20 CFR 404.1603, 404.1606, and 404.1608

SSR 68-18

Use of title II benefits by a representative payee for an 82-year-old retirement insurance beneficiary confined to a nursing home to repay a personal loan previously contracted by the beneficiary and to pay mortgage charges on her home in lieu of using such benefits to meet the current cost of her maintenance, held improper so long as the current and reasonably foreseeable needs of the beneficiary were not being met.

R, a retirement insurance beneficiary who is 82 years old, is confined to a nursing home as a "chronic care" case, and the cost of her care is being met by the County Welfare Department. Her son, P, has been appointed representative payee and has been using R's monthly benefit to meet current mortgage installments on her home, to which P admitted she was unlikely to return, and to repay a personal bank loan which she obtained prior to her son's appointment as a representative payee. As these debts exceed the monthly benefit by $5.90, he has been paying this amount out of his own funds, as well as meeting the cost of his mother's incidental expenses. The County Welfare Department has informed P that the beneficiary's monthly benefit should be applied toward the cost of her care.

The question presented is whether the representative payee appointed in accordance with section 205(j) of the Social Security Act, amy properly use R's benefits for the payment of the mortgage and personal loan charges in lieu of applying such benefits toward the cost of her care in the nursing home.

Section 205(j) of the Act provides that when it appears that the interest of a beneficiary would be served thereby, certification of payment may be made either for direct payment to such beneficiary or for his use and benefit to a relative or some other person. Section 404.1603 of Regulations No. 4 of the Social Security Administration (20 CFR 404.1603) authorizes the representative payee to use the benefits certified to him on behalf of the beneficiary for the sue and benefit of such beneficiary in the manner and for the purposes which he determines to be in the beneficiary's best interest. However, under section 404.1606 of Regulations No. 4 (20 CFR 404.1606) the representative payee of an institutionalized beneficiary is required to "give highest priority to expenditure of the payments for the current maintenance needs of the beneficiary, including the customary charges made by the institution . . . in providing care and maintenance." Thus, the expenditure of benefits by a representative payee to keep and maintain property owned by an institutionalized beneficiary could be considered to be for the "use and benefit" of the beneficiary so long as it did not jeopardize the beneficiary's current and reasonably foreseeable future maintenance needs and was reasonably related to her other needs. Section 404.1608 provides that the representative payee may in no case use such payments to discharge an indebtedness incurred before the first month for which payments are certified to him on the beneficiary's behalf unless the current and reasonably foreseeable needs of the beneficiary are otherwise provided for.

From the facts here, it appears that P's sole purpose in his use of the benefit payments was to meet his mother's financial obligations; to insure the repayment of her creditors and to prevent loss of the property through foreclosure of the mortgage. Although the payment of the beneficiary's debts and the retention of her home might be of technical benefit to her, the instant situation is not one in which such expenditures would be proper. As P, the representative payee himself states there is no real expectation that the beneficiary will ever be able to return to her home, the mortgage payments cannot be considered to assure the beneficiary a home upon her release. Furthermore, these funds cannot be considered to be in excess of those needed for the beneficiary's current maintenance so as to permit the representative payee to use them to discharge the beneficiary's indebtedness and to maintain her property rights.

Although the Welfare Department is currently paying for the beneficiary's care, such Department is not in fact responsible for providing that portion which could be provided by her own income because to that extent the individual is not needy. Under such circumstances, the current maintenance needs of the beneficiary herein may not be considered to be provided for by funds other than her social security benefits.

Accordingly, it is held that P's use of R's benefits for the repayment of her personal loan is improper since her current and reasonably foreseeable needs are not otherwise provided for. Held further that his use of R's benefits to meet the mortgage payments is also improper in this case since R's current maintenance needs at the nursing home were not being met.

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