Bill Would Prohibit States from Keeping Children’s Social Security Benefits

States not only keep children's Social Security Benefits, they also bill Medicaid and Title IV-E for it and taxpayers allow it to happen.

Bill Would Prohibit States from Keeping Children’s Social Security BenefitsA U.S. Senate bill (S. 961) introduced May 12 by Sen. John Kerry (D-Mass.) would prohibit states from keeping foster children’s Social Security benefits. 

A recent report, The Fleecing of Foster Children: How We Confiscate Their Assets and Undermine Their Financial Security, decries the practice of keeping benefits as being unfair to children by robbing them of a possible means of support.

The report, issued by the Children’s Advocacy Institute, First Star, and the University of San Diego School of Law, argues that allowing foster children to keep their Social Security benefits would give them the financial safety net they need as they transition to adult life.

Estimates show that about 30,000 children in foster care receive Social Security benefits, either because they qualify as disabled, or because they have a parent that is disabled, retired, or deceased.
It is widely believed many more are qualified but have not applied.

Typically, states are appointed to act as representative payees for foster children and place the Social Security funds in a general account used to pay for foster care maintenance.

In 2003, children’s advocates challenged that widespread practice, but it was upheld by the Supreme Court in Washington State Department of Social and Health Services v. Keffeler.

The report alleges that when states act as representative payee, the law is not followed. For example, before appointing a representative payee, the U.S. Social Security Administration must conduct a meaningful inquiry and choose the most appropriate representative payee, rather than automatically appointing the state. Also, the representative payee must determine use of funds on an individual case-by-case basis, which does not happen when benefits are placed in a state account.

Some have argued against restrictions on the states, saying that if states are not allowed to keep Social Security funds, they will have no incentive to screen foster children for eligibility and assist with obtaining benefits. The process of applying for Social Security can be cumbersome, involving detailed documentation and a lengthy appeals process.

The Senate bill would require child welfare agencies to:

• Screen children for Social Security eligibility

• Assist with the application and apply to be representative payee if no other suitable party exists

• Provide notice to the child if the child is over 14 years, or to the child’s attorney or guardian ad litem, of a determination to pay benefits to a representative payee

• Create an individualized benefit management plan, which includes necessary items such as housing, educational opportunities, and the purchase of a vehicle

If requested by the child or his or her advocate, the plan could be reviewed at a permanency or administrative review hearing.

The bill also would eliminate for foster children the $2,000 income limitation for Social Security recipients, allowing youth to accumulate funds that could be used to meet needs while in foster care, or upon leaving the foster care system.

The report says that the average American young adult who is not in foster care receives from his or her parents approximately $50,000 after age 18 to help him or her become self-sufficient. That kind of support for foster children could prevent negative outcomes, such as dropping out of school, homelessness, and poverty.

The Urban Institute has issued a report saying households of disabled individuals with at least $2,000 in assets can better fend off short-term hardship and are less likely to make choices such as forgoing medical care and not paying utility bills.

The new requirements would raise implementation issues for states, not all of which currently seek Social Security payments on behalf of children. States would have to establish procedures for eligibility screening and assisting children with obtaining benefits. They also would have to assist youth in setting up a plan for managing their funds. The legislation does provide for technical assistance to the states.

While there would be administrative costs in helping children receive and manage benefits, some of the funds captured could be returned to the foster care system. Under the legislation, 50 percent of Social Security benefits for children under 14 could be applied to foster care maintenance.
A bill addressing state use of children’s Social Security benefits was introduced in the last session by Representative Pete Stark (D-Calif.). He is expected to introduce a bill similar to the Senate version in the coming months.

U.S. Senate Bill 961 To Prevent States From Taking Foster Care Youth Social Security Benefits