Cognitive Impairment and Social Security’s Representative Payee Program



Social Security’s Representative Payee Program allows one individual to receive benefits on behalf of a retiree or disabled person who is incapable of managing them.  In the case of retirees with cognitive impairment, the program could help prevent fraud by ensuring that Social Security benefits are immediately turned over to a capable individual.  This paper seeks to answer three questions about the Representative Payee Program and its relationship to cognitive impairment.  First, what share of individuals with cognitive impairment use a representative payee?  Second, if individuals with cognitive impairment are not using a payee, what are they doing instead?  Finally, is it possible to identify recipients with cognitive impairment who have no help managing their finances (through a representative payee or otherwise), a situation that makes them especially vulnerable to fraud?

This paper found that:

  • Just over 9 percent of retirees with dementia, the most severe form of cognitive impairment, have a payee, while only 2 percent of those with mild cognitive impairment have one.
  • Over 95 percent of retirees with dementia have some form of assistance with their financial management, whether it is a payee, a non-impaired spouse or child, a power of attorney, or through their residence in a nursing home. The comparable number for those with mild cognitive impairment is 85 percent.
  • Retirees with spouses or kids living nearby are less likely to use a payee, indicating they may view family as substitutes for a payee.
  • Less educated, non-white, and relatively isolated retirees are most likely to lack formal or informal means of assistance with their financial management.

The policy implications of this paper are:

  • Most individuals with cognitive impairment seem to have an institution or individual available who could serve as a representative payee should an expansion of the program become desirable.
  • Educating family and other caregivers about a primary benefit of the program – that the vulnerable person does not have access to his or her money – may help expand coverage.

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