The Social Security Administration (SSA) may designate a government entity as the representative payee of a foster child if the child's custodial or non-custodial parents, guardians, relatives, stepparents, or a close friend are not available to serve in that role. Nearly all states use SSI and/or other Social Security benefits to pay for foster care. Social Security benefits may be paid to the children of workers who have retired, become disabled, or died. SSI benefits are authorized under Title XVI of the Social Security Act and are available for certain children with disabilities if their families have low incomes and minimal assets. Typically, however, a state, acting as the child's representative payee, is believed to use SSI or Social Security benefits to provide a foster care maintenance payment to the child (or to reimburse itself for that payment). Use of SSI and Other Social Security Benefits by Child Welfare Agencies

Most, if not all, states use Social Security and/or SSI benefits of children in foster care as a source of federal funds for their foster care programs. The Supreme Court ruled unanimously (in 2003) that the state of Washington could, as the representative payee for a foster child receiving Social Security or SSI benefits, use the child's benefits to reimburse itself for the cost of that child's foster care. The Court further noted that the use of funds to reimburse the Washington State Department of Social and Health Services for foster care was consistent with the regulatory requirement that such funds be spent for the "use and benefit of the beneficiary" and with the regulatory definition of "current maintenance" that includes "costs incurred in obtaining food, shelter, clothing, medical care, and personal comfort items." Proponents of reserving Social Security benefits for children in care further argue that even the practice of applying the benefits solely for the beneficiaries' foster care costs amounts to asking children to pay for their own stay in foster care, while other children in care (including those with assets or income other than Social Security or those who receive Social Security benefits but have a representative payee other than the child welfare agency) are not required to repay the costs. Some child welfare advocates express the concern that if states were not able to use SSI or Title II benefits to pay for a child's foster care room and board, then states would simply stop screening children to determine their eligibility for these programs. Federally enforceable changes to this practice would require congressional action. The costs for screening children who are not IV-E eligible would be borne entirely by the state. Passing Through Benefits

Congress could permit or require states that act as representative payees to "pass through" some or all of the SSI and Title II benefits to eligible foster children and those children could receive a portion of the benefits while in care and/or upon leaving care. 6192 , 111 th Congress) would require states, for any foster child receiving an SSI or other Social Security Act benefit (under Title II), to develop a plan specific to the needs of that child and that would conserve benefits not necessary for the immediate needs of the child to enable the child to "achieve self-support after leaving foster care." Identifying Alternative Representative Payees

Some child advocates have proposed changes to the selection of representative payees because of the perceived automatic process by which child welfare agencies are named as the payees for foster care children.
Of the more than 400,000 children in foster care on a given day, as many as 24,000 (about 6%) receive Supplemental Security Income (SSI) or other Social Security benefits. Some research suggests that a greater number of children in foster care might be eligible for SSI benefits if this assistance was sought. SSI benefits are available under Title XVI of the Social Security Act for certain disabled children from families with low incomes and minimal assets. Other Social Security benefits may be paid under Title II of the act to the children of workers who have retired, become disabled, or died.
Federal regulations require that in most cases the Social Security Administration (SSA) select and assign a representative payee—an individual, organization, or government entity—that manages SSI and Social Security payments for children, including those in foster care. Nearly all states designated as the representative payee for a foster child use the child's benefits to support the child in foster care. In Washington State Department of Social and Health Services v. Guardianship Estate of Keffeler (hereinafter Keffeler), the Supreme Court held that the process used by the state of Washington to keep the Social Security benefits received as a child's representative payee was not prohibited by the Social Security Act. The Court also concluded that the use of funds for reimbursement for foster care services was consistent with the act's provisions that such funds be spent for the "use and benefit of the beneficiary" and within the regulatory definition of "current maintenance" (i.e., food, clothing, shelter, medical care, and personal comfort items).
Although the Keffeler decision supports states' practice of using SSI and other Social Security benefits for reimbursement of foster care, some child advocates assert that by using these benefits to reimburse the cost of foster care, the state agency denies the child beneficiaries funding that rightly belongs to them. Advocates also raise concern that child welfare agencies are often automatically assigned as the representative payee for foster children. On the other hand, child welfare agencies and advocates argue that if states were not able to use benefits to pay for a child's foster care, they would stop screening children to determine their eligibility for these Social Security programs. They further raise the concern that if a foster child's SSI benefits were allowed to accumulate in a savings account, the child would soon surpass the "means test" for SSI and would lose eligibility for the benefits.
Changes governing how child welfare agencies are assigned as representative payees or how they use the Social Security benefits of foster children would require congressional action. For example, Congress could permit or require states that act as representative payees to "pass through" some or all benefits to eligible foster children and those children could receive a portion of the benefits while in care and/or upon leaving care. Congress could also make changes to the selection of representative payees so that certain individuals, such as the child's attorney, would have the opportunity to serve as the payee.
Legislation has been introduced that would prohibit using SSI or Title II Social Security benefits to reimburse a state for foster care maintenance payments; require state child welfare agencies to screen foster children for benefits; and for any foster child already receiving benefits, it would also require the state to develop a plan to "conserve benefits not necessary for the immediate needs of the child" to enable the child to "achieve self-support after leaving foster care."