The Trump administration has successfully persuaded 30 states to cease intercepting Social Security survivor or disability benefits from children in foster care, a practice often referred to as the "orphan tax." This initiative, bolstered by Melania Trump's Fostering the Future program, aims to ensure children aging out of the foster care system have financial resources for their future.
New York is among the 20 states that continue this practice, drawing criticism for potentially leaving vulnerable youth penniless as they transition into adulthood. These intercepted funds, which can amount to thousands of dollars, are intended to help children establish stability through education, housing, or other life necessities.
Alex Adams, assistant secretary of the Administration for Children and Families (ACF), emphasized the significance of these survivor benefits, stating they can mean "the difference between success or not." He likened the funds to a crucial "down payment on a house" or "years of apartment rent," highlighting their impact on young individuals.
The "orphan tax" policy allows states to use a foster child's Social Security benefits to reimburse themselves for the costs of care, even though state and federal laws already mandate that states cover these expenses. Critics describe this as "double billing." The End the Orphan Tax group estimates that states have collectively taken $179 million from foster children's Social Security benefits in a single year.
Survivor benefits for orphans typically average around $1,100 per month. For children in foster care for multiple years, these funds can accumulate significantly, providing a vital boost for their post-care lives. The ACF anticipates that more states will follow Oklahoma, which recently became the 30th state to abandon the practice.
HHS Secretary Robert F. Kennedy, Jr. commended the 30 states that have "chosen fairness over bureaucracy by protecting the Social Security survivor benefits that belong to foster children." He stressed that these benefits are meant to support the child, not reimburse the government.
A spokesperson for New York Governor Kathy Hochul stated that the state is "actively assessing this matter" concerning its use of the tax, with a priority on ensuring foster children have necessary resources. New York City, however, has a different policy, ensuring that orphans receive their survivor benefits and opening bank accounts for these children in 2021.
Melania Trump's Fostering the Future Accounts program has played a key role in encouraging states to end the orphan tax. The program helps establish savings accounts for foster children, which can be used for major life milestones like education or housing down payments. Adams noted that this program has "turbocharged" efforts, leading to a surge in states pledging to end the tax and establish these accounts for their foster youth. This approach aims to provide a safety net, setting young adults on a path toward financial independence upon turning 18.
Statistics indicate a significant challenge for youth aging out of foster care, with nearly 65% experiencing poverty by age 23, according to The Imprint. The Fostering the Future Accounts are designed to mitigate this by offering protected savings vehicles for essential future expenses, rather than immediate discretionary spending.