(1) A protective payment plan shall be implemented when the caretaker relative has clearly demonstrated an inability or unwillingness to use the family's assistance payments to meet the basic needs of the minor children in the household, as determined by an employee of the division of the department which provides protective services to children.

(2) Selection of the protective payee will be made by the participant, or with the participant's participation and consent, to the extent possible. Selection of a protective payee may be made among relatives, friends of the family, the clergy, a community service group, a voluntary social service agency, or departmental staff. If it is in the best interest of the participant for a staff member of the Department of Public Health and Human Services to serve as protective payee, a staff member will be appointed. The selection of protective payees may not include:

(a) county commissioners;

(b) executive heads of the Department of Public Health and Human Services;

(c) persons determining financial eligibility for public assistance;

(d) special investigative or resource staff;

(e) staff handling fiscal processes;

(f) landlords;

(g) grocers or other vendors of goods or services dealing directly with the client.