PROGRAM OPERATIONS MANUAL SYSTEMPart GN – GeneralChapter 005 – Selection of Representative PayeeSubchapter 06 – Payment for Representative Payee ServicesTransmittal No. 15, 07/13/2020
This POMS section gives instructions on when an organization can receive a fee from the beneficiary for representative payee services.
Summary of Changes
GN 00506.100 Criteria for Receiving Fees for Service
Subsection B.2.a.1 – Clarified that the Note refers to “the beneficiaries’ parent district office service area.”
Subsection B.3.b – Added language to explain how the creditor exception for fee-for-service payees relates to the creditor exceptions for representative payee selection in GN 00502.135, and revised the description of the creditor exception to be more consistent with 20 CFR §404.2040a(c).
Only qualified organizations serving as payee may participate in the Fee-for-Service (FFS) program. The field office (FO) authorizes the organization to collect a fee for providing representative payee services. Authorized organizations must meet all the criteria defined in the Social Security Act and SSA regulations.
State or local government agencies must meet the criteria for ONE of the following types of agencies and meet the requirements explained in GN 00506.100B.3.
An agency has an income maintenance mission if it strives to ensure that its clients attain or maintain a minimal standard of living (usually by the issuance of monetary allowances, food programs, etc.). These agencies are generally welfare departments.
An agency has a social service mission if it performs social work, that is, organized efforts to advance the welfare of the public or a certain group of people. (For example, a State Department of Social Services)
An agency has a health care-related mission if it provides medical services to the public for the treatment of physical or mental limitations or illnesses. (For example, a county hospital or community mental health clinic)
An agency has fiduciary responsibilities if it regularly acts as an agent in administering money or property for the benefit of others. A housing agency operated by a state or local government, a public guardian, or a conservator are examples.
Non-governmental agencies must meet ALL of the following criteria and the requirements explained in GN 00506.100B.3.
A non-governmental organizational payee requesting to charge a fee must be community based. It is community based if it meets all of the following criteria:
The organization’s physical business office and its beneficiaries' residence addresses are located within the same FO service area. If the organization serves beneficiaries outside its FO service area, the organization’s physical business office must be within 75 miles of its beneficiaries’ servicing FO(s).
In special circumstances in remote areas, the Regional Office may determine that an organization meets this criterion if the organization’s physical business office is located in the same parent district office service area as the beneficiaries' parent district office service area or an FO service area adjacent to its beneficiaries' FO service area.
The physical business office is accessible to the public.
The organization employs at least one staff person who works in the physical business office and handles payee responsibilities. The staff must be available during normal daytime business hours to provide in-person, and telephone contact with beneficiaries they serve.
The organization maintains the physical business office for the entire length of its service as a FFS payee.
The organization requesting permission to charge fees must provide a letter to the authorizing FO describing that it meets the community-based criteria.
Some organizations have multiple branches or offices that are affiliated with a statewide or national association. Each individual branch/office of the organization must apply separately for FFS approval.
An organization is a non-profit social service agency if it has tax-exempt status under section 501(c) of the Internal Revenue Code and it is established for a religious, charitable or social welfare purpose. Agencies granted tax-exemption would have a ruling or determination letter from the Internal Revenue Service (IRS) to this effect. The letter will include the organization’s employer identification number (EIN). In many cases, the IRS letter will prove that the agency is both nonprofit and social service. A copy of the IRS letter should accompany the request to collect a fee.
The Internal Revenue Code has different categories of tax-exemption—501(c)(3), 501(c)(5), 501(c)(10), etc. For determining nonprofit status as a religious, charitable, or social welfare agency, 501(c)(3) and 501(c)(4) are applicable. If a payee applicant has a different 501(c) status, look at the nature of the organization to determine if it is established for a religious, charitable, or social welfare purpose. If in doubt, consult with the Programs Section of your Regional Office, which in turn can request an opinion from the Office of the Regional Chief Counsel.
The organization must be bonded and licensed, if licensing is available in the State. (See GN 00506.105C and GN 00506.105D for bonding/insurance guidelines.)
Government and non-government organizations must meet both of the following requirements:
The organization must be regularly serving as payee for at least five beneficiaries. The information submitted must include a list of the names, Social Security numbers, and resident addresses of all beneficiaries for whom the organization is currently payee.
Query the RPS or MBR/SSR to ensure that the organization is payee for at least five of the beneficiaries on the list supplied by the payee. The organization must be the appointed payee for each of the five beneficiaries for a minimum of one calendar month. Please note the payment status field. The beneficiary’s MBR/SSR should be an active record.
CAUTION: There may be situations where an organization is payee for five or more beneficiaries, but collects a fee from less than five. An organization is considered to be regularly serving as payee for a beneficiary regardless of whether it collects a fee from that beneficiary.
Generally, an organization cannot be a creditor of the beneficiaries that is serves. Organizations that indicate they have a creditor relationship with the beneficiaries must meet the requirements in GN 00502.135 in order to be selected as payee. In addition, the organization cannot collect fees for representative payee services from beneficiaries for which it is a creditor unless:
The goods or services that create the creditor relationship help to meet the current needs of the beneficiary. To meet this condition, these items must be for the immediate needs of the beneficiary, such as food, clothing, and housing. Creditor relationships related only to discharging past debts do not meet this requirement; and
The amount the payee charges the beneficiary for the organization's services is consistent with rates charged other individuals and is reasonable for the services provided, and the organization has a policy that allows it to consider the beneficiary’s ability to pay when determining the amount to be charged for the goods and services it provides.
IMPORTANT: A creditor organization's authorization to collect a fee for serving as payee for one beneficiary does not extend to subsequent applications for other beneficiaries. Such authorizations must be made on a case-by-case basis.