PROGRAM OPERATIONS MANUAL SYSTEMPart GN – GeneralChapter 006 – Use and Accountability of BenefitsSubchapter 02 – Use of BenefitsTransmittal No. 22, 11/16/2022
Currently, the POMS section for misapplication of funds in a dedicated account is SI
02220.060. Additionally, GN 00602.140 contains misapplication information as well. We are making these updates to consolidate all misapplication information into one POMS section. As part of the consolidation, we are archiving SI 02220.060 and moving all the misapplication information into a new GN section, GN 00602.150.
Summary of Changes
GN 00602.140 Permitted Expenditures from Dedicated Accounts
Subsection A - Changed title of subsection to 'Introduction to use of dedicated accounts".
Subsection B - Moved information about misapplication to new POMS section GN
Subsection C - Moved procedure for misapplication and misuse to new POMS section GN
Subsection D - Added this section in full. It was previously in SI 02220.060.
Subsection I - Added new misapplication section GN 00602.150 and GN 00603.025 to references.
GN 00602.150 Misapplication of Funds in a Dedicated Account
Subsection A - Consolidated historical background information; and added information about beneficiaries in direct pay.
Subsection C - Updated language about overpayments and waivers for clarify purposes. Added information about beneficiaries in direct pay that was previously in GN
Subsection D - Added instructions that were previously in GN 00602.140 regarding preparation of an SSA-553, developing for misuse, and analyzing the SSA-552. Consolidated reconsideration information in this section as well.
This section describes how a representative payee (payee), or a recipient in direct payment, may use the funds in a dedicated account. The instructions refer to “payees” unless specific instructions refer to individuals who attain age 18. Additionally, we will refer to the person managing the dedicated account as a representative payee; but a recipient in direct payment can manage their own dedicated account.
Effective August 23, 1996, we must pay into a dedicated account certain past-due benefits issued to the payee of a supplemental security income (SSI) recipient who is under age 18. For the policy on which past-due benefits this affects, see SI 02101.010. We call this account a dedicated account because the law prohibits the deposit of these funds into the same account as regular monthly SSI payments and limits the expenditures from this account.
This law and its restrictions represent a significant departure from the traditional approach on the use of SSI benefits by payees. These restrictions limit a payee's discretion on the use of funds in a dedicated account and require the payee to use the funds in a dedicated account only for medical treatment, education, job skills training, or expenditures related in some other way to a consequence of the child’s impairment.
The law requires that we exclude dedicated account funds from resources when determining eligibility for SSI payments, see SI 01130.601. This exclusion gives a payee the use of the funds over a longer period without jeopardizing the child's eligibility to receive SSI payments.
A payee must use dedicated account funds for the benefit of the child and only for any of the following expenses:
Job skills training.
If related to the child’s impairment:
Personal needs assistance,
Other items and services that SSA determines appropriate.
NOTE: While we do not require payees to obtain our approval before making expenditures in the “other” category, you should encourage them to do so. The payee should explain how or why the “other items and services” relate to the child’s impairment. Field office (FO) staff should approve or deny requests promptly because many families depend on a quick response to a request to use funds. For examples, see GN
00602.140E. in this section.
A payee may
not use dedicated account funds for:
Items or services not listed in GN 00602.140B.1 in this section;
Repayment of SSI overpayments (see GN
Basic maintenance costs (food, housing, clothing, and personal items) not related to the child’s impairment.
EMERGENCY EXCEPTION: SSA determines that in emergency situations, where the unavailability of dedicated account funds for basic living expenses may result in the child becoming homeless or malnourished, a payee may use dedicated account funds to prevent the child from becoming homeless or malnourished, if otherwise appropriate.
We must monitor a payee’s use of funds from the dedicated account. Therefore, we require a payee to keep records and receipts of all deposits to, and expenditures from, the dedicated account. In addition, the payee must submit an annual accounting report, SSA-6233, Representative Payee Report of Benefits and Dedicated Account, of the use of benefits and the activity of funds in the dedicated account. For information on the monitoring of payees with dedicated accounts, see GN 00605.200 through GN 00605.240. See GN 00602.140C.2 for use of dedicated account monitoring procedures.
Misapplication refers to the use of dedicated account funds for non-permitted expenditures for the recipient. Misapplication occurs when a payee, or an individual who is in direct-payment knowingly uses dedicated account funds for non-permitted expenditures or basic maintenance costs (unless the emergency exception in GN 00602.140B.1 in this section applies).
Misapplication differs from misuse in that misuse occurs when a payee uses funds for a purpose other than for the use and benefit of the recipient, while the misapplication of dedicated account funds, though not permitted, can benefit the recipient. For information on the misuse of benefits, see GN 00604.001.
If SSA determines that a payee knowingly misapplied funds, we will seek repayment from the payee for the misapplied amount on a dollar-for-dollar basis. For more information on misapplication, see GN
Approvals and denials of expenditure requests, as well as misapplication determinations for dedicated account funds, are initial determinations with appeal rights. For information on the procedures for misapplication appeals, see GN
Dedicated account rules continue to apply until the funds become depleted or SSI eligibility terminates. This includes situations where an individual recipient attains age 18, continues to be eligible and goes into direct pay, or when a new payee is appointed.
A former payee must return conserved dedicated account funds to SSA for reissue to a new payee or to the recipient in direct payment. The new payee or recipient must establish a new dedicated account before SSA reissues the conserved dedicated account funds.
When eligibility terminates, treat any funds remaining in the dedicated account as conserved funds and follow GN 00603.055 and GN 00603.100.
Once the payee establishes the dedicated account (see GN 00603.025) and provides the FO with the required information for the account (see SI
01130.601D and SI 02101.010B.3), have the payee or recipient in direct payment sign and date the SSA-552, Dedicated Account Use of Funds Statement. A PDF version of form SSA-552 is available on the inForm Library website to print. An individual who needs to complete an SSA-552 has the option to use the online service to complete the form (e552) in lieu of returning a completed paper form by mail or in person. The technician can send the link to the individual to complete the form online. The link can be sent through the eMailer program.
The SSA-552 provides information on the appropriate use of dedicated account funds along with reporting responsibilities associated with the dedicated account. By signing the form, the payee acknowledges that they understand the dedicated account use restrictions.
The FO should:
Give the payee a copy of the signed SSA-552; and
Retain a copy of the SSA-552 in eDIB or the Non Disability Repository for Evidentiary Documents (NDRED) using the Evidence Portal (EP), as outlined in GN 00301.322. Once faxed into the file, follow the instructions in GN 00301.322 to destroy the paper SSA-552.
NOTE: The submitted e552 will be electronically routed to the jurisdictional FO in WorkTrack based on the payee’s (or recipient, if in direct pay) ZIP code. If a payee completes and submits the SSA-552 online, they will have the opportunity to download a copy after submission. This is the only time they will be able to download and retain a completed copy of the form from Adobe Sign.
The payee has special insight into the needs of the child and bears the responsibility to explain why or how an item or service, other than medical treatment, education, or job skills training, relates to the child’s impairment.
Because each expenditure request is unique, FO staff should consider all requests carefully, and ensure that the payee has the opportunity to explain the connection between the expenditure and the child’s impairment.
FO staff should use their best judgment to decide on a case-by-case basis whether the expenditure relates to, results from, or would improve the child’s condition.
The FO should take the following steps during the determination process:
Use the remarks segment of the Supplemental Security Record (SSR), Report of Contact (DROC) screen, or other mechanism to document the determination.
Remind the payee of record-keeping responsibilities, which include keeping all records and receipts for all dedicated account deposits and expenditures.
Inform the payee of annual accounting requirements.
Provide the payee with notice of the determination and appeal rights. See GN
On an annual basis, payees must report expenditures from, and deposits to, dedicated accounts, see GN 00605.200 and GN 00605.215. FO staff will review dedicated accounts separately from the annual accounting, due to allegations of misapplication or misuse. If you receive an allegation of misapplication or misuse, take the following steps:
Review records and receipts and determine if the expenditures are permitted according to GN
00602.140B.1. in this section. If the payee did not keep receipts, obtain a signed statement from the payee that explains the expenditures.
If the payee did not obtain SSA pre-approval before using the dedicated account funds, follow GN 00602.140B.1. and GN 00602.140C.1. in this section, to determine if we permit the expenditure.
If there is an allegation of misuse of dedicated account funds, follow the procedures in GN
If your review of the dedicated account reveals that the payee knowingly
misapplied funds for items or services not permitted, follow the instructions in GN
REMINDER: Misapplication is not the same as misuse.
While the individual remains eligible for SSI, dedicated account funds cannot be used to repay an SSI overpayment.
Past-due payments that are or must be paid into a dedicated account cannot be used to repay an SSI overpayment that occurred after the individual was determined to be eligible for such past-due benefits. For example, a large past-due award must be paid in installments. Between the payment of the first and second installment an overpayment is detected. The overpayment cannot be netted with nor offset from the second installment. Remember netting is the process used to determine whether there is an overpayment/underpayment. (See SI
The following are examples of approved requests for expenditures from dedicated accounts.
The payee requests approval to pay for computer software that enables a blind child to hear the keyed text. The software allows the child to use the computer and to keep up with the other children in their class.
Rationale for approval: The expenditure relates to the child’s blindness.
The payee requests approval for purchases of large quantities of gluten-free products for a child with celiac disease. Other residents in the group home do not commonly eat these foods.
Rationale for approval: The child could not eat a regular diet due to the impairment.
The payee requests approval to pay for attorney fees incurred in pursuit of the child’s SSI disability claim. We paid past-due benefits directly into the dedicated account; we did not pay the attorney prior to release.
Rationale for approval: Pursuit of the child’s disability claim incurred the attorney fees.
A parent payee requests approval from dedicated account funds for respite care expenses to enable them to shop and take care of personal business, and to provide a short break from caregiving responsibilities.
approval: The expense provides care for the disabled child. Limit the expense approval to the actual cost of childcare (i.e., hourly wage of a nurse, skilled caregiver), and not the expenses associated with shopping.
A parent payee requests approval to pay an expense from dedicated account funds for a specially equipped van, to accommodate the child’s wheelchair. The payee uses the van to transport the child to therapy sessions several times a week. In addition to providing proof of the treatment history, the payee must provide a letter from the child’s doctor indicating that the treatments will continue indefinitely.
Rationale for approval: These expenses enable the child to attend impairment related therapy sessions.
The payee requests reimbursement to sources that paid for the child’s medical expenses while the child’s SSI application was pending. The payee submits evidence of the expenses.
Rationale for approval: The repayment of debts for medical treatment, education, or job skills trainings, or other expenses that relate to the impairment is an appropriate expenditure.
A parent payee requests approval to pay for closing costs and down payment on a used trailer and lot from dedicated account funds. The child’s previous home has a contaminated water supply and lead-based paint throughout the house. The local health department requires that the family leave the house as soon as possible.
Rationale for approval: Without the expenditure approval, the child and their family are most likely to become homeless. In addition, the substandard housing conditions could adversely affect the child’s health as it relates to the impairment.
A parent payee requests approval for moving expenses from an apartment to a rented home. The payee explains that the child has frequent, noisy outbursts and as a result, the apartment manager is going to terminate the lease.
Rationale for approval: The termination of the lease is due to the autistic child’s outbursts.
A parent payee requests approval to pay for three months of past-due rent and utility bills. The payee is behind in their bills due to the child’s hospitalization and as a result, the payee missed work. The period of past-due rent and utilities corresponds with the period of hospitalization. The landlord and utility company are now demanding payment.
Rationale for approval: The past-due debts relate directly to the child’s impairment related hospitalization. For information regarding paying debts and obtaining pre-approval, see GN 00602.030.
Following are examples of other approved requests for expenditures from dedicated accounts.
Special clothes, such as orthopedic shoes, or adult-size pants with snap-crotch for older, incontinent children.
Increased electrical bills, resulting from needed mechanical devices that must frequently run.
Specialized day care and therapeutic recreation, such as special summer camps or Special Olympics.
Food and veterinary care for a guide dog or other assistive animal.
Repair of walls, carpets or furnishings damaged or worn by a disabled child.
Counseling, crisis intervention services, respite care, and therapeutic foster care, if not covered by health insurance or public service program.
Household furnishings, appliances, and changes in utility services, related to the child's disability, such as air conditioning for an asthmatic child, a washing machine for an incontinent child, or installation and maintenance of a phone line to ensure ready access for a needed service.
Household renovations, where the current conditions adversely affect the child's health, such as insulating a home for a child with a respiratory or cardiovascular condition aggravated by extremes of cold or heat, or a separate bedroom for a child with emotional disabilities that require a structured setting.
Special play and recreation equipment related to the impairment.
The following are examples of denied requests for expenditures from dedicated accounts.
The payee requests approval to buy a new pair of shoes for the disabled child.
Rationale for denial: The shoes are not impairment related. The payee could receive approval if the child’s impairment requires orthopedic modifications. The payee needs to get verification from the vendor that the disabled child needs regular shoes as a base shoe for performing the required modifications.
A foster care agency payee asks for approval to repay the foster care parents for regular expenses, and for psychiatric treatment related to the child’s impairment.
Rationale for denial: The first part of this request does not relate to the child’s impairment. However, the psychiatric treatment is reimbursable due its impairment relationship.
The disabled child has a Social Security overpayment due to a parent’s wages. The payee requests approval to pay the overpayment from the child’s dedicated account funds.
Rationale for denial: The overpayment does not relate to the child’s impairment.
Prepare a manual notice to approve or deny a payee’s request to spend dedicated account funds. Manual notices are available in the Document Processing System (DPS).
GN 00301.322 Retention of Paper Material After Faxing into Either the eDIB Folder or Claims Folder using NDRed
GN 00602.030 Payment of Beneficiary's Past Due Debts - Claims of Creditors
GN 00603.025 Dedicated Accounts for Disabled/Blind SSI Recipients Under Age 18
GN 00604.001 Overview — Misuse of Benefits
GN 00604.030 Preparing a Misuse Determination
GN 00605.200 Overview of Monitoring Representative Payees with Dedicated Accounts
SI 01130.601 Dedicated Accounts for Past-Due Benefits Due to Individuals Under 18 Who Have a Representative Payee
SI 02101.010 Past-Due Benefits Payable - Individual Alive Under Age 18 with Representative Payee - Dedicated Account Required
Form SSA-552 (Dedicated Account Use of Funds Statement)
Section 213 of Public Law (P.L.) 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, enacted August 22, 1996, lists the allowable expenses for which the funds in the dedicated account shall be used. These allowable expenses include those for education, training, medical treatment and other items or services related to the impairment. Any unauthorized use “shall be considered a misapplication of benefits..., and any representative payee who knowingly misapplies benefits from such an account shall be liable to the Commissioner in an amount equal to the total amount of such benefits.” (See GN 00602.140 for details about allowable expenses.)
In this section, we will refer to the person managing the dedicated account as a representative payee; but a recipient in direct payment can manage their own dedicated account. Additionally, a misapplication determination can apply to a recipient in direct payment. Follow these instructions for representative payees and recipients in direct payment.
A dedicated account is an account in a financial institution for supplemental security income (SSI) past-due monthly benefits (including any Federally administered State Supplement) which are required or allowed to be paid into such an account and the use of which is restricted by section 1631 (a)(2)(F) of the Social Security Act (Act).
Allowable expenses are education, training, medical treatment and other items or services related to the individual's impairment. See GN 00602.140.
The use of funds from a dedicated account for an expense not authorized by the Act is considered misapplication of funds. An authorized expense can include an item or service not specifically listed in the Act if the item or service is determined to be appropriate by the Commissioner and is related to the individual's impairment. See GN
Repayment is the return to SSA of an amount equal to the amount misapplied. Returned misapplied funds go back into the general revenues of the Treasury Department.
Misapplication of the funds from a dedicated account is not an overpayment. Waiver rules do not apply to the requirement to return misapplied funds because misapplication is not an overpayment.
Misapplication is not misuse when the representative payee's use of the funds, while not authorized or approved, did benefit the recipient.
If a payee does not manage funds in the best interests of the beneficiary, SSA must conduct a suitability determination.
If SSA determines that an individual recipient who is in direct-payment misapplied funds from their dedicated account, the misapplied funds can be repaid from SSI benefits payable to the individual in an amount equal to the misapplied amount.
For more information on the remittance process, see GN 00602.150D.2.b. and MS 01103.001.
NOTE: Use the following procedures in the determination of misapplication of funds.
Misapplication can occur when the individual is in a period of suspension, as long as the payee continues to have control of the dedicated account.
The restrictions on the use of the funds in a dedicated account terminate when the individual's eligibility terminates.
A finding that a representative payee knowingly misapplied funds for unauthorized expenditures can be made based on a signed “Allowable Use Of Funds” statement (see GN 00602.140), but other relevant facts, if any, must also be considered.
Prepare an SSA-553, Special Determination, see OS 15010.170. The SSA-553 must include all relevant information to explain your determination (e.g., names, SSNs, facts of the misapplication, and basis of your determination). Store the SSA-553 in the Non-Disability Repository for Evidentiary Documents (NDRed) using the Evidence Portal (EP). For information on EP, see MS 09701.001.
Notify the representative payee of your determination and the requirement to repay the misapplied funds (see GN 00602.150D.2.a.).
NOTE: A signed SSA-552 or other statement from a representative payee certifying that the payee understood the dedicated account restrictions can support a finding that a payee knowingly misapplied funds. However, the certification does not automatically establish misapplication of funds. Field office staff must consider any other relevant evidence, such as the nature and amount of the expenditure, and the payee's explanation of why they believed the expenditure was justified.
If your review of the dedicated account indicates that the payee may have misused benefits, fully investigate for misuse following GN 00604.020.
If you determine that misuse occurred, take appropriate actions regarding misuse and possible restitution. For information on misuse, see GN 00604.045. While a finding of misuse does not preclude a finding of misapplication, SSA will, in the recipient’s interest, pursue the finding of misuse, so any recovered funds go back into the dedicated account.
NOTE: The payee cannot use dedicated account funds to repay misapplied funds. We will seek repayment from the payee for the misapplied amount on a dollar-for-dollar basis.
Prepare an SSI Important Information Notice (SSA-L8166) titled "Dedacnt 10 - Rep Payee-Misapplication." This notice is located in the Document Processing System (DPS), under the National and PE tabs. Include:
your determination that dedicated account funds were misapplied;
a demand for full repayment within 60 days;
that payment is to be made to SSA;
the payment stub; and
a return envelope addressed to the field office serving the payee.
an eFAX copy of the notice to the Office of Financial Policy and Operations:
eFAX - (833) 955-2293
Follow remittance processing procedures in GN 02403.001 and MS 01103.001.
Code the Debt Management System (DMS) remittance screen with a trust fund code of M and a reason code of S.
Annotate the SSR Remarks field that a refund has been received, the amount received and the amount of misapplied funds that remains to be repaid. Do not delete the original amount of the misapplied funds.
NOTE: DO NOT add a manually computed overpayment to the record (P TAC). Remittances of misapplied funds are not posted to the Supplemental Security Record (SSR).
Allow for repayment over a period of up to 12 months.
Ensure that payments will be made on a regular monthly basis.
Do not complete Section II of the SSA-632-BK.
Give the payee enough Payment Stubs and return envelopes.
Set up manual control of the installment payments.
Determine whether the payee did not receive the letter (e.g., was it returned), or is delinquent in dealing with the repayment.
If the payee is delinquent, send a letter stating that payment is past due and demanding payment within 10 days.
If no response is received, attempt phone contact.
If phone contact is unsuccessful or the payee is unresponsive, send a letter by certified mail. This letter will:
State that the case may be referred to the Department of Justice (DOJ) for civil action; and
That we may review the payee's continuing suitability to remain payee considering their failure to repay the misapplied funds.
Allow 30 days for a response.
Take appropriate follow up action. See SI 02220.035
Annotate the file; and,
Send a report of contact outlining the recovery efforts to the Office of Financial Policy and Operations eFAX number in GN 00602.150D.2.a.
Because misapplication of funds from a dedicated account is not an overpayment, do not apply overpayment waiver procedures (based on defeat the purpose of the Act (SI
02260.020), against equity and good conscience (SI 02260.025) or impede effective or efficient administration (SI 02260.030)).
The determination that a payee has misapplied funds is an initial determination. Therefore, the payee has the right to appeal this determination.
When a request for reconsideration is filed within 60 days of the date of the notice of the initial determination of misapplication, stop all recovery efforts. Resume recovery efforts only after making the reconsideration determination.
It is not necessary to stop recovery efforts when further appeals — Hearing, Appeals Council, etc. — are requested.
When the payee objects to the determination (i.e., the notice sent per GN
00602.150D.1.d., and GN 00602.150D.2.a.) that they knowingly misapplied funds, obtain a Request For Reconsideration (Form SSA-561). Make a reconsideration determination using the same criteria as in GN 00602.150D.1. Consider any additional evidence/statements. Notify the representative payee of the determination using a Notice of Reconsideration (Form SSA-8457-CL).
NOTE: Send a copy of the SSA-561, SSA-8457-CL and information/documentation on any subsequent appeal, annotated with the payee's social security number, to the Office of Financial Policy and Operations, Office of Benefit Accounting and Systems Analysis, at the eFAX number shown in GN 00602.150D.2.a for processing.
GN 00603.025 Dedicated Accounts for Disabled/Blind SSI recipients Under Age 18
GN 00604.030 through GN 00604.035 Misuse
GN 02403.001 Overview of Field Office Remittance Process
SI 02101.010 Past-Due Benefits Payable- Individual Alive Under Age 18 with Representative Payee- Dedicated Account Required
SI 02201.015 SSI Netting/Offsetting Overpayments Against Underpayments,
SM 01311.300 Manual Overpayments- P TAC