TN 31 (03-05)

GN 00502.186 Payment of Large Retroactive Benefits or Conserved Funds

A. Policy

1. General

Generally, retroactive or conserved funds of less than $4000 will be paid to the payee in one lump-sum payment. However, if you believe the beneficiary's best interests will be served by paying accumulated funds in installments over a period of time, you may do so.

EXCEPTION: For SSI disabled children with a payee, if past due benefits (less any IAR) exceed six times the FBR plus any federally administered optional State supplement, such benefits must be paid into a dedicated account (see SI 02101.010 and GN 00603.025).

CAUTION: FO direct input of title II payee appointments will automatically release all accrued benefits. If installments are needed, the processing centers must take the action.

2. When to Consider Installments

Installments may be appropriate when:

  • the representative payee is inexperienced at managing another person's funds, particularly with a large accumulation;

  • the payee does not have reasonable plans for using the accumulation;

  • the payee is one you have appointed conditionally (see GN 00502.133;

  • the payee is a friend (payee type “OTHER”) who does not have custody of the beneficiary;

  • your investigation of the payee raised any question about the payee's suitability;

  • the current and foreseeable needs of the beneficiary are such that installments are needed to protect the interests of the beneficiary; or

  • you believe for some other reason this payment arrangement is in the beneficiary's best interests.

    NOTE: SSI past due benefits (less IAR) which equal or exceed 12 times the Federal Benefit Rate (FBR), plus any federally administered State supplement, must be paid in installments (see SI 02101.020).

3. Accumulation of $4000 or More

If the amount of accumulation is $4,000 or more, assess the payee's ability to handle such an accumulation UNLESS the payee is:

  • the beneficiary's close relative who has custody of the beneficiary (see GN 00603.070B.3.);

  • the beneficiary's legal guardian; or

  • a bank or trust company.

  • Social agency or a public or nonprofit institution or organization whose principal activities include direct care and maintenance or treatment of children or incapable adults.

B. Procedure - General

1. Payee Assessment

Assess the payee's ability to handle large sums of money.

  1. Ask the payee how he/she plans to use the money. If possible, ask the beneficiary whether the payee's plans for the money meet his/her needs. If benefits are to be conserved, make sure the payee understands and is willing to comply with SSA guidelines regarding conservation of benefits (see GN 00603.000 ).

  2. Ask the payee if he/she has experience managing a large sum of money. If possible, obtain corroboration of the payee's allegations. If the payee is serving for other beneficiaries, obtain an accounting of how he/she used other large payments.

  3. Obtain evidence of the payee's ability to handle his/her own funds. Is he/she in debt? Does he/she have sufficient means to meet his own expenses? Determine how he/she has used any similar large payments.

    If, in looking at these factors, it appears the payee is able to handle the accrual, pay it in one lump sum. If, however, it appears the payee may not be able to use such a large sum properly, pay the accrual in installments.

2. Documentation

Use the Rep Payee/Bene Relationship “Note Type” on the Make Note screen to document any decision to pay in installments in the eRPS (or a RC outside the eRPS). Also, document your payment decision in any case in which the accrual is $4,000 or more. In your documentation, describe the factors that led to the decision.

C. Procedure – Substance Abuse

Benefits to individuals who were entitled because drug addiction or alcoholism was a contributing factor material to their disability were terminated effective 1/1/97. Installment payments to their representative payees continued until all remaining benefits were paid. See MS INTRANETCPS 001.001 and SM 00635.