SSI Dedicated Accounts for Child Disability Benefits

You must put large SSI disability back payments for a child into a dedicated account, separate from the regular monthly benefit payments.

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

If you're the representative payee for your child (or plan to be), you'll need to follow the Social Security Administration's (SSA's) strict rules regarding the way you handle your child's SSI benefits. The SSA has particularly strict rules when it comes to handling a child's benefit "back pay" (more on this below). Here's what you need to know about becoming your child's representative payee and how you must handle the benefits you receive on your child's behalf—including when you'll need to set up a dedicated account.

How Do I Become My Child's Representative Payee?

You most likely have already applied to be your child's representative payee. Most parents do this when filling out their child's initial application for SSI benefits. If you didn't, you can apply to be your child's SSI representative payee by visiting your local Social Security office.

How Does Social Security Choose a Child's Representative Payee?

A Social Security representative payee must be someone who will look out for the disabled person's best interests. The SSA gives preference to someone who lives with and helps care for the SSI beneficiary (the child). When appointing a child's representative payee, Social Security generally chooses a biological or adoptive parent or legal guardian who has custody of the child.

But there are times when Social Security could appoint someone other than a child's parent to act as representative payee. The SSA might choose someone else if:

  • neither of the child's parents has custody of the child, or
  • the SSA has reason to believe neither of the child's parents is capable of managing the child's SSI benefits due to:
    • a cognitive impairment
    • certain mental health issues, or
    • an addiction to gambling, drugs, or alcohol.

What Are My Responsibilities as My Child's SSI Rep Payee?

If Social Security appoints you to serve as your child's representative payee, you'll receive your child's monthly disability benefits on their behalf. You'll manage that money, spending it only on your child's care and support. You can use your child's monthly benefits to pay for your child's everyday living expenses, including your child's:

  • shelter and furnishings
  • food and clothing
  • medical care (and insurance costs)
  • personal comfort items, and
  • savings for future needs.

You'll need to keep good records of your spending and report it to Social Security every year.

If your child will receive a large, past-due payment from Social Security, as the representative payee, you'll have to open a dedicated account for that back pay.

What Is an SSI Dedicated Account?

A dedicated account is a separate account at a bank or other financial institution that has to meet certain requirements. Social Security will deposit your child's back payments directly into the SSI dedicated account.

The funds deposited in your child's SSI dedicated account, and any interest they earn, don't count as income or resources toward the SSI income and resource limits.

When Is a Dedicated Account Required?

You must open a dedicated account when your child receives a "large" amount of past-due funds. Social Security defines a "large" amount as six times the federal benefit rate. (In 2022, the federal benefit rate is $841 per month—so six times that rate is $5,046.)

If the amount of SSI back pay your child receives is less than $5,046, you don't have to open a dedicated account to receive it. Social Security will notify you if a payment is going to be large enough to require a dedicated account.

Your child might receive such a large amount of SSI back pay if it took more than six months for Social Security to process the child's disability application. If a child has to appeal a claim to win disability benefits, it will take six months to a year or more. (Learn more about Social Security disability backpay.)

Although it's rare, your child could also receive a large back payment if it's discovered that Social Security was paying your child too little (less than the benefit amount the child was entitled to receive) for a long period of time—this is called an "underpayment." No matter the reason for the large back payment, you're still required to set up a dedicated account for it.

How Does a Representative Payee Open a Dedicated Account?

You can open a representative payee account at most major banks and credit unions. (Note that some smaller banks and credit unions might not offer them.)

The dedicated account you open for your child's SSI back pay must be one of the following account types:

  • checking
  • savings, or
  • money market account.

You can't use stocks, bonds, brokerage accounts, or certificates of deposit as a dedicated account for a child's SSI back pay.

To open a dedicated representative payee bank account, bring the letter from Social Security showing that your child is entitled to back pay (or retroactive pay) to the bank you plan to use. Tell the bank you need to set up a dedicated account in your child's name. The bank will open an account and give you an account number to share with Social Security.

Once everything is set up at the bank, and you've shared the account number with Social Security, the SSA will deposit any past due payments or back pay owed to your child into this dedicated account.

Social Security's Dedicated Account Requirements

Social Security has set strict limitations on how a dedicated account for a child's SSI back pay must be handled.

  • Completely separate account. The dedicated account must be kept completely separate from any other account. It can't be the same account used for the child's monthly disability payments, and it can't be the representative payee's account.
  • No mixed funds allowed. No other funds can be mixed in with the funds in the dedicated account (with a few, narrow exceptions if the child's had other past-due Social Security benefits). The dedicated account can only contain money from past-due SSI payments.
  • Child is the owner. 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?

Unlike monthly SSI checks, the funds in your child's dedicated account can only be used for a few types of expenses. You can always use the money for your child's medical expenses, education, or job training. 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 (like a home health aide)
  • modifications to housing, like extra insulation if your child has an impairment that's 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, like paying the fees of the attorneys who worked on your child's disability application or appeals. In an emergency, the SSA might approve basic living expenses if the child is at risk of becoming malnourished or homeless. Before spending money on what you think is an emergency, get approval from Social Security first.

Note that the money in the dedicated account can't be used to repay an overpayment to Social Security. For example, an overpayment can happen if a parent makes more income than usual during a month, but the child's benefit amount for that month wasn't reduced as it should have been. (Learn about what to do if Social Security discovers an overpayment.)

If you're at all uncertain about whether an expense is a valid use of the dedicated account funds, you should first check with Social Security. If the SSA determines you've used funds incorrectly, you'll have to pay back the money out of your own pocket.

Keeping Records of Your Child's Dedicated Account

When you're serving as your child's representative payee, you'll need to be able to show Social Security that you're handling and using the funds in the dedicated account correctly. You'll need to keep a record of all incoming and outgoing funds, including all receipts and bank statements.

Once a year, you'll have to complete a report accounting for the use of the SSI funds. You'll need to file the Dedicated Account Use of Funds Statement (Form SSA-552). You can fill out the report and mail it to Social Security or complete it online. You'll need to have a working email account to file the report online.

Sometimes it might not be clear from a receipt how the purchase benefits the child and that it's related to the child's disability. When that happens, you should make a note of the purpose of the spending (on the receipt or in a ledger). That way, if the SSA wants an explanation later, you'll be able to provide one accurately and without having to guess.

What Happens When the Child Turns 18?

When your child turns 18, Social Security will reevaluate their medical condition using the disability guidelines for adults. Even if Social Security determines that your child is still disabled after the "age 18 redetermination," the restrictions on the dedicated account would continue. All of the restrictions on the use of the money in that account would continue until the account has no more funds or your child is no longer eligible for SSI—whichever happens first.

But if you and your child believe your child is capable of managing their own money, your child could apply to be their own payee by visiting a Social Security field office. If the SSA agrees that it would be in your child's best interest to have direct access to the funds, the agency could approve the direct transfer of the funds from the account to your child.

Updated October 11, 2022

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