At least 34 states and the District of Columbia have ended or substantially changed a practice that allowed child welfare agencies to use Social Security survivor benefits belonging to children in foster care to help cover the cost of their care. The changes have accelerated since late 2025, as federal officials urged states to preserve those payments for the children who receive them.
The policy debate centers on benefits paid after the death of a parent who worked and contributed to Social Security. According to Newsweek, children can receive up to 75 percent of a deceased parent’s Social Security benefit, while the average monthly payment was $1,179 as of July. More than 330,000 children are currently in foster care nationwide, according to the federal government’s Child Welfare Information Gateway.
States Move to Preserve Survivor Benefits for Foster Children
When a child receiving survivor benefits enters foster care, a state child welfare agency can become the child’s representative payee and manage the money on the child’s behalf. Some states have historically used part or all of those payments to reimburse themselves for foster care expenses they are legally required to provide.
Federal guidance issued jointly by the Social Security Administration and the Administration for Children and Families (ACF) in August 2023 states that representative payees must use benefits for a beneficiary’s current needs and conserve money not required for current maintenance for future needs.
The federal government renewed pressure on states in December 2025. ACF Assistant Secretary Alex J. Adams called on governors to stop the practice, which federal officials have described as the “orphan tax,” though it is not a formal tax.
According to the Department of Health and Human Services, 30 states had ended or substantially reformed the practice by July 15, 2026, when Oklahoma became the 30th state to act. HHS Secretary Robert F. Kennedy Jr. said survivor benefits are intended to support children after the death of a parent rather than reimburse government agencies.
The list expanded in the following weeks. Newsweek reported that Iowa, Montana and Michigan joined later in July, while Maine became the most recent addition on August 5. The total now stands at 34 states plus the District of Columbia.
Federal Policy Links the Reforms to Broader Foster Care Measures
The effort has become part of a wider set of federal policies affecting children in foster care. The Trump administration has encouraged states to protect survivor payments while also promoting new investment accounts for eligible foster youth.
According to the Administration for Children and Families, states can preserve Social Security survivor benefits in Fostering the Future Accounts, an investment vehicle announced in June. At the time of ACF’s July 15 statement, 25 governors had pledged to open the accounts in their states.
The accounts are connected to a broader initiative led by first lady Melania Trump. They extend the $1,000 Trump Account program, which became available to U.S. newborns this year, to children in foster care. State child welfare agencies serving as legal guardians for eligible children with Social Security numbers are permitted to open the accounts on their behalf.
Oklahoma Gov. J. Kevin Stitt said his state’s reform was intended to ensure survivor benefits are used in the best interests of children and to give young people leaving foster care a stronger financial foundation. ACF has said it will continue working with governors, legislatures, child welfare agencies and advocates to encourage the remaining states to change how survivor benefits are handled.
