Only 28 states have stopped diverting foster children’s federal benefits — and means-testing at 18 remains unresolved
A longstanding practice complicates the picture further: many state child welfare agencies have historically intercepted foster children’s Social Security and SSI benefits to offset their own costs. As of last year, only 11 states had policies in place to preserve survivor benefits for foster children. In mid-December, the Administration for Children and Families notified the remaining 39 governors to stop diverting those payments.
Since that directive, the number of states that have agreed not to intercept survivor benefits has grown to 28, according to HHS. Only a small number of states currently refrain from taking SSI. Whether additional states will change their practices — and whether they will route those assets into Trump Accounts — remains unclear.
A separate and potentially consequential question involves what happens to Trump Account assets when a former foster child applies for means-based services as an adult. While a Trump Account is not counted when determining SSI eligibility before age 18, it is uncertain how those assets would be assessed for any means-tested programs once the individual crosses that threshold.
«If a Trump Account gets in the way of them continuing to receive resources at [age] 18 or 21, whatever their state’s threshold is, that’s an unintended consequence that makes their situation worse,» Eby warned. Despite those open questions, he expressed cautious optimism about the program’s direction: «We just want to make sure that, as intended, these funds change the trajectory of someone who experienced the child welfare system.»
The Treasury Department has yet to release guidance on how SSI deposits would be handled within Trump Accounts, leaving states without a clear framework as they begin opening accounts for foster children. Advocates are also watching whether the remaining states that still intercept survivor benefits will fall in line following HHS’s December directive — and whether federal or state authorities will address the means-testing question before the first cohort of account holders turns 18. For Hatcher and others in the child welfare field, the next legislative or regulatory window will be the moment to push for broader withdrawal flexibility, which they argue is essential if the accounts are to deliver on their promise for youth aging out of care.
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