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New Requirements for SSA Representative Payee
April 7, 2005

On April 1 requirements of the Social Security Protection Act of 2004 (Public Law 108-203) went into effect. The law now requires certification of both bonding and licensing for nongovernmental organizational representative payees. The law refers to a certified community-based nonprofit social service agency defined as a community-based nonprofit social service agency which is in compliance with requirements for annual certification to the commissioner, that it is bonded in accordance with requirements specified by the commissioner, and that it is licensed in each state in which it serves as a representative payee, if licensing is available in the state. Any annual certification shall include a copy of any independent audit on the agency performed since the previous certification.

Guidance provided by the Social Security Administration (SSA) states that agencies must meet the requirements for both bonding and licensure by April 1 or their authorization to collect a fee will be revoked. A bond is defined as an insurance contract that guarantees payment either to the beneficiary of Social Security Income or Supplemental Security Income benefits or to the Social Security Administration on behalf of the agency if unforeseen financial loss is caused by an act or default of the agency or an individual in the agency. The minimum amount of the bond or insurance coverage should equal the amount of conserved funds on hand plus the average monthly amount of Social Security payments received by the agency. The license must be issued in the state in which the agency serves as representative payee and must permit the agency to provide specialized services to residents of the state, such as fiduciary services, community mental health services, social services, substance abuse treatment services, residential care services, psychiatric care services, skilled nursing services or Medicaid services, or to conduct business in the state. Organizational charters, articles of incorporation, and licenses for “doing business as” are not considered licenses to operate for purposes of these requirements.

For more information, contact your local Social Security Office or 800-772-1213, the Social Security toll-free number that operates from 7:00 a.m. — 7:00 p.m., Monday through Friday.

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