, 2004). In the survey, an estimated 3.3 percent (0.5) of the payees reported that they had been convicted of a felony in the past, and 2.4 percent (0.4) had served time in prison. A small fraction of payees, 1.1 percent (0.3), had been treated in the past 5 years for alcohol or drug problems. A few, 0.3 percent (0.1), said they felt they needed treatment, and a small fraction, 0.2 percent (0.1), reported they were told they needed treatment. CHARACTERISTICS OF BENEFICIARIES Many representative payees serve because a beneficiary is a minor or incapacitated in some way. In the survey, about 35 percent of the beneficiaries were under the age of 18, about 53 percent were between 18 and 64, and about 12 percent were 65 years or older. In contrast with the payees, who were mostly female, the beneficiaries were more likely to be male (53.9 percent). The beneficiaries were similar to the payees with regard to race and ethnicity, but different from the national distribution. The beneficiaries were predominantly white, 66.7 percent (4.2). About 27 percent (4.2) identified

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse themselves as black or African American, 9.5 percent (1.0) as American Indian or Alaska Native, 2.5 percent (0.5) as Asian, and 1.2 percent (0.4) as Native Hawaiian or other Pacific Islander. When asked about Hispanic origin, 16.2 percent (2.8) identified themselves as being of Hispanic or Latino descent (Table 2-3). The survey asked beneficiaries what language they used to talk with their payees. About 91.6 percent (1.2) said English, 5.9 percent (1.1) said Spanish, and 2.6 percent (0.6) said some other language. The beneficiaries reported that they communicated well in the chosen language. Severe impairment prevented schooling for 3.4 percent (0.7) of the beneficiaries and, as expected, the overall educational attainment level of the beneficiaries was different from that of the payees. Most beneficiaries were still in school or had completed less than high school, 62.2 percent (2.2).3 About 25 percent (2.0) had completed high school, and 2.3 percent (0.4) had a vocational or trade school education. Some beneficiaries had higher education: close to 5 percent (0.7) had some college or an associate degree, 1.8 percent (0.4) had a 4-year college degree, and a few, 0.6 percent (0.2), reported graduate school as the highest level of completed education. Of beneficiaries who reported that they are still in school or participating in a training program, around 10 percent (2.0) said they were in a special program addressing activities of daily living. Of those for whom compensated work was possible, 14.5 percent (2.3) said they had worked full time (more than 35 hours per week) in the past 30 days. During the past 5 years 4.6 percent (1.0) of beneficiaries had received treatment for alcohol or other drug problems. More than 2 percent (0.7) said that during the past 5 years they had been told that they needed treatment for alcohol or other drug problems, but none of the beneficiaries actually felt they needed treatment according to the survey. SSA prefers a representative payee to be closely linked with the beneficiary. In the survey, almost all the beneficiaries knew their payees before they became the payees and more than 90 percent were related (see Table 2-4). Almost three-quarters of the beneficiaries lived with their representative payees, 72.2 percent (1.5). More than 50 percent lived in their own apartments or homes, and more than 25 percent lived in other people’s apartments or homes. The rest lived in various kinds of group living situations (see Table 2-5). An estimated 83.1 percent (1.4) had been in their current living arrangement for more than 12 months, 7.4 percent (1.0) for 6-12 months, and 9.6 percent (1.0) for less than 6 months. 3 The response category to the educational attainment question lumped “still in school” with completed schooling. A cross-tabulation of the educational attainment variable by beneficiary age shows that in our sample, 44.5 percent of the 62.2 percent are 18 or older.

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Improving the Social Security Representative Payee Program: Serving Beneficiaries and Minimizing Misuse TABLE 2-4 Beneficiary Relationship to the Payee Representative Payee Percent Parent 61.2 (0.5) Other relative 22.6 (0.7) Adult child 8.3 (0.7) Nonrelative 5.2 (0.1) Organization 2.7 (0.1) Total 100.0   NOTE: Numbers in parentheses are the standard errors of the estimates. SOURCE: Data from the national survey of representative payees and beneficiaries conducted for the National Academies Committee on Social Security Representative Payees (2006). TABLE 2-5 Beneficiary Residence Usual Place of Residencea Percent Own apartment or home 61.9 (2.4) Someone else’s apartment or home 28.1 (2.1) Group home 2.5 (0.3) Residence for senior citizens 1.7 (0.3) Nursing home 4.6 (0.4) Long-term care hospital or related institution 0.5 (0.2) Facility for persons with mental retardation or physical disability 0.4 (0.2) Somewhere else 0.3 (0.1) Total 100.0   NOTE: Numbers in parentheses are the standard errors of the estimates. aInformation on residence is from the beneficiaries. SOURCE: Data from the national survey of representative payees and beneficiaries conducted for the National Academies Committee on Social Security Representative Payees (2006).