Representative Payment Policies Regulation

§ 404.2011

20 CFR Ch. III (4–1–06 Edition)

representative payee. However, in certain situations, we will make direct
payments to a beneficiary under age 18
who shows the ability to manage the
benefits. For example, we make direct
payments to a beneficiary under age 18
if the beneficiary is—
(1) Receiving disability insurance
benefits on his or her own Social Security earnings record; or
(2) Serving in the military services;
or
(3) Living alone and supporting himself or herself; or
(4) A parent and files for himself or
herself and/or his or her child and he or
she has experience in handling his or
her own finances; or
(5) Capable of using the benefits to
provide for his or her current needs and
no qualified payee is available; or
(6) Within 7 months of attaining age
18 and is initially filing an application
for benefits.

jcorcoran on PROD1PC62 with CFR

[47 FR 30472, July 14, 1982, as amended at 54
FR 35483, Aug. 28, 1989]

§ 404.2011 What happens to your
monthly benefits while we are finding a suitable representative payee
for you?
(a) We may pay you directly. We will
pay current monthly benefits directly
to you while finding a suitable representative payee unless we determine
that paying you directly would cause
substantial harm to you. We determine
substantial harm as follows:
(1) If you are receiving disability payments and we have determined that
you have a drug addiction or alcoholism condition, or you are legally incompetent, or you are under age 15, we
will presume that substantial harm exists. However, we will allow you to
rebut this presumption by presenting
evidence that direct payment would
not cause you substantial harm.
(2) If you do not fit any of these categories, we make findings of substantial harm on a case-by-case basis. We
consider all matters that may affect
your ability to manage your benefits in
your own best interest. We decide that
substantial harm exists if both of the
following conditions exist:
(i) Directly receiving benefits can be
expected to cause you serious physical
or mental injury.

(ii) The possible effect of the injury
would outweigh the effect of having no
income to meet your basic needs.
(b) We may delay or suspend your payments. If we find that direct payment
will cause substantial harm to you, we
may delay (in the case of initial entitlement to benefits) or suspend (in the
case of existing entitlement to benefits) payments for as long as one month
while we try to find a suitable representative payee for you. If we do not
find a payee within one month, we will
pay you directly. If you are receiving
disability payments and we have determined that you have a drug addiction
and alcoholism condition, or you are
legally incompetent, or you are under
age 15, we will withhold payment until
a representative payee is appointed
even if it takes longer than one month.
We will, however, as noted in paragraph (a)(1) of this section, allow you
to present evidence to rebut the presumption that direct payment would
cause you substantial harm. See
§ 404.2001(b)(3) for our policy on suspending benefits if you are currently
receiving benefits directly.
Example 1: Substantial Harm Exists. We are
unable to find a representative payee for Mr.
X, a 67 year old retirement beneficiary who
is an alcoholic. Based on contacts with the
doctor and beneficiary, we determine that
Mr. X was hospitalized recently for his
drinking. Paying him directly will cause serious injury, so we may delay payment for as
long as one month based on substantial harm
while we locate a suitable representative
payee.
Example 2: Substantial Harm Does Not Exist.
We approve a claim for Mr. Y, a title II
claimant who suffers from a combination of
mental impairments but who is not legally
incompetent. We determine that Mr. Y needs
assistance in managing his benefits, but we
have not found a representative payee. Although we believe that Mr. Y may not use
the money wisely, there is no indication that
receiving funds directly would cause him
substantial harm (i.e., serious physical or
mental injury). We must pay current benefits directly to Mr. Y while we locate a suitable representative payee.

(c) How we pay delayed or suspended
benefits. Payment of benefits, which
were delayed or suspended pending appointment of a representative payee,

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Social Security Administration

§ 404.2021

can be made to you or your representative payee as a single sum or in installments when we determine that installments are in your best interest.
[69 FR 60232, Oct. 7, 2004]

jcorcoran on PROD1PC62 with CFR

§ 404.2015 Information considered in
determining whether to make representative payments.
In determining whether to make representative payment we consider the
following information:
(a) Court determinations. If we learn
that a beneficiary has been found to be
legally incompetent, a certified copy of
the court’s determination will be the
basis of our determination to make
representative payment.
(b) Medical evidence. When available,
we will use medical evidence to determine if a beneficiary is capable of managing or directing the management of
benefit payments. For example, a
statement by a physician or other medical professional based upon his or her
recent examination of the beneficiary
and his or her knowledge of the beneficiary’s present condition will be used
in our determination, if it includes information concerning the nature of the
beneficiary’s illness, the beneficiary’s
chances for recovery and the opinion of
the physician or other medical professional as to whether the beneficiary is
able to manage or direct the management of benefit payments.
(c) Other evidence. We will also consider any statements of relatives,
friends and other people in a position
to know and observe the beneficiary,
which contain information helpful to
us in deciding whether the beneficiary
is able to manage or direct the management of benefit payments.
§ 404.2020 Information considered in
selecting a representative payee.
In selecting a payee we try to select
the person, agency, organization or institution that will best serve the interest of the beneficiary. In making our
selection we consider—
(a) The relationship of the person to
the beneficiary;
(b) The amount of interest that the
person shows in the beneficiary;
(c) Any legal authority the person,
agency, organization or institution has
to act on behalf of the beneficiary;

(d) Whether the potential payee has
custody of the beneficiary; and
(e) Whether the potential payee is in
a position to know of and look after
the needs of the beneficiary.
§ 404.2021 What is our order of preference in selecting a representative
payee for you?
As a guide in selecting a representative payee, categories of preferred payees have been established. These preferences are flexible. Our primary concern is to select the payee who will
best serve the beneficiary’s interest.
The preferences are:
(a) For beneficiaries 18 years old or
older (except those described in paragraph (b) of this section), our preference is—
(1) A legal guardian, spouse (or other
relative) who has custody of the beneficiary or who demonstrates strong
concern for the personal welfare of the
beneficiary;
(2) A friend who has custody of the
beneficiary or demonstrates strong
concern for the personal welfare of the
beneficiary;
(3) A public or nonprofit agency or
institution having custody of the beneficiary;
(4) A private institution operated for
profit and licensed under State law,
which has custody of the beneficiary;
and
(5) Persons other than above who are
qualified to carry out the responsibilities of a payee and who are able and
willing to serve as a payee for a beneficiary; e.g., members of community
groups or organizations who volunteer
to serve as payee for a beneficiary.
(b) For individuals who are disabled
and who have a drug addiction or alcoholism condition our preference is—
(1) A community-based nonprofit social service agency which is licensed by
the State, or bonded;
(2) A Federal, State, or local government agency whose mission is to carry
out income maintenance, social service, or health care-related activities;
(3) A State or local government agency with fiduciary responsibilities;
(4) A designee of an agency (other
than a Federal agency) referred to in
paragraphs (b)(1), (2), and (3) of this
section, if appropriate; or

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