SSI Dedicated Accounts for Child Disability Benefits

When a child (anyone under the age of 18) is receiving Supplemental Security Income (SSI), that child will need a person to receive the disability payments on their behalf. That person is called a representative payee. A representative payee can be a parent or other relative or an institution, agency, or non-profit.

What Is an SSI Dedicated Account?

If the child receiving SSI disability benefits is eligible for a large, past-due payment from the Social Security Administration (SSA), the child's representative payee will have to open a dedicated account. A dedicated account is a separate account at a bank or other financial institution that has to meet certain requirements. The SSA will deposit the past-due payments owed to the child into the dedicated account.

The funds you deposit into the dedicated account, and any interest they earn, do not count as income or resources toward the SSI income and resource limits.

When Is a Dedicated Account Required?

A dedicated account is required when the child receives a "large" amount of past-due funds, which the SSA has determined means six times the federal benefit rate. (In 2012, the federal benefit rate was $674 per month, so six times that rate is $4,044.) If the past-due amount is less than six times the federal benefit rate, a dedicated account is not required. The SSA will notify you if a payment has to be put in a dedicated account.

A child might receive such a large amount of backpay from Social Security if it took more than six months for Social Security to process the child's disability application. (This usually happens if the child has to appeal the case to win disability benefits.) For more information, see our section on disability backpay. It could also happen, though rarely, if it is discovered that Social Security was paying the child less than was owed for a long period of time -- this is called an underpayment.

Dedicated Account Requirements

There are strict limitations on the type of account an SSI dedicated account must be and how it must be handled.

• The dedicated account must be kept completely apart from any other account. It cannot be the same account used for the child's monthly disability payments.
• The dedicated account can only be a savings, checking, or money market account. It cannot be in the form of stocks, bonds, or certificates of deposit.
• No other funds can be mixed in with the funds in the dedicated account, although there are some narrow exceptions if the child has had other past-due benefits. This means that if the dedicated account is a checking account, that checking account cannot also be the representative payee's regular checking account. It can only contain money from the past-due payments.
• The account paperwork has to show that the child is the one who owns all of the money in the account. 

What Can the Funds in the Dedicated Account Be Used For?

The representative payee can use the funds in a dedicated account only for a few types of things. The money can always be used for the child's medical expenses or for education or job training for the child. And if you can show that any of the following expenses benefit the child and are related to the child's disability, the funds can also be used for:

• therapy or rehabilitation
• personal assistance
• modifications to housing, such as extra insulation if a child has an impairment that is made worse by extreme temperatures, or
• special equipment, such as assistive devices or computers for improved communication.

Sometimes the local Social Security office will approve other expenses or services, such as attorneys fees owed for assistance in the disability application or appeals process.

In an emergency, the SSA might approve basic living expenses if the child is at risk of becoming malnourished or homeless. Before spending money in what you think is an emergency, get approval from the SSA first.

The money cannot be used to repay an overpayment to the SSA (for instance, if the child's parents made more income one month so the child's check was larger than it should have been). For help in this situation, see our article on what to do if SSA discovers an overpayment.

If you are at all uncertain about whether an expense is a valid use of the funds, you should first check with the SSA. If the SSA determines you have used funds incorrectly, you will have to pay back the money out of your own funds.

It is important to note that although a representative payee can (and should) use the child's regular monthly payments to pay for things like food, shelter, and clothing, the money in the dedicated account cannot be used for such things.

Record Keeping

The SSA will check to make sure the representative payee is handling and using the funds in the dedicated account correctly. Once a year, the representative payee will have to complete a report that accounts for the use of the funds. This is why it is very important that if you are acting as a representative payee, you keep all receipts and bank statements to show you did not misuse the funds in the child’s account.

If it is not clear from a receipt how the purchase benefits the child and is related to the child’s disability, you should make a note of the purpose so if the SSA wants an explanation later, you will be able to accurately provide one.

What Happens When the Child Turns 18?

If the child is still disabled when he or she turn 18, all of the restrictions on the use of the money in the dedicated account continue. Those restrictions continue until there are no more funds in the dedicated account or until the child is no longer eligible for SSI, whichever happens first. (Read about what can cause SSI eligibility to end.)