A common question asked by parents of children with disabilities who are receiving Supplemental Security Income (SSI) is “how can the monthly SSI payment be spent?” A parent can spend the money in many ways, assuming he or she is the representative payee for the child. (Social Security presumes that children under 18 are not capable of managing their own benefit payments, so they require the child to have a representative payee, though not in all cases—more on this below.)
If the child does have a representative payee, whether the payee is the parent or not, the payee must spend the monthly SSI payment on the child’s “maintenance,” which means food, housing, clothing, medical care, and personal needs.
If necessary, it is okay for a parent payee to use a child’s SSI benefit to contribute more than the child’s share to certain expenses for the whole family, such as rent and utilities. Social Security understands that the overall wellbeing and stability of the family is of value to the child, and it is a payee’s responsibility to see that the child has a habitable home with electricity, heat, and running water.
Children who qualify for SSI also qualify for Medicaid, but they may still have medical expenses. If the child has medical costs not covered by Medicaid, the SSI money can be spent on copays for medication, any equipment that Medicaid doesn’t cover, and services that Medicaid won’t pay for, like counseling or occupational or physical therapy.
If there is money left over after taking care of the child’s basic minimum needs, the payee parent can also spend money on recreational expenses that benefit the child, such as sports, lessons, tutoring, movie tickets, or special camps.
A payee is also allowed to set aside a small amount of money as savings for the child. Historically, children could not save much without becoming ineligible for SSI; they would lose eligibility if they had countable resources of more than $2,000 (and note that Social Security can count a parent’s cash or other assets toward this limit if it is over a certain amount).
Today, a payee or parent can put the child's money into an ABLE savings account, a special type of account created by the Achieving a Better Life Experience Act, a federal law passed in 2014. Money in an ABLE account doesn’t count as assets or resources for the purpose of SSI disability benefits (up to $100,000) or Medicaid. (For more information, see our article on ABLE accounts.) In addition, money put into a Program to Achieve Self-Support (PASS) to help you return to work doesn't count as a resource, nor does money put into a special needs trusts.
A child’s payee is allowed to pay off past debts, such as past-due rent or utility bills, only if it is in the child’s best interests and if the child’s current needs can be met, as well as his or her needs in the future (including transitioning into independent living). Social Security says that a payee should pay off debts only if the child will still have savings equal to two monthly SSI payments after the debts are paid.
When Can a Child’s SSI Be Taken to Pay Debts?
SSI payments cannot be garnished by creditors, so repaying debts is often a low priority. In some cases, you may not need to pay back certain debts if you can’t afford them (except for repaying SSI overpayments); see a lawyer or credit counselor for more information.
SSI recipients usually receive a lump sum payment of benefits when they are finally approved for benefits. The lump sum represents the monthly payments that should have been paid in the past, starting the month following the application up until the approval date. If the child’s back payments are for more than six months of benefits, Social Security says the payee must set up a separate “dedicated account,” in the child’s name, that contains only the lump sum payment of SSI. Funds in an SSI dedicated account are not counted toward the resource limit of $2,000.
The rules for spending money in a dedicated account are much stricter than those for spending regular monthly payments, however. The funds in the account cannot be used for basic needs like food, clothing, or shelter (except in the case of a true emergency) or to purchase certificates of deposit (CDs), stocks, or any other types of investment. The money can be spent only on the following:
Even when a child turns 18, the same rules apply to the dedicated account, if there is still money remaining in it.
Children between the ages of 15 and 17 can collect SSI disability benefits directly from Social Security in some cases, particularly if a parent is not qualified or available to act as the representative payee. For children who are paid their SSI monthly payments directly, there are no restrictions on what they can spend the money on.
Specifically, Social Security can pay a child age 15 through 17 directly if one of the following conditions exists.
In addition, Social Security can directly pay beneficiaries who are ages 15 through 17 on a temporary basis even if they do not meet the above criteria, while efforts are made to identify a new representative payee.