Changes to use of foster youth Social Security benefits advanced

Lawmakers gave first-round approval April 24 to a bill that seeks to reform the use of Social Security benefits received by eligible Nebraska foster children.

Under current law, the state Department of Health and Human Services may apply for Social Security benefits on behalf of eligible state wards and act as their representative payee. The department then is authorized to use a portion of those funds to reimburse the state for the foster youth’s care.

Omaha Sen. Megan Hunt, sponsor of LB275, said this practice impacts approximately 400 Nebraska children who are eligible for Social Security benefits due to a disability or death of a parent. She said the state “intercepts” $4 million annually in benefits meant for vulnerable children.

“This is a major double standard because any other youth in foster care who’s a ward of the state … [does] not have to pay for their own care,” Hunt said. “Foster youth should not be seen by the state as a funding stream to cover the cost of their own care.”

Among other provisions related to transparency in the representative payee process, the bill as introduced would require the department to conserve in a separate trust fund at least 40% of all Social Security benefits received, beginning when a foster child is 14 years old. That percentage would increase incrementally as the child ages.

The bill also would allow eligible foster children or their guardian ad litem to request a different representative payee and grant them authority to access the funds.

Hunt introduced an amendment, adopted 32-0, that would lower the initial percentage of conserved funds to 20% of all benefits received. That percentage would increase gradually as the child ages until reaching 50% for beneficiaries who are 18 and older.

The amendment also would clarify that the department must use all available Title IV-E funding prior to the use of state general funds for a beneficiary’s care.

Following adoption of the amendment, senators advanced LB275 to select file on a 34-0 vote.