Limits on spending money from SSDIManaged by the Social Security Administration (SSA), Social Security Disability Insurance (SSDI) is a government program that provides medical care and monthly payments to individuals who have disabilities that prevent work or substantial gainful activity (SGA). Unlike Supplemental Security Income (SSI), SSDI isn't needs-based, so if you applied and were approved for benefits, there aren't any official restrictions on how you can spend the money you receive. However, the SSA does suggest prioritizing your current needs, catching up on past-due bills, and saving for reasonably foreseeable future expenses before using the money for discretionary spending. 

Here's what you need to know about using SSDI back pay or monthly payments; the many spending restrictions you face if you're a representative payee rather than a beneficiary; and how the knowledgeable and experienced Boston-based attorneys with Keefe Disability Law can assist you.

A Word About Back Pay 

Getting approved for SSDI can be a lengthy and frustrating process. Most applications are initially denied, forcing people who are in serious need of benefits to appeal the unfavorable decision via a four-stage process that can add months to the whole ordeal. When disability applicants are finally approved, they're often eligible for back pay – a lump sum payment of benefits you would have received had the SSA approved your application when you first applied. Because these benefits have accrued for months or even years, when the back pay lands in your account, the amount can be substantial. 

Spending Your Disability Benefits 

Whether it's back pay or monthly payments, the SSA recommends covering all of your basic needs before doing anything extravagant.

Examples of Basic Expenses 

  • Rent or mortgage payments (or other housing costs)
  • Utilities, such as water, electricity, natural gas, sewage and sanitation, and Internet 
  • Food, including daily meals, snacks, and beverages, as well as occasional meals out 
  • Other living expenses, such as transportation costs, laundry services, and more

Though, if you live with another person who covers such expenses in their entirety – or pays the lion's share – you can essentially spend your SSDI payments however you see fit.

Understanding the Responsibilities and Spending Limitations of an SSDI Representative Payee 

The SSA appoints a representative payee when an adult beneficiary is incapable of managing their own SSDI benefits, such as in cases of legal incompetency. A representative payee can be a person, like a family member, close friend, attorney, or an organization, such as social service agencies, banks or other financial institutions, and state or local government agencies. The appointed individual or organization has wide-ranging responsibilities, all of which must be completed with the beneficiary's best interests in mind. Also, unlike an SSDI beneficiary, a representative payee can't spend at their own discretion.

Representative Payee Duties 

  • Use payments to meet the beneficiary's current and future housing, dietary, and other basic needs.
  • Spend some of the money on personal comfort items and recreational costs for the beneficiary, such as movie tickets, magazine subscriptions, or outings or trips.
  • Provide the beneficiary with discretionary money when possible. (If the disabled person has drug, alcohol, gambling, or other addiction issues, spending money can be given in small amounts and monitored to prevent abuse.)
  • Save any benefits not currently needed to help cover unexpected future expenses.
  • Keep records of the payments received and how they were spent.
  • Provide the SSA with an accounting of how SSDI benefits were saved or used upon request.

Additionally, the SSA prohibits representative payees from collecting a fee – unless they're a qualified organizational payee and have received approval in writing – or spending SSDI benefits on themselves.

Are You Looking for a Social Security Disability Attorney in Boston, MA?

If you are looking to apply for social security disability, you need to speak with an experienced social security disability lawyer as soon as possible. Please contact us online or call our Natick Office directly at 888.904.6847 to schedule your free consultation.

John L. Keefe
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Founding Attorney, Massachusetts Social Security Disability Lawyer