Every year nearly one million Social Security recipients nationwide rely on nonprofits, nursing homes and other so-called organizational payees to manage their benefits. However, the Social Security Administration exercises limited oversight to ensure that these organizations are not misusing beneficiaries’ funds, according to a new report by the Government Accountability Office (GAO).
While most recipients of Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and Social Security retirement benefits receive their benefits in the form of monthly checks directly from the SSA, about 8 million recipients who are unable to manage their money have their checks sent to third parties, known as representative payees.
Most of these payees are individuals, such as family members or friends. Such individual representative payees have been the focus of increased oversight in recent years from Congress and disability advocacy groups.
But those who do not have a family member or friend to help out must turn to organizational payees, and this group has received less scrutiny. At the request of the House Ways and Means Committee’s Social Security Subcommittee, the GAO looked into SSA’s oversight of organizational payees to protect against financial abuse.
While the report credited the SSA with ensuring that organizational payees have adequate staffing, the GAO said that the SSA needs to do more to oversee these organizations’ financial management practices, and other day-to-day operations.
Critically, while the SSA conducts background checks for all individual payees, it does not do the same for key employees at organizations that are payees. To monitor compliance, the SSA relies primarily on on-site reviews. For larger organizations -- those with more than 50 employees -- on-site reviews occur only every three to four years. For smaller organizations, reviews are even less frequent, opening up potential opportunities for abuse.
The GAO recommends that that the SSA conduct background checks, increase its rate of onsite reviews and update its accounting form, among its nine recommendations.
“Organizational payees play a critical role in ensuring beneficiaries’ basic needs are met. The beneficiaries these payees serve—individuals who cannot manage their own finances and lack a family member or friend to do so on their behalf—are dependent on their representative payees and thus extremely vulnerable to financial abuse,” the report states . “It is therefore crucial that SSA take steps to shore up a range of gaps in how the agency evaluates, supports, and oversees payees to better ensure beneficiaries are protected.”
Read the full report.