60224 Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 

SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404, 408 and 416 

[Regulation Nos. 4, 8, and 16] 

RIN 0960–AF83 

Representative Payment Under Titles 

II, VIII and XVI of the Social Security 

Act

AGENCY: Social Security Administration 

(SSA).

ACTION: Final rules.

SUMMARY: We are revising our 

regulations that explain the procedures 

we follow in determining the need for 

a representative payee, the procedures 

we follow in selecting a representative 

payee, the responsibilities of a 

representative payee, and restitution of 

misused benefits under titles II, VIII and 

XVI of the Social Security Act (the Act). 

This regulation codifies SSA’s 

representative payee policy based on 

statutory changes made during 1990–

1999 and includes one provision 

enacted in 2004. Part 408 sets forth our 

rules applicable to claims for special 

veteran’s benefits (SVB) under title VIII 

of the Act. We began making payments 

under the SVB program in May 2000. 

We are adding a new subpart F 

(Representative Payment) to part 408. 

The changes to the representative 

payee provisions of the regulations 

reflect several statutory changes that 

provide protection for beneficiaries who 

need representative payees. These 

changes include representative payment 

procedures for investigating payee 

applicants, identifying unsuitable 

applicants, making direct payment in 

some circumstances, providing advance 

notice of our determination to make 

representative payment, and providing 

affected beneficiaries with the 

opportunity to appeal our 

determinations. Also included are 

procedures for making restitution of 

benefits where a payee has misused a 

beneficiary’s payments and 

representative payee policies and 

procedures for the title VIII program.

DATES: These rules are effective 

November 8, 2004.

FOR FURTHER INFORMATION CONTACT:

Regarding this Federal Register

document—Robert Augustine, Social 

Insurance Specialist, Office of 

Regulations, Social Security 

Administration, 6401 Security 

Boulevard, Baltimore, MD 21235–6401, 

(410) 965–0020 or TTY (410) 966–5609; 

regarding eligibility or filing for 

benefits—our national toll-free number, 

1–800–772–1213 or TTY 1–800–325–

0778 or visit our Internet Web site, 

Social Security Online at http://

www.socialsecurity.gov. 

Electronic Version 

The electronic file of this document is 

available on the date of publication in 

the Federal Register on the Internet site 

for the Government Printing Office, 

http://www.gpoaccess.gov/fr/

index.html. It is also available on the 

Internet site for SSA (i.e., Social 

Security Online) at http://

policy.ssa.gov/pnpublic.nsf/LawRegs.

SUPPLEMENTARY INFORMATION: 

Background 

Subpart U of part 404 and subpart F 

of part 416 of our regulations explain 

the principles and procedures that we 

follow in determining whether to make 

representative payment and in selecting 

a representative payee under the title II 

and title XVI programs. These subparts 

also describe the responsibilities of a 

representative payee regarding the use 

of benefits the payee receives on behalf 

of the beneficiary. Under the authority 

provided in sections 205(j) and 

1631(a)(2) of the Act and these 

regulations, we select a representative 

payee for a person receiving Social 

Security benefits under title II or 

supplemental security income (SSI) 

benefits under title XVI of the Act if we 

believe that representative payment 

rather than direct payment of benefits is 

in the best interest of that person. 

In selecting a representative payee, we 

choose the person, agency, or 

organization that we believe will best 

serve the interest of a beneficiary. Any 

person or organization chosen as a 

representative payee must use benefits 

and accept all payee responsibilities as 

required under the Act and our 

regulations. 

A. Changes Required by Public Law 

101–508 

Sections 5105(a)(1) and (2), and (c) of 

Public Law 101–508, the Omnibus 

Budget Reconciliation Act of 1990 

(OBRA 90) enacted November 5, 1990, 

amended sections 205(j) and 1631(a)(2) 

of the Act. These sections of OBRA 90 

made numerous modifications and 

additions to the representative payee 

provisions of the Act and were intended 

to provide additional safeguards and 

protection for beneficiaries who need 

representative payees. These 

modifications and additions include: 

• Investigating representative payee 

applicants; 

• Identifying unsuitable 

representative payee applicants; 

• Making direct payment to some 

beneficiaries while we try to find a 

representative payee; 

• Allowing a delay or suspension of 

direct payment for one month (or longer 

under certain exceptions) when 

searching for a representative payee 

where direct payment would cause 

substantial harm to the beneficiary; 

• Providing advance notice to the 

beneficiary of determinations to make 

representative payment and selections 

of representative payees;

• Providing beneficiaries with the 

opportunity to appeal our determination 

to make representative payment or to 

select a particular representative payee; 

• Making restitution (in some 

instances) to beneficiaries of benefits 

misused by representative payees; and 

• Making a good faith effort in those 

instances to obtain restitution from 

terminated representative payees who 

have misused benefits. 

The restitution provision of section 

5105(c) of OBRA 90, amending sections 

205(j) and 1631(a)(2) of the Act, was 

effective November 5, 1990—the date 

OBRA 90 was enacted. These restitution 

provisions were later amended by 

Public Law 108–203, which was enacted 

March 2, 2004. That amendment is 

effective for determinations of misuse 

made on or after January 1, 1995. The 

provision in Public Law 108–203 

regarding misuse is discussed below. 

The other OBRA 90 representative 

payee provisions addressed by these 

rules were effective with respect to 

determinations regarding payment of 

benefits to representative payees made 

on or after July 1, 1991. 

As noted above, Public Law 108–203 

was enacted March 2, 2004, several 

months after we published the proposed 

rules for representative payment under 

title II, VIII, and XVI of the Act. The 

misuse provision in Public Law 108–

203 is effective immediately and 

requires SSA to provide restitution of 

misused benefits when the 

representative payee is an organization 

or an individual payee serving 15 or 

more beneficiaries. Prior to the 

enactment of Public Law 108–203, SSA 

would repay benefits only when we 

determined SSA was negligent in 

investigating or monitoring the payee 

and that negligence contributed to or 

failed to prevent the misuse. SSA does 

not have discretion in implementing the 

new restitution requirement, as the 

statutory obligation is very specific. 

Accordingly, we are including this 

restitution provision in these final rules, 

rather than including it in a NPRM with 

other Pub. L. 108–203 provisions that 

are subject to comment and a delayed 

effective date. 

Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 60225

B. Changes Required by Public Law 103–

296 

Section 201 of Public Law 103–296, 

the Social Security Independence and 

Program Improvements Act of 1994 

(SSIPIA 94), enacted August 15, 1994: 

• Extends the authority for qualified 

organizations to collect fees for 

representative payee services beyond 

the July 1, 1994, sunset date; 

• Included State or local government 

agencies as qualified organizations for 

purposes of collecting fees; and 

• Required an annual adjustment 

(beginning with December 1996) to the 

limit on the fee collected by qualified 

organizations for providing payee 

services. 

C. Changes Required by Public Law 104–

121 

Section 105 of Public Law 104–121, 

the Contract With America 

Advancement Act of 1996, enacted 

March 29, 1996, eliminated disability 

benefits based on drug addiction and/or 

alcoholism (DAA). However, 

individuals are considered to have a 

DAA condition when there is medical 

evidence of DAA, but the DAA is not 

material to the disability determination. 

Under Public Law 104–121, individuals 

with a DAA condition (as determined by 

the Commissioner), who are eligible for 

Social Security or SSI benefits based on 

a disability other than DAA and who are 

also found to be incapable of managing 

their own benefits, must have a 

representative payee if the 

Commissioner determines that 

representative payment would serve the 

interests of the individual. The statute 

also provided an exception to the onemonth limit on suspension of benefit 

payment while we are looking for a 

representative payee for an individual 

with a DAA condition. Appointment of 

organizational representative payees for 

incapable individuals with a DAA 

condition is preferred; however, in 

certain cases we may select a family 

member. 

D. Changes Required by Public Law 

105–33 and Public Law 106–170 

Section 5525(b) of Public Law 105–33, 

the Balanced Budget Act of 1997, 

enacted August 5, 1997, provided 

technical amendments to the title XVI 

portions of Public Law 104–121 relating 

to the effective date of provisions 

concerning representative payees. 

Effective July 1, 1996, or later, certain 

individuals with a DAA condition who 

were found to be incapable of managing 

their benefits would be paid through a 

representative payee. In addition, 

section 401 of Public Law 106–170, the 

Ticket to Work and Work Incentives 

Improvement Act of 1999, provided 

technical amendments to Public Law 

104–121 to change the effective date of 

the title II representative payee and 

referral provisions applicable to 

individuals with a DAA condition. 

E. Changes Required by Public Law 106–

169 

Section 251 of Public Law 106–169, 

the Foster Care Independence Act of 

1999, enacted on December 14, 1999, 

added a new title VIII program to the 

Act—Special Benefits for Certain World 

War II Veterans. Title VIII requires SSA 

to pay SVB to certain World War II 

Veterans. Section 807 of the Act 

authorizes SSA to pay SVB to a 

representative payee when we 

determine that would be in the 

beneficiary’s interest. We are adding a 

new subpart F—Representative Payment 

to part 408 of our regulations to set forth 

the representative payment rules 

applicable to the SVB program. 

F. Changes Required by Section 101 of 

Public Law 108–203 

Section 101 of Public Law 108–203, 

the Social Security Protection Act of 

2004, enacted March 2, 2004, eliminated 

the requirement in cases of certain 

representative payees that SSA must be 

negligent in fully following agency 

procedures before it is required to repay 

the amount of misused benefits to 

beneficiaries. Effective for 

determinations of misuse made on or 

after January 1, 1995, SSA must re-issue 

benefits under Titles II, VIII, or XVI 

whenever an individual representative 

payee serving 15 or more beneficiaries 

or an organizational representative 

payee is found to have misused a 

beneficiary’s benefits. If an individual 

payee serving fewer than 15 

beneficiaries misuses a beneficiary’s 

benefits, we will be liable for repayment 

of the misused benefits only when our 

negligent failure to investigate or 

monitor the representative payee results 

in misuse by the payee. 

As discussed above, we are including 

the restitution provision of Public Law 

108–203 in these final rules because it 

is effective immediately, and the 

requirement is very specific and does 

not allow SSA discretion in how to 

implement it.

Public Law 108–203 makes a number 

of additional changes to provisions 

related to representative payees under 

Titles II, VIII, XI, and XVI of the Act. We 

will promulgate regulations to 

implement these changes at a later date. 

Explanation of Regulatory Changes 

We are making the following changes 

in our regulations to reflect the 

amendments to the Act made by 

sections 5105(a)(1) and (2), and (c) of 

Public Law 101–508; section 201 of 

Public Law 103–296; section 105 of 

Public Law 104–121; section 5525(b) of 

Public Law 105–33; section 251 of 

Public 106–169; section 401 of Public 

Law 106–170 and section 101 of Public 

Law 108–203. 

A. Restitution 

We are amending existing §§ 404.902 

and 416.1402 to include a determination 

on restitution as an initial determination 

subject to the administrative review 

process. This change reflects our view 

that our determination regarding a 

person’s right to restitution is a decision 

covered by sections 205(b)(1) and 

1631(c)(1) of the Act and is an initial 

determination subject to the 

administrative review process. 

B. Substantial Harm 

We are adding new §§ 404.2011 and 

416.611 to explain that when we have 

determined a beneficiary needs to be 

paid through a representative payee and 

a representative payee is not 

immediately available: 

1. We will pay monthly benefits 

directly to a beneficiary who we 

determine should have a representative 

payee until a suitable representative 

payee is selected, unless we determine 

that direct payment of these benefits 

will result in substantial harm to the 

beneficiary. 

2. Findings of substantial harm will 

be made on a case-by-case basis. We 

will find substantial harm in cases 

where direct payment of benefits is 

expected to result in serious physical or 

mental injury to the beneficiary. We also 

will find substantial harm to exist when 

the beneficiary is legally incompetent, 

under age 15, or is receiving disability 

payments and we have determined that 

he or she has a DAA condition. 

However, we will allow these 

individuals to provide evidence that 

direct payment would not cause 

substantial harm. If we find upon 

review of this evidence that direct 

payment will not result in substantial 

harm, then we will make direct payment 

to the individual. 

3. Findings of substantial harm are 

not considered initial determinations 

subject to appeal rights. A finding of 

substantial harm will not materially 

affect the beneficiary because delay or 

suspension of direct payment is 

temporary. Beneficiaries who have their 

benefits temporarily suspended can 

60226 Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 

appeal the determination to make 

representative payment (§§ 404.902(o) 

and 416.1402(d)). 

4. If we find that direct payment to an 

individual would cause substantial 

harm, we may delay or suspend benefits 

up to 1 month. If the beneficiary who 

needs a representative payee is legally 

incompetent, under age 15, or receiving 

disability payments and determined by 

us to have a DAA condition and is 

incapable, we may delay payments for 

more than 1 month. 

5. Payment of any benefits that were 

deferred or suspended pending 

selection of a representative payee will 

be made to the beneficiary or the 

representative payee as a single sum, or 

in installments when we determine that 

installments are in the best interest of 

the beneficiary. 

C. Unsuitable Representative Payees 

We are adding new §§ 404.2022 and 

416.622 to explain that: 

1. A representative payee applicant 

convicted of a violation under section 

208, 811 or 1632 of the Act may never 

serve as a representative payee. This 

prohibition was in sections 208 and 

1632 of the Act prior to enactment of 

section 5105(a)(2) of OBRA 90 but was 

never included in our regulations. We 

added section 811 violations because of 

the enactment of the new SVB program 

(section 807 of the Act). 

2. A representative payee applicant 

receiving Social Security, SVB or SSI 

benefits through a representative payee 

may not serve as a representative payee. 

These individuals have already been 

determined to be incapable of managing 

their own benefits. 

3. A representative payee applicant 

whose prior certification or 

appointment as representative payee 

was revoked or terminated for misusing 

title II, VIII or XVI benefits generally 

may not be appointed as a 

representative payee. We may make an 

exception to this prohibition on a caseby-case basis if:

• Direct payment is not possible, 

• No suitable alternative payee is 

available, 

• Payment to the payee applicant 

would serve the best interest of the 

beneficiary, 

• The information we have indicates 

the applicant is now suitable to serve as 

payee, and 

• The applicant has repaid the 

misused benefits or has a plan to repay 

them. 

If such an applicant is appointed, 

evaluation(s) of the applicant’s 

performance as representative payee 

will be conducted periodically at 

intervals not to exceed 3 months until 

we are satisfied that the payee poses no 

risk to the beneficiary and is likely to 

perform in the beneficiary’s best 

interest. 

4. Payment will not be certified to a 

representative payee applicant who is a 

creditor of the beneficiary (i.e., provides 

goods or services for consideration), 

unless the creditor is: 

• A relative of the beneficiary living 

in the same household as the 

beneficiary; 

• A legal guardian or legal 

representative of the beneficiary; 

• A facility that is licensed or 

certified as a care facility under State or 

local law, or an administrator, owner, or 

employee of such a facility and the 

selection of the facility or such person 

is made only after we have attempted to 

locate an alternative representative 

payee who would better serve the 

interests of the beneficiary; 

• An individual we determine to be 

acceptable to serve as a representative 

payee because we have determined that 

the individual poses no risk to the 

beneficiary, the financial relationship of 

the applicant to the beneficiary poses no 

substantial conflict of interest, and a 

more suitable representative payee 

cannot be found; or 

• A qualified organization authorized 

to collect a monthly fee from the 

beneficiary for expenses incurred by the 

organization in providing services 

performed as the individual’s 

representative payee. 

D. Investigation of Representative Payee 

Applicants 

We are adding new §§ 404.2024 and 

416.624 to explain that before certifying 

payment to a representative payee 

applicant, we will conduct an 

investigation of the payee applicant to 

determine the applicant’s suitability. A 

face-to-face interview will be included 

as part of the investigation unless it is 

impracticable to do so. A face-to-face 

interview may be considered 

impracticable if it would cause the 

representative payee applicant undue 

hardship. Undue hardship exists when 

the applicant cannot reasonably make 

arrangements to visit the Social Security 

field office. During the investigation, we 

will: 

• Require the payee applicant to 

submit documented proof of identity, 

unless such information has been 

submitted with an application for titles 

II, VIII or XVI benefits; 

• Verify the payee applicant’s Social 

Security account number or employer 

identification number; 

• Determine whether the payee 

applicant has been convicted of a 

violation under section 208, 811, or 

1632 of the Act; 

• Determine whether the payee 

applicant previously served as a 

representative payee and had his or her 

certification revoked or terminated 

because of misuse of title II, VIII or XVI 

benefits. 

E. Notice of Appointment of 

Representative Payee 

We are amending existing §§ 404.2030 

and 416.630 to explain that whenever 

we intend to make representative 

payment or to appoint a particular 

representative payee, we will provide 

written notice to the beneficiary (or the 

legal guardian or the legal representative 

of the beneficiary) in advance of 

actually appointing the payee and 

certifying payment. This will allow the 

beneficiary the opportunity to appeal 

the proposed representative payee 

appointment. The advance notice will: 

• Be clearly written in language that 

is easily understandable to the reader; 

• Identify the person to be designated 

as representative payee; 

• Explain the right of the beneficiary 

(or the legal guardian or legal 

representative of the beneficiary) to 

appeal our determination that a 

representative payee is necessary; 

• Explain the right to appeal the 

designation of a particular person to 

serve as the representative payee of the 

beneficiary; and 

• Explain the right to review the 

evidence upon which the payee 

designation is based, and to submit 

additional evidence. 

If the beneficiary, or his or her legal 

guardian or legal representative, appeals 

and the appeal is received before the 

appointment of the representative payee 

is effective, the appointment will not be 

processed until the appeal has been 

resolved in accordance with subpart J of 

part 404 or subpart N of part 416. We 

will pay current monthly benefits 

directly to the beneficiary, where 

appropriate, in accordance with 

§§ 404.2011 and 416.611, until we select 

a payee. 

F. Organizational Representative Payees 

We are amending existing 

§§ 404.2040a and 416.640a to remove 

the requirement that the organization 

must have been in existence prior to 

October 1, 1988. We are including State 

or local government agencies as 

qualified organizations for purposes of 

collecting fees. We are also revising 

paragraph (g), Limitation on fees, to 

reflect that the limit on fees collected by 

such organizations increases annually 

by the same percentage as the cost of 

living adjustment. Our NPRM 

Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 60227

inadvertently omitted the phrase 

‘‘which is tax exempt under section 

501(c) of the Internal Revenue Code’’

from §§ 404.2040a and 416.640a(a)(2); 

we have included it in this final rule. 

We also deleted the language at the end 

of proposed § 404.2040a(b)(1) because it 

was redundant. 

G. Liability for Misused Benefits 

We are amending existing §§ 404.2041 

and 416.641 to explain that: 

• The representative payee is liable 

for misuse of the beneficiary’s benefits 

and is responsible for paying back 

misused benefits to us. We will always 

make every reasonable effort to obtain 

restitution of misused benefits and 

repay them to the beneficiary;

• In addition, we will be liable for 

repayment of misused benefits 

whenever an individual representative 

payee serving 15 or more beneficiaries 

or an organizational representative 

payee is found to have misused a 

beneficiary’s benefits. 

• In all other cases of misuse, we will 

be liable for repayment of the misused 

benefits when our negligent failure to 

investigate or monitor the representative 

payee results in misuse by the payee. 

The term ‘‘negligent failure’’ as used in 

the regulation means that we failed to 

investigate or monitor a representative 

payee or that we did investigate or 

monitor the payee but were negligent in 

that effort; 

• For title XVI purposes, our 

repayment of misused funds will 

include any portion of misused SSI 

benefits which are State supplementary 

payments. 

• If we determine that repayment of 

misused benefits is appropriate, we will 

certify for payment to the beneficiary or 

the beneficiary’s new representative 

payee an amount equal to such misused 

benefits. 

H. When a New Representative Payee 

Will Be Selected 

We are amending existing §§ 404.2050 

and 416.650 to reflect changes made by 

section 5105(a)(1) of OBRA 90 requiring 

that we will promptly stop payment to 

a representative payee and make 

payment directly to the beneficiary or to 

a new payee if we, or a court of 

competent jurisdiction, determine that 

the representative payee has misused 

the beneficiary’s benefits. We may make 

exceptions to this rule on a case-by-case 

basis if the requirements discussed in 

C.3. above are met. 

I. Annual Accounting of Benefits 

We are amending existing §§ 404.2065 

and 416.665 to show that an annual 

accounting of benefits is required from 

all representative payees except for 

certain State institutions, and to clarify 

the types of questions included in the 

accounting report. We also clarify that 

payees must keep records and make 

them available to us upon request. 

J. Other Changes 

We are amending existing §§ 404.2025 

and 416.625 to change the title of the 

sections to ‘‘What information must a 

representative payee report to us?’’, 

move existing paragraph (a) of these 

sections with minor revisions to new 

§§ 404.2024 and 416.624 as new 

paragraph (a)(8) and keep existing 

paragraph (b) as an undesignated 

paragraph under §§ 404.2025 and 

416.625. 

We are also amending existing 

§§ 404.902(o) and 416.1402(d) to give 

any individual who is dissatisfied with 

the determination that he or she needs 

a payee the right to a hearing on the 

matter. 

We added a new paragraph 

§§ 404.902(x) and 416.1402(o) to 

include the determination whether SSA 

was negligent in investigating or 

monitoring or failing to investigate or 

monitor the representative payee which 

resulted in misuse of benefits by a 

representative payee as an initial 

determination subject to judicial review. 

K. Representative Payment of SVB 

Section 807 of the Act authorizes SSA 

to pay SVB benefits to a representative 

payee when we determine that would be 

in the best interest of the beneficiary. 

The title VIII provisions on 

representative payment closely parallel 

the representative payment provisions 

in titles II and XVI of the Act (although 

not all title II/XVI provisions apply to 

the title VIII program). We are therefore 

adding a new subpart F to part 408 

which includes an introductory section 

on representative payment in the title 

VIII program followed by sections (with 

the exception of § 408.630) that refer 

users to the sections in part 404 that 

deal with the appropriate topics. 

Subpart F consists of the following 

sections: 

• Section 408.601 introduces subpart 

F. 

• Section 408.610 provides a crossreference to § 404.2010(a), which 

explains the circumstances under which 

we will make representative payment. 

• Section 408.611 provides a crossreference to § 404.2011, which explains 

what happens to your monthly benefits 

while we are finding a suitable 

representative payee. 

• Section 408.615 provides a crossreference to § 404.2015, which explains 

the kinds of information we consider in 

determining whether to make 

representative payment. 

• Section 408.620 provides a crossreference to § 404.2020, which explains 

the information we consider in 

determining an appropriate 

representative payee for you. 

• Section 408.621 provides a crossreference to § 404.2021(a), which 

provides a list of the payees that we 

prefer to serve your interests. 

• Section 408.622 provides a crossreference to § 404.2022, which contains 

a list of individuals whom we generally 

will not select as your representative 

payee. 

• Section 408.624 provides a crossreference to § 404.2024, which explains 

how we investigate whether an 

individual is suitable to serve as a 

representative payee, including the 

requirement that we conduct a face-toface interview with the payee applicant 

unless it is impracticable to do so. 

• Section 408.625 provides a crossreference to § 404.2025, which explains 

the information a representative payee 

or payee applicant must give us. 

• Section 408.630 explains how we 

will notify you when we decide you 

need a representative payee. 

• Section 408.635 provides a crossreference to § 404.2035, which explains 

the responsibilities of a representative 

payee. 

• Section 408.640 provides a crossreference to § 404.2040, which explains 

how a representative payee must use the 

SVB payments he or she receives on 

your behalf. 

• Section 408.641 provides a crossreference to § 404.2041, which explains 

who is liable when a representative 

payee misuses the benefits he or she 

receives on your behalf. 

• Section 408.645 provides a crossreference to § 404.2045, which explains 

the rules your representative payee must 

follow to conserve or invest excess 

benefits, contains a list of preferred 

investments, and explains that any 

interest and dividends that result from 

an investment is your property, not the 

property of your payee. 

• Section 408.650 provides a crossreference to § 404.2050, which explains 

when we will select a new 

representative payee for you. 

• Section 408.655 provides a crossreference to § 404.2055, which explains 

when we will stop representative 

payment and begin making payment 

directly to you. 

• Section 408.660 provides a crossreference to § 404.2060, which explains 

what happens to accumulated funds 

when your representative payee 

changes. 

60228 Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 

• Section 408.665 provides a crossreference to § 404.2065, which explains 

how we require your representative 

payee to verify that he or she used your 

benefits on your behalf. 

• Section 408.655 provides a crossreference to § 404.2055, which explains 

when we will stop representative 

payment and begin making payment 

directly to you.

Public Comments 

On September 25, 2003, we published 

proposed rules in the Federal Register

at 68 FR 55323 and provided a 60-day 

period for interested parties to 

comment. We received comments from 

6 organizations and 20 individuals. 

Because some of the comments received 

were quite detailed, we have condensed, 

summarized or paraphrased them in the 

discussion below. We address all of the 

issues raised by the commenters that are 

within the scope of the proposed rules. 

Comment: Three commenters felt that 

the explanation we provided in the 

NPRM on ‘‘substantial harm’’ was 

inconsistent with the proposed 

regulations language, which specified 

that substantial harm will be found 

where direct payment is expected to 

result in serious physical or mental 

injury. The commenters also felt the 

example in the preamble was vague and 

overly broad. 

Response: We agree with the 

commenters and have revised the 

explanation accordingly. 

Comment: One commenter suggests 

the regulations do not sufficiently 

explain what would constitute 

‘‘substantial harm’’ which would justify 

an interruption in direct payment of 

benefits. The commenter noted for 

example, the ‘‘stress associated with 

handling his * * * own affairs’’ may 

arise even for many non-disabled 

individuals and certainly should not 

result in a capable beneficiary requiring 

a representative payee, unless of course 

they freely request such an arrangement. 

The commenter recognizes that there are 

certain categories of beneficiaries where 

a payee would be expected, but 

recommends that we always favor direct 

payment. 

Response: The parenthetical language 

objected to by the commenter in the 

‘‘Explanation of Regulatory Changes’’

section has been removed as stated in 

the response shown above. Our policy is 

that every beneficiary has the right to 

manage his or her own benefits unless 

he or she is unable to do so due to a 

mental or physical condition or due to 

youth. When we determine a payee is 

necessary, we will generally pay the 

beneficiary directly, while finding a 

suitable representative payee. 

Substantial harm must be determined 

before we may delay a payment. 

Sections 404.2011 and 416.611 clearly 

describe how we determine substantial 

harm. We will not appoint a 

representative payee for a ‘‘capable’’

beneficiary. SSA selects a representative 

payee only when someone is not able to 

manage or direct the management of 

their finances because of their age, or a 

mental or physical impairment. SSA 

does not appoint a representative payee 

solely for a beneficiary’s convenience or 

personal preference. 

Comment: Eighteen commenters 

suggested that SSA ensure that 

substantial harm in fact exists and that 

benefits are not routinely withheld for 

one month pending appointment of an 

appropriate payee. 

Response: We believe that under the 

proposed regulations, benefits will not 

routinely be held for a month pending 

appointment of an appropriate payee. 

Direct payment will be made pending 

appointment of a payee unless 

substantial harm is found. Sections 

404.2011 and 416.611 clearly specify 

that withholding payment for one 

month pending appointment of an 

appropriate payee is appropriate only in 

cases when we find that direct payment 

will cause substantial harm to the 

beneficiary. Those sections also clearly 

explain how we determine whether 

substantial harm exists. 

Comment: One commenter suggested 

that individuals whose benefits are 

deferred or suspended for more than 

one month based on a finding of 

substantial harm should have the ability 

to appeal the substantial harm finding. 

The commenter stated that SSA can 

make a mistake in its finding that 

‘‘substantial harm’’ would result from 

direct payment to the individual and 

that the ability to appeal would ensure 

that cases do not get lost in the SSA 

workload and unnecessarily delayed for 

months. 

Response: Benefits should not be 

suspended for more than 1 month. 

Benefits can only be suspended for a 

maximum of 1 month while a payee is 

being developed if direct payment to the 

incapable beneficiary would cause the 

beneficiary ‘‘substantial harm’’. 

Beneficiaries who have their benefits 

temporarily suspended can appeal the 

determination to make representative 

payment (§§ 404.902(o) and 

416.1402(d)). Further, sections 404.2011 

and 416.611 clearly specify that, in 

cases when we withhold payment for 

one month, we will allow a beneficiary 

to rebut the substantial harm decision 

and present evidence that direct 

payment will not cause him or her 

substantial harm. Therefore, we believe 

the proposed rules already provide 

sufficient safeguards.

Comment: A commenter said we did 

not explain in the NPRM that paragraph 

(b) in §§ 404.2021 and 416.621 is 

redesignated as paragraph (c). 

Response: The redesignation of 

subsection (b) to subsection (c) in 

§§ 404.2021 and 416.621 was noted in 

number 5 of the proposed amendments 

to Part 404 and number 17 of the 

proposed amendments to Part 416. 

Comment: Two commenters 

expressed concern that the investigation 

procedures for representative payee 

applicants set forth in proposed 

§§ 404.2024 and 416.624 were not 

stringent enough to protect the 

recipients who will lose all rights to 

control their benefits. Specifically, they 

expressed the view that difficulty 

finding child care is simply not severe 

enough to warrant exempting a 

prospective payee from a personal 

interview. 

Response: We agree and have revised 

§§ 404.2024(b) and 416.624(b) by 

deleting the examples of not being able 

to find child care and not being able to 

arrange for time off from work. 

Comment: Twenty-two commenters 

recommended that SSA make home 

visits to payee applicants unable to visit 

an SSA office for a face-to-face 

interview. They also suggested that this 

procedure could be included in a 

Program Operating Manual System 

(POMS) provision on payee applicant 

interviewing procedures. 

Response: This is an operational issue 

and not appropriate to include in 

regulations. However, we will review 

current operating instructions and 

determine whether guidance on when to 

conduct home visits to payee applicants 

should be considered. We have made no 

changes to the regulations based on this 

comment. 

Comment: A commenter suggested 

that SSA should be required to keep 

records that it has properly investigated 

payee applicants before their 

appointment. 

Response: Representative payee 

applications are taken and stored in the 

Representative Payee System (RPS) 

which is a database that houses 

information about representative payees 

and beneficiaries who have payees. The 

RPS was designed to keep an electronic 

record of our appointment process and 

the information it contains documents 

that the payee applicant was properly 

investigated before being appointed. 

Comment: Three commenters stated 

that the statute requires that prior to 

appointment of a ‘‘high risk’’ payee, the 

Commissioner establish that ‘‘such 

individual poses no risk to the 

Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 60229

beneficiary.’’ The commenters 

recommended that statutory language be 

included at the outset of these 

regulations to clarify that the 

Commissioner’s duty to make this 

finding applies to all ‘‘high risk’’ payee 

applicants. 

Response: The requirement that the 

Commissioner must establish that an 

individual poses no risk to the 

beneficiary applies only to the 

appointment of creditor payees and not 

to the other categories of payees in 

§§ 404.2022 and 416.622. The statute 

imposes different standards and 

restrictions for different situations. 

These rules set out steps that are 

required to ensure the payee is acting in 

the beneficiary’s best interest depending 

upon the specific situation. Therefore, 

we have made no changes based on this 

comment. 

Comment: A commenter was 

concerned that direct providers of 

services have potential conflict of 

interest as payees. The commenter listed 

as an example residential boarding 

homes, which the commenter felt had a 

high potential for fraud or abuse. The 

commenter recommended that SSA 

develop some new classes of non-profit 

payees and ban payees where there is an 

inherent conflict of interest and a 

potential for abuse exists. 

Response: Banning certain classes of 

potential payees would be inconsistent 

with sections 205(j)(2)(c)(iii) and 

1631(a)(2)(B)(v) of the Act. We use 

guidelines setting out categories of 

potential representative payees for 

selecting the best payee for a 

beneficiary. These guidelines suggest a 

preferred order for considering those 

potential representative payees but they 

are flexible. Our regulations do 

generally prohibit the appointment of 

creditors as payees, and they are only 

appointed when specific conditions 

exist, including a determination that 

there is no substantial conflict of 

interest (§§ 404.2022(d), 416.622(d)). We 

do currently appoint non-profit payees, 

and we are always seeking to develop 

new or additional sources of 

representative payees. Our primary 

concern is to select a representative 

payee who will best serve the interest of 

the beneficiary. Banning a specific class 

of payee based on ‘‘potential abuse’’

would not take individual 

circumstances into account. We do not 

believe such an approach would be in 

the best interest of the beneficiary and 

therefore, have made no changes based 

on this comment. 

Comment: Twenty-one commenters 

stated that §§ 404.2022(d)(3) and 

416.622(d)(3) would permit an 

institution to act as payee with virtually 

no safeguards. The commenters believe 

there is a strong need for closer 

oversight of governmental agencies and 

institutions that serve as payees and 

recommend that SSA take the following 

steps to ensure that a creditor 

institution, acting as payee, fulfills its 

fiduciary duties on the beneficiary’s 

behalf: (1) Notify the beneficiary in 

writing before the institution is 

appointed as payee that the institution 

will be appointed and make clear that 

the person’s benefits will be available to 

the person upon release from the 

institution; (2) include in the 

regulations a requirement that 

institutional payees develop procedures 

for conducting annual individualized 

assessments of the current and 

foreseeable needs of the beneficiary, 

considering more than just the financial 

needs of the institution as a creditor; 

and (3) ensure that, where there is a 

family member or friend available to be 

the payee, they be given preference over 

the institution as payee. 

Response: We have made no changes 

based on this comment for the following 

reasons: 

(1) The advance notice, sent before 

effectuation of any payee appointment, 

contains language regarding the identity 

of the proposed representative payee. 

However, we do not require institutions 

to set aside funds for the beneficiary’s 

use after release from the institution. As 

explained in §§ 404.2040(b) and 

416.640(b), we consider funds to have 

been used for the use and benefit of the 

beneficiary if they are used for the 

beneficiary’s current care and 

maintenance. Any remaining funds 

should be conserved or invested for the 

beneficiary pursuant to § 404.2045. 

(2) SSA requires that all 

representative payees remain informed 

of beneficiaries’ needs (i.e., make 

ongoing assessments of beneficiaries’

current and reasonably foreseeable 

needs) so they can decide how best to 

use benefits for beneficiaries’ personal 

care and well being. Institutional 

payees, as care facilities, generally 

assess current and future needs for the 

purpose of providing care as well as 

deciding how best to use benefits 

received on behalf of a beneficiary. We 

believe that ongoing assessments better 

serve the beneficiaries than would 

annual assessments.

(3) If we are aware of family interest 

in being a representative payee, we will 

solicit an application from family 

members. However, SSA’s 

responsibility is to appoint the person, 

agency, organization or institution who 

can best serve the interest of the 

beneficiary. Thus family members will 

be evaluated under this standard along 

with any other applicants. 

Comment: Twenty-two commenters 

suggested strengthening the language in 

§§ 404.2022(c)(5) and 416.622(c)(5) 

regarding when a misuser can be 

appointed. They note, for example, it is 

difficult to imagine any circumstances 

where SSA would approve a payee who 

not only has misused others’ benefits in 

the past but also has failed to repay 

completely those misused benefits. The 

commenters said that SSA needed to set 

a very high standard for re-appointing a 

person who has previously misused 

benefits. 

Response: Representative payees with 

a history of misuse are generally banned 

from serving as representative payees. 

As noted in the proposed rules at 

§§ 404.2022 and 416.622, we will only 

consider appointing a person who has 

misused funds in the past when five 

specific requirements are met, including 

the requirement that no suitable 

alternative payee is available. We 

believe the standard for appointing a 

payee who has previously misused 

funds is sufficiently strong to protect the 

beneficiaries, while at the same time is 

flexible enough to address situations 

where no other payee is available. 

Comment: A commenter suggested 

that §§ 404.902(x) and 416.1402(o) be 

revised to clarify that both the 

determination of negligence and the 

determination regarding restitution are 

initial determinations subject to appeal. 

Response: In all cases where SSA 

determines that it was negligent in 

investigating or monitoring a 

representative payee and misuse of 

benefits resulted, SSA is liable for 

restitution of the misused funds. Where 

the Agency finds itself negligent, 

restitution is due and there is no need 

to appeal the restitution decision 

separately. 

Comment: Twenty-two commenters 

suggested that the regulations should be 

amended to indicate that SSA’s 

determinations of misuse (or no misuse) 

are initial determinations subject to the 

appeals process. 

Response: Findings of misuse or no 

misuse are administrative decisions, 

and are not initial determinations 

subject to the appeals process. Nothing 

actionable results from a misuse 

determination. However, in every case 

where SSA makes a finding of misuse, 

it also makes a decision on restitution. 

SSA’s findings of whether or not we 

will make restitution are initial 

determinations, and thus subject to 

appeal. Effectively, a beneficiary may 

appeal the misuse finding in these 

circumstances as part of any appeal on 

the decision to make restitution. Finally, 

60230 Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 

recently enacted statutory guidelines 

now require SSA to make restitution 

without a finding of negligence in 

misuse cases where the payee is an 

organization or an individual payee 

serving 15 or more beneficiaries. For 

these reasons, we have made no changes 

based on this comment. 

Comment: One commenter suggested 

that we revise proposed §§ 404.2022(c) 

and 416.622(c) to provide that we will 

evaluate a payee’s performance at least 

once every three months for at least the 

first two years when that payee has 

previously been found to have misused 

benefits. 

Response: We believe the language in 

the proposed rules is preferable because 

it provides more flexibility to take into 

account the different facts of each case 

while still safeguarding the beneficiary’s 

interest. It says we must evaluate the 

payee’s performance at least every 3 

months until we are satisfied that the 

payee poses no risk to the beneficiary’s 

best interest. This period could be less 

than or greater than two years 

depending on the specific 

circumstances. 

Comment: One commenter stated that 

misuse of funds by a representative 

payee should not negatively impact the 

payment of benefits to child 

beneficiaries, who should be presumed 

to be without fault under §§ 404.2041 

and 416.641. The commenter stated that 

holding the child beneficiary liable for 

misuse of dedicated funds is unfair to 

the child and clearly violates the spirit 

and purpose of the Act. This should be 

made explicit in the regulations. 

Response: Sections 404.2041 and 

416.641 explain that the representative 

payee is liable for repaying misused 

funds. We do not hold the beneficiary 

liable, and these rules do not suggest 

otherwise. Therefore, we do not find it 

necessary to change the proposed 

regulations. 

Comment: A commenter said 

§ 404.2030(a) does not clearly indicate 

that both the decision as to the need for 

a payee and the decision as to whom to 

appoint are appealable issues.

Response: The proposed regulations 

at §§ 404.2030(a)(3) and 416.630(a)(3) 

indicate that the determination that you 

need a representative payee may be 

appealed, and §§ 404.2030(a)(4) and 

416.630(a)(4) indicate that the 

designation of a particular person or 

organization as your representative 

payee may be appealed. We made no 

changes to the regulation based on this 

comment. 

Comment: Twenty-one commenters 

suggested that we allow 15 days from 

time of receipt of our notice to protest 

our decision as to the need for a payee 

and the decision as to who we appoint 

as payee instead of 10 days as provided 

in §§ 404.2030(a) and 416.630(a). 

Response: We feel the protest and 

appeal time we allow adequately 

protects the beneficiary’s rights. We 

have revised the language in the 

regulation to clarify that there are two 

ways to give advance notice—by mail or 

in the field office. Appropriate language 

is included in each notice outlining how 

claimants must proceed if they disagree 

with our decision and the timeframes 

they must meet. 

Comment: One commenter 

recommended that we revise 

§§ 404.2065 and 416.665 to include an 

exception to the annual accounting 

requirements for parents of child 

beneficiaries. The commenter stated 

there should be a presumption that 

parents are allocating the benefits in a 

responsible manner. 

Response: The statute requires that all 

representative payees report not less 

often than annually. The only exception 

granted by Congress in the statute is for 

certain State institutions which 

participate in a separate onsite review 

program. We cannot change a statutory 

requirement by regulation. 

Comment: One commenter suggested 

that we periodically send a 

questionnaire to recipients (except 

minor children and some others who 

may have difficulty replying) to help 

identify situations where payees need 

further education about their 

responsibilities or need to be replaced. 

The commenter stated that SSA should 

have in place a mechanism for regular 

contact with the recipients as well as 

the payees. 

Response: We do not think mailing a 

questionnaire to beneficiaries would 

help identify situations where payees 

need further education about their 

responsibilities or need to be replaced. 

As part of the representative payee 

annual report process, SSA includes as 

a reminder a section on representative 

payee responsibilities. Questions on the 

accounting form are designed to solicit 

meaningful information about how 

payees use the benefits sent to them. We 

also have operating procedures in place 

to evaluate responses as indicators of 

how well the payee manages benefits. 

Our new publication no. 05–10097, 

‘‘What you should know when a 

representative payee manages your 

money * * *’’ was designed to help 

explain representative payment to adult 

beneficiaries and is sent to the 

beneficiary with the advance notice that 

a representative payee has been 

appointed. Beneficiaries may contact 

SSA at any time to discuss their payee 

or payee situations. In addition, our new 

monitoring program (described in our 

response to the following comment) 

provides for beneficiary interviews 

when feasible. 

Comment: Twenty-one commenters 

suggested SSA should increase 

oversight of governmental agencies and 

institutions and include all payees in 

the annual reporting requirement and 

not exempt certain State institutions. 

Response: Four years ago, we 

strengthened our oversight process by 

establishing a new expanded monitoring 

program. Recently enacted new 

statutory guidelines expand that 

program even further. The new program 

now requires site visits for fee-forservice payees, volume payees (those 

organizational payees serving 50 or 

more beneficiaries) and individual 

payees serving 15 or more beneficiaries. 

These site reviews monitor payee 

compliance through a face-to-face 

meeting and an examination of a sample 

of beneficiary records. All 

representative payees must account for 

use of benefits by completing a written 

report, but Congress specifically 

exempted certain State institutions. 

These State institutions participate in an 

alternate periodic monitoring program 

as allowed by statute. See section 

205(j)(3)(B) of the Act. We have made no 

changes to the regulatory language 

based on this comment. 

Comment: Four commenters 

suggested that in their experiences 

dealing with SSA on claims of misuse, 

there are often no records showing what 

SSA did to determine whether the payee 

was properly investigated, or whether 

SSA monitored the payee’s 

performance, or responded to the 

beneficiaries’ complaints of misuse. The 

commenters feel there is a need for 

explicit standards, procedures, and a 

paper trail on these issues. 

Response: We do maintain records to 

document our efforts in these areas. 

Procedures require that all payees are 

monitored and that we retain the annual 

representative payee reports for two 

years. The RPS contains information 

regarding beneficiaries’ complaints and 

the actual findings of misuse. Current 

procedures require all allegations of 

misuse to be investigated and 

documented in the RPS. 

Comment: Three commenters made 

suggestions regarding fee-for-service 

payees. They suggested that charges for 

such services should be limited to $25 

a month. In addition, the commenters 

suggested that the current proposal to 

allow certain State agencies to charge a 

fee and that the fee be ‘‘indexed’’ should 

not be finalized without extensive study 

into the workings of these agencies and 

their current histories as representative 

Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 60231

payees. The commenters stated if 

‘‘indexing’’ of fees is allowed, it should 

not occur automatically. Any increase in 

fees for organizational representative 

payees should be the result of a request 

for an increase by the payee and a 

complete investigation of that payee’s 

activities and performance as payee 

before any increased fee is allowed. 

Response: Fee-for-service 

organizations may collect from the 

individual a monthly fee for providing 

payee services. The fee amount and the 

yearly adjustments are set by statute. 

See section 205(j)(4)(A)(i) of the Act. 

Comment: Five commenters 

recommended that SSA incorporate a 

requirement in the regulations that 

beneficiary complaints are treated 

seriously and investigated promptly by 

the local District Office staff. The 

commenters recommended SSA offer a 

specific procedure for filing complaints 

about payees and to tell beneficiaries 

how they can file a complaint if needed. 

Response: We take all beneficiary 

complaints seriously, regardless of how 

the complaint is reported. It is 

unnecessary to establish a formal 

process to receive such complaints. 

Sections 404.2050 and 416.650 explain 

when we will make a representative 

payee change and provide the criteria 

for looking into such complaints. We 

have made no changes based on this 

comment. 

Comment: One commenter suggests 

SSA should be required to review a 

significant sampling of individual and 

institutional payees each year. Such 

reviews should include a requirement 

for the payee to visit the local SSA 

office for an interview and a close 

inspection of accounts and bookkeeping 

methods used by the payee. 

Response: Our current procedures 

require an annual accounting from all 

payees and we also have a monitoring 

program that requires site visits for all 

fee-for-service payees, volume payees 

(organizations serving 50 or more 

beneficiaries) and individual payees 

serving 15 or more beneficiaries. These 

site reviews ensure payee compliance 

through a face-to-face meeting and an 

examination of a sample of beneficiary 

records. The reviews include an 

assessment of the payee’s record 

keeping and a certification that 

institutional payees continue to meet 

requirements for a fee-for-service payee. 

Whenever feasible, we include 

beneficiary interviews.

Regulatory Procedures 

Executive Order 12866 

We have consulted with the Office of 

Management and Budget (OMB) and 

determined that these final rules meet 

the criteria for a significant regulatory 

action under Executive Order 12866, as 

amended by Executive Order 13258. 

Thus, they were reviewed by OMB. 

However, the estimated amounts of the 

savings or costs involved do not cross 

the threshold for an economically 

significant regulation as defined in 

Executive Order 12866, as amended by 

Executive Order 13258. 

We have also determined that these 

final rules meet the plain language 

requirement of Executive Order 12866, 

as amended by Executive Order 13258. 

Administrative Procedure Act 

Pursuant to section 702(a)(5) of the 

Social Security Act, 42 U.S.C. 902(a)(5), 

the Social Security Administration 

follows the Administrative Procedure 

Act (APA) rulemaking procedures 

specified in 5 U.S.C. 553 in the 

development of its regulations. The 

APA provides exceptions to its Notice of 

Proposed Rulemaking (NPRM) 

procedures when an agency finds that 

there is good cause for dispensing with 

such procedures on the basis that they 

are impracticable, unnecessary, or 

contrary to the public interest. As 

indicated above, we are including in 

these final rules a provision on 

restitution of misused benefits that was 

enacted March 2, 2004, as part of Public 

Law 108–203 and, therefore, was not 

included in the NPRM we published on 

September 25, 2003. Since this 

provision was effective on enactment 

and the statutory requirement is very 

specific and does not allow SSA 

discretion in how to implement, we 

have determined that under 5 U.S.C. 

553(b)(B), good cause exists for waiving 

the NPRM procedures for the restitution 

provision of Public Law 108–203 

included in these rules. 

Executive Order 13132 (Federalism) and 

the Unfunded Mandates Reform Act of 

1995 

We have reviewed these final rules for 

compliance with Executive Order 13132 

and the Unfunded Mandates Reform Act 

of 1995 (UMRA of 1995). We have 

determined that the final rules are not 

significant within the meaning of the 

UMRA of 1995 nor will they have any 

substantial direct effects on the States, 

on the relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government within the 

meaning of Executive Order 13132. 

The provision regarding restitution of 

misused benefit payments will not 

significantly impact the States. Even 

though the States will be responsible for 

the supplementary payments portion of 

the restitution, there should only be a 

small number of cases involved. There 

are a very small number of 

representative payees who are found to 

misuse benefit payments and of that 

number, misuse involving SSI payments 

is even smaller. In addition, SSA will 

seek restitution of misused funds from 

the terminated representative payee 

and, if the restitution is obtained, the 

State will be reimbursed for any State 

supplementary payment involved. 

Regulatory Flexibility Act 

We certify that these final regulations 

will not have a significant economic 

impact on a substantial number of small 

entities. Therefore, a regulatory 

flexibility analysis as provided in the 

Regulatory Flexibility Act, as amended, 

is not required. 

Paperwork Reduction Act 

The Paperwork Reduction Act (PRA) 

of 1995 says that no persons are 

required to respond to a collection of 

information unless it displays a valid 

OMB control number. In accordance 

with the PRA, SSA is providing notice 

that OMB has approved the information 

collection requirements contained in 

part 404—subpart U, part 408—subpart 

F, and part 416—subpart F. The OMB 

Control Number for these collections is 

0960–0679, expiring November 30, 

2006.

(Catalog of Federal Domestic Assistance 

Program Nos. 96.001, Social SecurityDisability Insurance; 96.002, Social SecurityRetirement Insurance; 96.004, Social-Security 

Survivors Insurance; 96.006, Supplemental 

Security Income; 96–020, Special Benefits for 

Certain World War II Veterans.)

List of Subjects 

20 CFR Part 404 

Administrative practice and 

procedure, Blind, Disability benefits, 

Old-Age, Survivors and Disability 

Insurance, Reporting and recordkeeping 

requirements, Social Security. 

20 CFR Part 408 

Administrative practice and 

procedure, Aged, Reporting and 

recordkeeping requirements, Social 

Security, Special Veterans benefits, 

Veterans. 

20 CFR Part 416 

Administrative practice and 

procedure, Aged, Blind, Disability 

benefits, Public assistance programs, 

Reporting and recordkeeping 

requirements, supplemental security 

income (SSI).

60232 Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 

Dated: July 12, 2004. 

Jo Anne B. Barnhart, 

Commissioner of Social Security.

■ For the reasons set out in the preamble, 

we are amending subparts J and U of part 

404, adding subpart F to part 408, and 

amending subparts F and N of part 416 

of Title 20 of the Code of Federal 

Regulations as follows:

PART 404—FEDERAL OLD–AGE, 

SURVIVORS AND DISABILITY 

INSURANCE (1950– )

Subpart J—Determinations, 

Administrative Review Process, and 

Reopening of Determinations and 

Decisions

■ 1. The authority citation for subpart J 

continues to read as follows:

Authority: Secs. 201(j), 204(f), 205(a)–(b), 

(d)–(h), and (j), 221, 225, and 702(a)(5) of the 

Social Security Act (42 U.S.C. 401(j), 404(f), 

405(a)–(b), (d)–(h), and (j), 421, 425, and 

902(a)(5)); 31 U.S.C. 3720A; sec. 5, Pub. L. 

97–455, 96 Stat. 2500 (42 U.S.C. 405 note); 

secs. 5, 6(c)–(e), and 15, Pub. L. 98–460, 98 

Stat. 1802 (42 U.S.C. 421 note).

■ 2. Amend § 404.902 by revising 

paragraph (o), removing the word ‘‘and’’

at the end of paragraph (v), removing the 

period at the end of paragraph (w) and 

adding ‘‘; and’’ in its place, and adding 

paragraph (x) to read as follows:

§ 404.902 Administrative actions that are 

initial determinations.

* * * * *

(o) Whether the payment of your 

benefits will be made, on your behalf, to 

a representative payee;

* * * * *

(x) Whether we were negligent in 

investigating or monitoring or failing to 

investigate or monitor your 

representative payee, which resulted in 

the misuse of benefits by your 

representative payee.

Subpart U—Representative Payment

■ 3. The authority citation for subpart U 

of part 404 continues to read as follows:

Authority: Secs. 205(a), (j), and (k), and 

702(a)(5) of the Social Security Act (42 U.S.C. 

405(a), (j), and (k), and 902(a)(5)).

■ 4. Add § 404.2011 to read as follows:

§ 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, 

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.

■ 5. Amend § 404.2021 by revising the 

section heading and paragraph (a) 

introductory text, redesignating 

paragraph (b) as paragraph (c) and 

adding new paragraph (b) to read as 

follows:

§ 404.2021 What is our order of preference 

in selecting a representative payee for you?

* * * * *

(a) For beneficiaries 18 years old or 

older (except those described in 

paragraph (b) of this section), our 

preference is—

* * * * *

(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 

(5) A family member.

* * * * *

■ 6. Add § 404.2022 to read as follows:

§ 404.2022 Who may not serve as a 

representative payee? 

A representative payee applicant may 

not serve if he/she: 

(a) Has been convicted of a violation 

under section 208, 811 or 1632 of the 

Social Security Act. 

(b) Receives title II, VIII, or XVI 

benefits through a representative payee. 

(c) Previously served as a 

representative payee and was found by 

us, or a court of competent jurisdiction, 

to have misused title II, VIII or XVI 

benefits. However, if we decide to make 

an exception to this prohibition, we 

must evaluate the payee’s performance 

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at least every 3 months until we are 

satisfied that the payee poses no risk to 

the beneficiary’s best interest. 

Exceptions are made on a case-by-case 

basis if all of the following are true: 

(1) Direct payment of benefits to the 

beneficiary is not in the beneficiary’s 

best interest. 

(2) No suitable alternative payee is 

available. 

(3) Selecting the payee applicant as 

representative payee would be in the 

best interest of the beneficiary. 

(4) The information we have indicates 

the applicant is now suitable to serve as 

a representative payee. 

(5) The payee applicant has repaid the 

misused benefits or has a plan to repay 

them. 

(d) Is a creditor. A creditor is someone 

who provides you with goods or 

services for consideration. This 

restriction does not apply to the creditor 

who poses no risk to you and whose 

financial relationship with you presents 

no substantial conflict of interest, and 

who is any of the following: 

(1) A relative living in the same 

household as you do. 

(2) Your legal guardian or legal 

representative. 

(3) A facility that is licensed or 

certified as a care facility under the law 

of a State or a political subdivision of 

a State. 

(4) A qualified organization 

authorized to collect a monthly fee from 

you for expenses incurred in providing 

representative payee services for you, 

under § 404.2040a. 

(5) An administrator, owner, or 

employee of the facility in which you 

live, and we are unable to locate an 

alternative representative payee. 

(6) Any other individual we deem 

appropriate based on a written 

determination. 

Example 1: Sharon applies to be 

representative payee for Ron who we 

have determined cannot manage his 

benefits. Sharon has been renting a 

room to Ron for several years and assists 

Ron in handling his other financial 

obligations, as needed. She charges Ron 

a reasonable amount of rent. Ron has no 

other family or friends willing to help 

manage his benefits or to act as 

representative payee. Sharon has 

demonstrated that her interest in and 

concern for Ron goes beyond her desire 

to collect the rent each month. In this 

instance, we may select Sharon as Ron’s 

representative payee because a more 

suitable payee is not available, she 

appears to pose no risk to Ron and there 

is minimal conflict of interest. We will 

document this decision. 

Example 2: In a situation similar to 

the one above, Ron’s landlord indicates 

that she is applying to be payee only to 

ensure receipt of her rent. If there is 

money left after payment of the rent, she 

will give it directly to Ron to manage on 

his own. In this situation, we would not 

select the landlord as Ron’s 

representative payee because of the 

substantial conflict of interest and lack 

of interest in his well being.

■ 7. Add § 404.2024 to read as follows:

§ 404.2024 How do we investigate a 

representative payee applicant? 

Before selecting an individual or 

organization to act as your 

representative payee, we will perform 

an investigation. 

(a) Nature of the investigation. As part 

of the investigation, we do the 

following: 

(1) Conduct a face-to-face interview 

with the payee applicant unless it is 

impracticable as explained in paragraph 

(b) of this section.

(2) Require the payee applicant to 

submit documented proof of identity, 

unless information establishing identity 

has recently been submitted with an 

application for title II, VIII or XVI 

benefits. 

(3) Verify the payee applicant’s Social 

Security account number or employer 

identification number. 

(4) Determine whether the payee 

applicant has been convicted of a 

violation of section 208, 811 or 1632 of 

the Social Security Act. 

(5) Determine whether the payee 

applicant has previously served as a 

representative payee and if any previous 

appointment as payee was revoked or 

terminated for misusing title II, VIII or 

XVI benefits. 

(6) Use our records to verify the payee 

applicant’s employment and/or direct 

receipt of title II, VIII, or XVI benefits. 

(7) Verify the payee applicant’s 

concern for the beneficiary with the 

beneficiary’s custodian or other 

interested person. 

(8) Require the payee applicant to 

provide adequate information showing 

his or her relationship to the beneficiary 

and to describe his or her responsibility 

for the care of the beneficiary. 

(9) Determine whether the payee 

applicant is a creditor of the beneficiary 

(see § 404.2022(d)). 

(b) A face-to-face interview. We may 

consider a face-to-face interview 

impracticable if it would cause the 

payee applicant undue hardship. For 

example, the payee applicant would 

have to travel a great distance to the 

field office. In this situation, we may 

conduct the investigation to determine 

the payee applicant’s suitability to serve 

as a representative payee without a faceto-face interview. We may decide 

subsequent face-to-face interviews are 

impracticable for an organizational 

representative payee applicant when the 

organization is known by the field office 

as a suitable payee. We base this 

decision on the organization’s past 

performance, recent contacts, and its 

knowledge of and compliance with 

reporting requirements.

■ 8. Revise § 404.2025 to read as follows:

§ 404.2025 What information must a 

representative payee report to us? 

Anytime after we select a 

representative payee for you, we may 

ask your payee to give us information 

showing a continuing relationship with 

you, a continuing responsibility for your 

care, and how he/she used the payments 

on your behalf. If your representative 

payee does not give us the requested 

information within a reasonable period 

of time, we may stop sending your 

benefit payment to him/her—unless we 

determine that he/she had a satisfactory 

reason for not meeting our request and 

we subsequently receive the requested 

information. If we decide to stop 

sending your payment to your 

representative payee, we will consider 

paying you directly (in accordance with 

§ 404.2011) while we look for a new 

payee.

■ 9. Revise § 404.2030 to read as follows:

§ 404.2030 How will we notify you when we 

decide you need a representative payee? 

(a) We notify you in writing of our 

determination to make representative 

payment. This advance notice explains 

that we have determined that 

representative payment is in your 

interest, and it provides the name of the 

representative payee we have selected. 

We provide this notice before we 

actually appoint the payee. If you are 

under age 15, an unemancipated minor 

under the age of 18, or legally 

incompetent, our written notice goes to 

your legal guardian or legal 

representative. The advance notice: 

(1) Contains language that is easily 

understandable to the reader. 

(2) Identifies the person designated as 

your representative payee. 

(3) Explains that you, your legal 

guardian, or your legal representative 

can appeal our determination that you 

need a representative payee. 

(4) Explains that you, your legal 

guardian, or your legal representative 

can appeal our designation of a 

particular person or organization to 

serve as your representative payee. 

(5) Explains that you, your legal 

guardian, or your legal representative 

can review the evidence upon which 

our designation of a particular 

60234 Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 

representative payee is based and 

submit additional evidence. 

(b) If you, your legal guardian, or your 

legal representative objects to 

representative payment or to the 

designated payee, we will handle the 

objection as follows:

(1) If you disagree with the decision 

and wish to file an appeal, we will 

process it under subpart J of this part. 

(2) If you received your advance 

notice by mail and you protest or file 

your appeal within 10 days after you 

receive this notice, we will delay the 

action until we make a decision on your 

protest or appeal. (If you received and 

signed your notice while you were in 

the local field office, our decision will 

be effective immediately.)

■ 10. Revise § 404.2040a to read as 

follows:

§ 404.2040a Compensation for qualified 

organizations serving as representative 

payees. 

(a) Organizations that can request 

compensation. A qualified organization 

can request us to authorize it to collect 

a monthly fee from your benefit 

payment. A qualified organization is: 

(1) Any State or local government 

agency with fiduciary responsibilities or 

whose mission is to carry out income 

maintenance, social service, or health 

care-related activities; or 

(2) Any community-based nonprofit 

social service organization founded for 

religious, charitable or social welfare 

purposes, that is tax exempt under 

section 501(c) of the Internal Revenue 

Code and that is licensed in the State in 

which it serves as representative payee 

or bonded. 

(b) Requirements qualified 

organizations must meet. Organizations 

that are qualified under paragraphs 

(a)(1) or (a)(2) of this section must also 

meet the following requirements before 

we can authorize them to collect a 

monthly fee. 

(1) A qualified organization must 

regularly provide representative payee 

services concurrently to at least five 

beneficiaries. An organization which 

has received our authorization to collect 

a fee for representative payee services, 

but is temporarily (not more than 6 

months) not a payee for at least five 

beneficiaries, may request our approval 

to continue to collect fees. 

(2) A qualified organization must 

demonstrate that it is not a creditor of 

the beneficiary. See paragraph (c) of this 

section for exceptions to the 

requirement regarding creditors. 

(c) Creditor relationship. On a caseby-case basis, we may authorize an 

organization to collect a fee for payee 

services despite the creditor 

relationship. (For example, the creditor 

is the beneficiary’s landlord.) To 

provide this authorization, we will 

review all of the evidence submitted by 

the organization and authorize 

collection of a fee when: 

(1) The creditor services (e.g., 

providing housing) provided by the 

organization help to meet the current 

needs of the beneficiary; and 

(2) The amount the organization 

charges the beneficiary for these 

services is commensurate with the 

beneficiary’s ability to pay. 

(d) Authorization process. (1) An 

organization must request in writing 

and receive an authorization from us 

before it may collect a fee. 

(2) An organization seeking 

authorization to collect a fee must also 

give us evidence to show that it is 

qualified, pursuant to paragraphs (a), 

(b), and (c) of this section, to collect a 

fee. 

(3) If the evidence provided to us by 

the organization shows that it meets the 

requirements of this section, and 

additional investigation by us proves it 

suitable to serve, we will notify the 

organization in writing that it is 

authorized to collect a fee. If we need 

more evidence, or if we are not able to 

authorize the collection of a fee, we will 

also notify the organization in writing 

that we have not authorized the 

collection of a fee. 

(e) Revocation and cancellation of the 

authorization. (1) We will revoke an 

authorization to collect a fee if we have 

evidence which establishes that an 

organization no longer meets the 

requirements of this section. We will 

issue a written notice to the 

organization explaining the reason(s) for 

the revocation. 

(2) An organization may cancel its 

authorization at any time upon written 

notice to us. 

(f) Notices. The written notice we will 

send to an organization authorizing the 

collection of a fee will contain an 

effective date for the collection of a fee 

pursuant to paragraphs (a), (b) and (c) of 

this section. The effective date will be 

no earlier than the month in which the 

organization asked for authorization to 

collect a fee. The notice will be 

applicable to all beneficiaries for whom 

the organization was payee at the time 

of our authorization and all 

beneficiaries for whom the organization 

becomes payee while the authorization 

is in effect. 

(g) Limitation on fees. (1) An 

organization authorized to collect a fee 

under this section may collect from a 

beneficiary a monthly fee for expenses 

(including overhead) it has incurred in 

providing payee services to a 

beneficiary. The limit on the fee a 

qualified organization may collect for 

providing payee services increases by 

the same percentage as the annual cost 

of living adjustment (COLA). The 

increased fee amount (rounded to the 

nearest dollar) is taken beginning with 

the benefit for December (received in 

January). 

(2) Any agreement providing for a fee 

in excess of the amount permitted shall 

be void and treated as misuse of your 

benefits by the organization under 

§ 404.2041. 

(3) A fee may be collected for any 

month during which the organization—

(i) Provides representative payee 

services; 

(ii) Receives a benefit payment for the 

beneficiary; and 

(iii) Is authorized to receive a fee for 

representative payee services. 

(4) Fees for services may not be taken 

from any funds conserved for the 

beneficiary by a payee in accordance 

with § 404.2045. 

(5) Generally, an organization may not 

collect a fee for months in which it does 

not receive a benefit payment. However, 

an organization will be allowed to 

collect a fee for months in which it did 

not receive a payment if we later issue 

payment for these months and the 

organization:

(i) Received our approval to collect a 

fee for the months for which payment is 

made; 

(ii) Provided payee services in the 

months for which payment is made; and 

(iii) Was the payee when the 

retroactive payment was paid by us. 

(6) An authorized organization can 

collect a fee for providing representative 

payee services from another source if 

the total amount of the fee collected 

from both the beneficiary and the other 

source does not exceed the amount 

authorized by us.

■ 11. Revise § 404.2041 to read as 

follows:

§ 404.2041 Who is liable if your 

representative payee misuses your 

benefits? 

(a) A representative payee who 

misuses your benefits is responsible for 

paying back misused benefits. We will 

make every reasonable effort to obtain 

restitution of misused benefits so that 

we can repay these benefits to you. 

(b) Whether or not we have obtained 

restitution from the misuser, we will 

repay benefits in cases when we 

determine that a representative payee 

misused benefits and the representative 

payee is an organization or an 

individual payee serving 15 or more 

beneficiaries. When we make 

restitution, we will pay you or your 

Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 60235

alternative representative payee an 

amount equal to the misused benefits 

less any amount we collected from the 

misuser and repaid to you. 

(c) Whether or not we have obtained 

restitution from the misuser, we will 

repay benefits in cases when we 

determine that an individual 

representative payee serving 14 or fewer 

beneficiaries misused benefits and our 

negligent failure in the investigation or 

monitoring of that representative payee 

results in the misuse. When we make 

restitution, we will pay you or your 

alternative representative payee an 

amount equal to the misused benefits 

less any amount we collected from the 

misuser and repaid to you. 

(d) The term ‘‘negligent failure’’ used 

in this subpart means that we failed to 

investigate or monitor a representative 

payee or that we did investigate or 

monitor a representative payee but did 

not follow established procedures in our 

investigation or monitoring. Examples 

of our negligent failure include, but are 

not limited to, the following: 

(1) We did not follow our established 

procedures in this subpart when 

investigating, appointing, or monitoring 

a representative payee;

(2) We did not timely investigate a 

reported allegation of misuse; or 

(3) We did not take the necessary 

steps to prevent the issuance of 

payments to the representative payee 

after it was determined that the payee 

misused benefits. 

(e) Our repayment of misused benefits 

under these provisions does not alter 

the representative payee’s liability and 

responsibility as described in paragraph 

(a) of this section.

■ 12. Revise § 404.2050 to read as 

follows:

§ 404.2050 When will we select a new 

representative payee for you? 

When we learn that your interest is 

not served by sending your benefit 

payment to your present representative 

payee or that your present payee is no 

longer able or willing to carry out payee 

responsibilities, we will promptly stop 

sending your payment to the payee. We 

will then send your benefit payment to 

an alternative payee or directly to you, 

until we find a suitable payee. We may 

suspend payment as explained in 

§ 404.2011(c) if we find that paying you 

directly would cause substantial harm 

and we cannot find a suitable 

alternative representative payee before 

your next payment is due. We will 

terminate payment of benefits to your 

representative payee and find a new 

payee or pay you directly if the present 

payee: 

(a) Has been found by us or a court 

of competent jurisdiction to have 

misused your benefits; 

(b) Has not used the benefit payments 

on your behalf in accordance with the 

guidelines in this subpart; 

(c) Has not carried out the other 

responsibilities described in this 

subpart; 

(d) Dies; 

(e) No longer wishes to be your payee; 

(f) Is unable to manage your benefit 

payments; or 

(g) Fails to cooperate, within a 

reasonable time, in providing evidence, 

accounting, or other information we 

request.

■ 13. Revise § 404.2065 to read as 

follows:

§ 404.2065 How does your representative 

payee account for the use of benefits? 

A representative payee must account 

for the use of benefits. We require 

written reports from your representative 

payee no less than annually (except for 

certain State institutions which 

participate in a separate onsite review 

program). We may verify how your 

representative payee used the funds. 

Your representative payee should keep 

records of how benefits were used in 

order to make accounting reports and 

make those records available upon our 

request. We may ask your representative 

payee to give us the following 

information: 

(a) Where you lived during the 

accounting period; 

(b) Who made the decisions on how 

your benefits were spent or saved; 

(c) How your benefit payments were 

used; and 

(d) How much of your benefit 

payments were saved and how the 

savings were invested.

PART 408—SPECIAL BENEFITS FOR 

CERTAIN WORLD WAR II VETERANS 

(SVB)

■ 14. Add new Subpart F to Part 408 to 

read as follows:

Subpart F—Representative Payment 

Sec. 

408.601 What is this subpart about? 

408.610 When will we send your SVB 

payments to a representative payee? 

408.611 What happens to your monthly 

benefits while we are finding a suitable 

representative payee for you? 

408.615 What information do we consider 

in determining whether we will pay your 

benefits to a representative payee? 

408.620 What information do we consider 

in selecting the proper representative 

payee for you? 

408.621 What is our order of preference in 

selecting a representative payee for you? 

408.622 Who may not serve as a 

representative payee? 

408.624 How do we investigate a 

representative payee applicant? 

408.625 What information must a 

representative payee report to us? 

408.630 How will we notify you when we 

decide you need a representative payee? 

408.635 What are the responsibilities of 

your representative payee? 

408.640 How must your representative 

payee use your benefits? 

408.641 Who is liable if your representative 

payee misuses your benefits? 

408.645 What must your representative 

payee do with unused benefits? 

408.650 When will we select a new 

representative payee for you? 

408.655 When will we stop making your 

payments to a representative payee? 

408.660 What happens to your accumulated 

funds when your representative payee 

changes? 

408.665 How does your representative 

payee account for the use of your SVB 

payments?

Subpart F—Representative Payment

Authority: Secs. 702(a)(5), 807, and 810 of 

the Social Security Act (42 U.S.C. 902(a)(5), 

1007, and 1010).

§ 408.601 What is this subpart about?

(a) Explanation of representative 

payment. This subpart explains the 

policies and procedures we follow to 

determine whether to pay your benefits 

to a representative payee and to select 

a representative payee for you. It also 

explains the responsibilities your 

representative payee has for using the 

funds he or she receives on your behalf. 

A representative payee may be either an 

individual or an organization. We will 

select a representative payee to receive 

your benefits if we believe your interests 

will be better served by paying a 

representative payee than by paying you 

directly. Generally, we appoint a 

representative payee if we determine 

you are unable to manage or direct the 

management of your own benefit 

payments. Because the representative 

payment policies and procedures we 

use for the title VIII program closely 

parallel our title II policies and 

procedures, we provide cross-references 

to the appropriate material in our title 

II representative payment rules in 

subpart U of part 404 of this chapter. 

(b) Policy we use to determine 

whether to make representative 

payment. For an explanation of the 

policy we use to determine whether to 

pay your SVB to a representative payee, 

see § 404.2001(b) of this chapter.

§ 408.610 When will we send your SVB 

payments to a representative payee? 

In determining when we will pay 

your benefits to a representative payee, 

we follow the rules in § 404.2010(a) of 

this chapter.

60236 Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 

§ 408.611 What happens to your monthly 

benefits while we are finding a suitable 

representative payee for you? 

For an explanation of the policy we 

use to determine what happens to your 

monthly benefits while we are finding a 

suitable representative payee for you, 

see § 404.2011 of this chapter. 

§ 408.615 What information do we 

consider in determining whether we will pay 

your benefits to a representative payee? 

We determine whether to pay your 

benefits to a representative payee after 

considering the information listed in 

§ 404.2015 of this chapter. 

§ 408.620 What information do we 

consider in selecting the proper 

representative payee for you? 

To select a proper representative 

payee for you, we consider the 

information listed in § 404.2020 of this 

chapter. 

§ 408.621 What is our order of preference 

in selecting a representative payee for you? 

We use the preference list in 

§ 404.2021(a) of this chapter as a guide 

in selecting the proper representative 

payee for you. 

§ 408.622 Who may not serve as a 

representative payee? 

For a list of individuals who may not 

serve as a representative payee, see 

§ 404.2022 of this chapter. 

§ 408.624 How do we investigate a 

representative payee applicant? 

Before selecting an individual or 

organization as your representative 

payee, we investigate him or her 

following the rules in § 404.2024 of this 

chapter. 

§ 408.625 What information must a 

representative payee report to us? 

Your representative payee must report 

to us information as described in 

§ 404.2025 of this chapter. 

§ 408.630 How will we notify you when we 

decide you need a representative payee? 

(a) We notify you in writing of our 

determination to make representative 

payment. If you are legally incompetent, 

our written notice is sent to your legal 

guardian or legal representative. The 

notice explains that we have determined 

that representative payment is in your 

interest, and it provides the name of the 

representative payee we have selected. 

The notice: 

(1) Contains language that is easily 

understandable to the reader. 

(2) Identifies the person designated as 

your representative payee. 

(3) Explains that you, your legal 

guardian, or your legal representative 

can appeal our determination that you 

need a representative payee. 

(4) Explains that you, your legal 

guardian, or your legal representative 

can appeal our designation of a 

particular person to serve as 

representative payee. 

(b) If you, your legal guardian, or your 

legal representative objects to 

representative payment or to the 

designated payee, you can file a formal 

appeal. 

§ 408.635 What are the responsibilities of 

your representative payee? 

For a list of your representative 

payee’s responsibilities, see § 404.2035 

of this chapter. 

§ 408.640 How must your representative 

payee use your benefits? 

Your representative payee must use 

your benefits in accordance with the 

rules in § 404.2040 of this chapter. 

§ 408.641 Who is liable if your 

representative payee misuses your 

benefits? 

For the rules we follow to determine 

who is liable for repayment of misused 

benefits, see § 404.2041 of this chapter. 

§ 408.645 What must your representative 

payee do with unused benefits? 

If your representative payee has 

accumulated benefits for you, he or she 

must conserve or invest them as 

provided in § 404.2045 of this chapter. 

§ 408.650 When will we select a new 

representative payee for you? 

We follow the rules in § 404.2050 of 

this chapter to determine when we will 

select a new representative payee for 

you. 

§ 408.655 When will we stop making your 

payments to a representative payee? 

To determine when we will stop 

representative payment for you, we 

follow the rules in § 404.2055 of this 

chapter. 

§ 408.660 What happens to your 

accumulated funds when your 

representative payee changes? 

For a description of what happens to 

your accumulated funds (including the 

interest earned on the funds) when we 

change your representative payee or 

when you begin receiving benefits 

directly, see § 404.2060 of this chapter. 

§ 408.665 How does your representative 

payee account for the use of your SVB 

payments? 

Your representative payee must 

account for the use of your benefits as 

specified in § 404.2065 of this chapter. 

PART 416—SUPPLEMENTAL 

SECURITY INCOME FOR THE AGED, 

BLIND AND DISABLED 

Subpart F—Representative Payment 

■ 15. The authority citation for subpart 

F continues to read as follows: 

Authority: Secs. 702(a)(5), 1631(a)(2) and 

(d)(1) of the Social Security Act (42 U.S.C. 

902(a)(5) and 1383(a)(2) and (d)(1)). 

■ 16. Add § 416.611 to read as follows: 

§ 416.611 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 

eligibility for benefits) or suspend (in 

the case of existing eligibility for 

benefits) payments for as long as one 

month while we try to find a suitable 

representative payee. 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 or 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 

Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 60237

presumption that direct payment would 

cause you substantial harm. See 

§ 416.601(b)(3) for our policy on 

suspending the 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 claimant 

receiving title XVI benefits based on age 

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 XVI claimant who suffers from 

a combination of mental impairments 

but who is not legally incompetent. We 

determine that Mr. Y needs assistance in 

managing 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, 

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.

■ 17. Amend § 416.621 by revising the 

section heading and paragraph (a) 

introductory text, redesignating 

paragraph (b) as paragraph (c) and 

adding new paragraph (b) to read as 

follows:

§ 416.621 What is our order of preference 

in selecting a representative payee for you?

* * * * *

(a) For beneficiaries 18 years old or 

older (except those described in 

paragraph (b) of this section), our 

preference is—

* * * * *

(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 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 

(5) A family member.

* * * * *

■ 18. Add § 416.622 to read as follows:

§ 416.622 Who may not serve as a 

representative payee? 

A representative payee applicant may 

not serve if he/she: 

(a) Has been convicted of a violation 

under section 208, 811 or 1632 of the 

Social Security Act. 

(b) Receives title II, VIII, or XVI 

benefits through a representative payee. 

(c) Previously served as a 

representative payee and was found by 

us, or a court of competent jurisdiction, 

to have misused title II, VIII or XVI 

benefits. However, if we decide to make 

an exception to the prohibition, we 

must evaluate the payee’s performance 

at least every 3 months until we are 

satisfied that the payee poses no risk to 

the beneficiary’s best interest. 

Exceptions are made on a case-by-case 

basis if all of the following are true: 

(1) Direct payment of benefits to the 

beneficiary is not in the beneficiary’s 

best interest. 

(2) No suitable alternative payee is 

available. 

(3) Selecting the payee applicant as 

representative payee would be in the 

best interest of the beneficiary. 

(4) The information we have indicates 

the applicant is now suitable to serve as 

a representative payee.

(5) The payee applicant has repaid the 

misused benefits or has a plan to repay 

them. 

(d) Is a creditor. A creditor is someone 

who provides you with goods or 

services for consideration. This 

restriction does not apply to the creditor 

who poses no risk to you and whose 

financial relationship with you presents 

no substantial conflict of interest, and is 

any of the following: 

(1) A relative living in the same 

household as you do. 

(2) Your legal guardian or legal 

representative. 

(3) A facility that is licensed or 

certified as a care facility under the law 

of a State or a political subdivision of 

a State. 

(4) A qualified organization 

authorized to collect a monthly fee from 

you for expenses incurred in providing 

representative payee services for you, 

under § 416.640a. 

(5) An administrator, owner, or 

employee of the facility in which you 

live and we are unable to locate an 

alternative representative payee. 

(6) Any other individual we deem 

appropriate based on a written 

determination. 

Example 1: Sharon applies to be 

representative payee for Ron who we 

have determined needs assistance in 

managing his benefits. Sharon has been 

renting a room to Ron for several years 

and assists Ron in handling his other 

financial obligations, as needed. She 

charges Ron a reasonable amount of 

rent. Ron has no other family or friends 

willing to help manage his benefits or to 

act as representative payee. Sharon has 

demonstrated that her interest in and 

concern for Ron goes beyond her desire 

to collect the rent each month. In this 

instance, we may select Sharon as Ron’s 

representative payee because a more 

suitable payee is not available, she 

appears to pose no risk to Ron and there 

is minimal conflict of interest. We will 

document this decision. 

Example 2: In a situation similar to 

the one above, Ron’s landlord indicates 

that she is applying to be payee only to 

ensure receipt of her rent. If there is 

money left after payment of the rent, she 

will give it directly to Ron to manage on 

his own. In this situation, we would not 

select the landlord as Ron’s 

representative payee because of the 

substantial conflict of interest and lack 

of interest in his well being.

■ 19. Add § 416.624 to read as follows:

§ 416.624 How do we investigate a 

representative payee applicant? 

Before selecting an individual or 

organization to act as your 

representative payee, we will perform 

an investigation. 

(a) Nature of the investigation. As part 

of the investigation, we do the 

following: 

(1) Conduct a face-to-face interview 

with the payee applicant unless it is 

impracticable as explained in paragraph 

(b) of this section. 

(2) Require the payee applicant to 

submit documented proof of identity, 

unless information establishing identity 

has recently been submitted with an 

application for title II, VIII or XVI 

benefits. 

(3) Verify the payee applicant’s Social 

Security account number or employer 

identification number. 

(4) Determine whether the payee 

applicant has been convicted of a 

violation of section 208, 811 or 1632 of 

the Social Security Act. 

(5) Determine whether the payee 

applicant has previously served as a 

representative payee and if any previous 

appointment as payee was revoked or 

terminated for misusing title II, VIII or 

XVI benefits. 

60238 Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 

(6) Use our records to verify the payee 

applicant’s employment and/or direct 

receipt of title II, VIII, or XVI benefits. 

(7) Verify the payee applicant’s 

concern for the beneficiary with the 

beneficiary’s custodian or other 

interested person. 

(8) Require the payee applicant to 

provide adequate information showing 

his or her relationship to the beneficiary 

and to describe his or her responsibility 

for the care of the beneficiary. 

(9) Determine whether the payee 

applicant is a creditor of the beneficiary 

(see § 416.622(d)). 

(b) A face-to-face interview. We may 

consider a face-to-face interview 

impracticable if it would cause the 

payee applicant undue hardship. For 

example, the payee applicant would 

have to travel a great distance to the 

field office. In this situation, we may 

conduct the investigation to determine 

the payee applicant’s suitability to serve 

as a representative payee without a faceto-face interview. We may decide 

subsequent face-to-face interviews are 

impracticable for an organizational 

representative payee applicant when the 

organization is known by the field office 

as a suitable payee. We base this 

decision on the organization’s past 

performance, recent contacts, and its 

knowledge of and compliance with 

reporting requirements.

■ 20. Revise § 416.625 to read as follows:

§ 416.625 What information must a 

representative payee report to us? 

Anytime after we select a 

representative payee for you, we may 

ask your payee to give us information 

showing a continuing relationship with 

you, a continuing responsibility for your 

care, and how he/she used the payments 

on your behalf. If your representative 

payee does not give us the requested 

information within a reasonable period 

of time, we may stop sending your 

benefit payment to him/her—unless we 

determine that he/she had a satisfactory 

reason for not meeting our request and 

we subsequently receive the requested 

information. If we decide to stop 

sending your benefit payment to your 

representative payee, we will consider 

paying you directly (in accordance with 

§ 416.611) while we look for a new 

payee.

■ 21. Revise § 416.630 to read as follows:

§ 416.630 How will we notify you when we 

decide you need a representative payee? 

(a) We notify you in writing of our 

determination to make representative 

payment. This advance notice explains 

that we have determined that 

representative payment is in your 

interest, and it provides the name of the 

representative payee we have selected. 

We provide this notice before we 

actually appoint the payee. If you are 

under age 15, an unemancipated minor 

under the age of 18, or legally 

incompetent, our written notice goes to 

your legal guardian or legal 

representative. The advance notice: 

(1) Contains language that is easily 

understandable to the reader. 

(2) Identifies the person designated as 

your representative payee. 

(3) Explains that you, your legal 

guardian, or your legal representative 

can appeal our determination that you 

need a representative payee.

(4) Explains that you, your legal 

guardian, or your legal representative 

can appeal our designation of a 

particular person to serve as your 

representative payee. 

(5) Explains that you, your legal 

guardian, or your legal representative 

can review the evidence upon which 

our designation of a particular 

representative payee is based and 

submit additional evidence. 

(b) If you, your legal guardian, or your 

legal representative objects to 

representative payment or to the 

designated payee, we will handle the 

objection as follows: 

(1) If you disagree with the decision 

and wish to file an appeal, we will 

process it under subpart N of this part. 

(2) If you received your advance 

notice by mail and you protest or file 

your appeal within 10 days after you 

receive the notice, we will delay the 

action until we make a decision on your 

protest or appeal. (If you received and 

signed your notice while you were in 

the local field office, our decision will 

be effective immediately.)

■ 22. Revise § 416.640a to read as 

follows:

§ 416.640a Compensation for qualified 

organizations serving as representative 

payees. 

(a) Organizations that can request 

compensation. A qualified organization 

can request us to authorize it to collect 

a monthly fee from your benefit 

payment. A qualified organization is: 

(1) Any State or local government 

agency with fiduciary responsibilities or 

whose mission is to carry out income 

maintenance, social service, or health 

care-related activities; or 

(2) Any community-based nonprofit 

social service organization founded for 

religious, charitable or social welfare 

purposes, that is tax exempt under 

section 50l(c) of the Internal Revenue 

Code and that is licensed in the State in 

which it serves as representative payee 

or bonded. 

(b) Requirements qualified 

organizations must meet. Organizations 

that are qualified under paragraphs 

(a)(1) or (a)(2) of this section must also 

meet the following requirements before 

we can authorize them to collect a 

monthly fee. 

(1) A qualified organization must 

regularly provide representative payee 

services concurrently to at least five 

beneficiaries. An organization which 

has received our authorization to collect 

a fee for representative payee services, 

but is temporarily (not more than 6 

months) not a payee for at least five 

beneficiaries, may request our approval 

to continue to collect fees. 

(2) A qualified organization must 

demonstrate that it is not a creditor of 

the beneficiary. See paragraph (c) of this 

section for exceptions to the 

requirement regarding creditors. 

(c) Creditor relationship. On a caseby-case basis, we may authorize an 

organization to collect a fee for payee 

services despite the creditor 

relationship. (For example, the creditor 

is the beneficiary’s landlord.) To 

provide this authorization, we will 

review all of the evidence submitted by 

the organization and authorize 

collection of a fee when: 

(1) The creditor services (e.g., 

providing housing) provided by the 

organization help to meet the current 

needs of the beneficiary; and 

(2) The amount the organization 

charges the beneficiary for these 

services is commensurate with the 

beneficiary’s ability to pay. 

(d) Authorization process. (1) An 

organization must request in writing 

and receive an authorization from us 

before it may collect a fee. 

(2) An organization seeking 

authorization to collect a fee must also 

give us evidence to show that it is 

qualified, pursuant to paragraphs (a), 

(b), and (c) of this section, to collect a 

fee. 

(3) If the evidence provided to us by 

the organization shows that it meets the 

requirements of this section, and 

additional investigation by us proves it 

suitable to serve, we will notify the 

organization in writing that it is 

authorized to collect a fee. If we need 

more evidence, or if we are not able to 

authorize the collection of a fee, we will 

also notify the organization in writing 

that we have not authorized the 

collection of a fee. 

(e) Revocation and cancellation of the 

authorization. (1) We will revoke an 

authorization to collect a fee if we have 

evidence which establishes that an 

organization no longer meets the 

requirements of this section. We will 

issue a written notice to the 

organization explaining the reason(s) for 

the revocation. 

Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 60239

(2) An organization may cancel its 

authorization at any time upon written 

notice to us. 

(f) Notices. The written notice we will 

send to an organization authorizing the 

collection of a fee will contain an 

effective date for the collection of a fee 

pursuant to paragraphs (a), (b) and (c) of 

this section. The effective date will be 

no earlier than the month in which the 

organization asked for authorization to 

collect a fee. The notice will be 

applicable to all beneficiaries for whom 

the organization was payee at the time 

of our authorization and all 

beneficiaries for whom the organization 

becomes payee while the authorization 

is in effect. 

(g) Limitation on fees. (1) An 

organization authorized to collect a fee 

under this section may collect from a 

beneficiary a monthly fee for expenses 

(including overhead) it has incurred in 

providing payee services to a 

beneficiary. The limit on the fee a 

qualified organization may collect for 

providing payee services increases by 

the same percentage as the annual cost 

of living adjustment (COLA). The 

increased fee amount (rounded to the 

nearest dollar) is taken beginning with 

the payment for January. 

(2) Any agreement providing for a fee 

in excess of the amount permitted shall 

be void and treated as misuse of your 

benefits by the organization under 

§ 416.641. 

(3) A fee may be collected for any 

month during which the organization—

(i) Provides representative payee 

services; 

(ii) Receives a benefit payment for the 

beneficiary; and 

(iii) Is authorized to receive a fee for 

representative payee services. 

(4) Fees for services may not be taken 

from any funds conserved for the 

beneficiary by a payee in accordance 

with § 416.645. 

(5) Generally, an organization may not 

collect a fee for months in which it does 

not receive a benefit payment. However, 

an organization will be allowed to 

collect a fee for months in which it did 

not receive a payment if we later issue 

payment for these months and the 

organization: 

(i) Received our approval to collect a 

fee for the months for which payment is 

made; 

(ii) Provided payee services in the 

months for which payment is made; and 

(iii) Was the payee when the 

retroactive payment was paid by us. 

(6) An authorized organization can 

collect a fee for providing representative 

payee services from another source if 

the total amount of the fee collected 

from both the beneficiary and the other 

source does not exceed the amount 

authorized by us.

■ 23. Revise § 416.641 to read as follows:

§ 416.641 Who is liable if your 

representative payee misuses your 

benefits? 

(a) A representative payee who 

misuses your benefits is responsible for 

paying back misused benefits. We will 

make every reasonable effort to obtain 

restitution of misused benefits so that 

we can repay these benefits to you. 

(b) Whether or not we have obtained 

restitution from the misuser, we will 

repay benefits in cases when we 

determine that a representative payee 

misused benefits and the representative 

payee is an organization or an 

individual payee serving 15 or more 

beneficiaries. When we make 

restitution, we will pay you or your 

alternative representative payee an 

amount equal to the misused benefits 

less any amount we collected from the 

misuser and repaid to you. 

(c) Whether or not we have obtained 

restitution form the misuser, we will 

repay benefits in cases when we 

determine that an individual 

representative payee serving 14 or fewer 

beneficiaries misused benefits and our 

negligent failure in the investigation or 

monitoring of that representative payee 

results in the misuse. When we make 

restitution, we will pay you or your 

alternative representative payee an 

amount equal to the misused benefits 

less any amount we collected from the 

misuser and repaid to you. 

(d) The term ‘‘negligent failure’’ used 

in this subpart means that we failed to 

investigate or monitor a representative 

payee or that we did investigate or 

monitor a representative payee but did 

not follow established procedures in our 

investigation or monitoring. Examples 

of our negligent failure include, but are 

not limited to, the following: 

(1) We did not follow our established 

procedures in this subpart when 

investigating, appointing, or monitoring 

a representative payee; 

(2) We did not investigate timely a 

reported allegation of misuse; or 

(3) We did not take the steps 

necessary to prevent the issuance of 

payments to the representative payee 

after it was determined that the payee 

misused benefits. 

(e) Our repayment of misused benefits 

under these provisions does not alter 

the representative payee’s liability and 

responsibility as described in paragraph 

(a) of this section.

■ 24. Revise § 416.650 to read as follows:

§ 416.650 When will we select a new 

representative payee for you? 

When we learn that your interest is 

not served by sending your benefit 

payment to your present representative 

payee or that your present payee is no 

longer able or willing to carry out payee 

responsibilities, we will promptly stop 

sending your payment to the payee. We 

will then send your benefit payment to 

an alternative payee or directly to you, 

until we find a suitable payee. We may 

suspend payment as explained in 

§ 416.611(c) if we find that paying you 

directly would cause substantial harm 

and we cannot find a suitable 

alternative representative payee before 

your next payment is due. We will 

terminate payment of benefits to your 

representative payee and find a new 

payee or pay you directly if the present 

payee: 

(a) Has been found by us or a court 

of competent jurisdiction to have 

misused your benefits; 

(b) Has not used the benefit payments 

on your behalf in accordance with the 

guidelines in this subpart; 

(c) Has not carried out the other 

responsibilities described in this 

subpart; 

(d) Dies; 

(e) No longer wishes to be your payee; 

(f) Is unable to manage your benefit 

payments; or 

(g) Fails to cooperate, within a 

reasonable time, in providing evidence, 

accounting, or other information we 

request.

■ 25. Revise § 416.665 to read as follows:

§ 416.665 How does your representative 

payee account for the use of benefits? 

A representative payee must account 

for the use of benefits. We require 

written reports from your representative 

payee no less than annually (except for 

certain State institutions which 

participate in a separate onsite review 

program). We may verify how your 

representative payee used the funds. 

Your representative payee should keep 

records of how benefits were used in 

order to make accounting reports and 

make those records available upon our 

request. We may ask your representative 

payee to give us the following 

information: 

(a) Where you lived during the 

accounting period; 

(b) Who made the decisions on how 

your benefits were spent or saved; 

(c) How your benefit payments were 

used; and 

(d) How much of your benefit 

payments were saved and how the 

savings were invested.

60240 Federal Register / Vol. 69, No. 194 / Thursday, October 7, 2004 / Rules and Regulations 

Subpart N—Determinations, 

Administrative Review Process, and 

Reopening of Determinations and 

Decisions

■ 26. The authority citation for subpart 

N continues to read as follows:

Authority: Secs. 702(a)(5), 1631, and 1633 

of the Social Security Act (42 U.S.C. 

902(a)(5), 1383, and 1383(b)); 31 U.S.C. 

3720A.

■ 27. Amend § 416.1402 by revising 

paragraph (d), removing the word ‘‘and’’

at the end of paragraph (m), removing the 

period at the end of paragraph (n) and 

adding ‘‘; and,’’ in its place, and adding 

paragraph (o) to read as follows:

§ 416.1402 Administrative actions that are 

initial determinations.

* * * * *

(d) Whether the payment of your 

benefits will be made, on your behalf, to 

a representative payee;

* * * * *

(o) Whether we were negligent in 

investigating or monitoring or failing to 

investigate or monitor your 

representative payee, which resulted in 

the misuse of benefits by your 

representative payee.

[FR Doc. 04–22331 Filed 10–6–04; 8:45 am] 

BILLING CODE 4191–02–P