Question: I have been searching the Social Security site and I can’t seem to find a list of what a Representative Payee can and cannot purchase for their friend with Social Security disability insurance (SSDI) benefits. Is there a list available, especially of what cannot be purchased? “Use common sense” does not appear to be a very helpful answer.
Answer: After paying for the disabled person’s food, shelter, clothing, medical and dental costs, and any rehab expenses, the representative payee can spend disability benefit money on personal comfort items and recreation costs (such as outings, movie tickets, or magazine subscriptions). The disabled person does have the right to spend some discretionary money himself or herself, once the payee has made sure the person’s needs are met. (However, if there are drug or alcohol abuse issues, spending money should be given in small amounts and monitored as much as possible.)
As far as discretionary spending goes, Social Security evaluates what’s reasonable spending on a case-by-case basis. The payee really needs to know how the individual is living and what his or her needs are. This is why Social Security doesn’t publish a list of personal comfort, recreation, or entertainment expenses that are and are not allowed. What’s reasonable spending for some would be unreasonable for others. For instance, because a payee for a person receiving $700 in SSI benefits per month will have trouble paying for the person’s food, shelter, and clothing costs as well as any medical and dental expenses, purchasing a flat-screen HDTV for $300 would probably not be seen as reasonable spending, but allowing an SSDI recipient who receives $2,000 per month to make the same purchase might be reasonable, especially if the person enjoys spending a lot of time watching television and isn’t able to get out much.
Here are a few more details for representative payees:
- A representative payee can use benefit money to pay past-due bills for the beneficiary (the person who is eligible for Social Security benefits) — if the beneficiary’s current needs are paid for.
- If there is money leftover after meeting the beneficiary’s current needs and some discretionary spending, it must be saved for the beneficiary in a separate bank account.
- The payee is not allowed to take a fee for payee services from the monthly benefit (unless the payee is a nonprofit organizational payee with written approval from Social Security to charge a fee).
- Each year, the payee will have to fill out a form accounting for how the benefits were spent. Social Security will send the form to the representative payee each year.
You can some more information in our article on what a representative payee can and cannot spend money on. The key to remember is that spending must always be in the best interests of the beneficiary.