A briefing for Senator Chuck Grassley's office on federal action to end benefit theft from foster children
A clear injustice that's easily fixable
When a parent in the foster care system dies, the child becomes eligible for Social Security survivor benefits—money meant to support them through tragedy. However, in many states, these benefits are intercepted by the state to offset foster care costs, leaving children with nothing.
When my father died, Michigan took $18,000 in survivor benefits that should have been mine. I was a foster child who lost my dad, and the state took the money meant to help me rebuild my life.
This practice affects thousands of vulnerable children every year, taking money that could be used for education, housing, therapy, and building a stable future after aging out of foster care.
As of February 2025, 37 states have taken action to end this practice. This unprecedented bipartisan momentum shows the moral clarity of this issue. However:
Iowa has not yet enacted reforms to protect foster children's benefits. Senator Grassley has an opportunity to lead federal action that would protect vulnerable children in Iowa and nationwide — ensuring they keep the benefits their parents earned for them.
Status: Introduced March 3, 2025 • Pending in Committee
As introduced, Senate Bill 481 would have required the Department of Health and Human Services to establish a benefits account in the name of any child under 18 years of age if the child receives benefits; provided that any benefits the child receives must be placed in the child's account; provided that if a conservator makes a demand for moneys in the child's account, the moneys must be paid to the conservator; provided that the account must be an interest-bearing account at a reputable bank or savings association, maintained by the Department as trustee for the child; and provided that all moneys in the account must be released to the child upon reaching 18 years of age.
⚠️ Limitation: This bill does not explicitly prohibit the state from taking foster children's benefits to reimburse care costs — it only requires separate accounts be established.
Status: Introduced 2024 • Not Included in Final Bill
In 2024, the Iowa Legislature considered a proposed amendment to HF 2698 that would have provided that if the Department of Health and Human Services collects a child's federal Social Security survivor benefits on behalf of a child, the Department shall establish a separate account for deposit of the child's benefit funds, and shall release the funds deposited in a child's account to the individual when the individual reaches eighteen years of age.
❌ Outcome: This amendment was not included in the version of the bill signed by the Governor on May 9, 2024.
The bottom line: Despite these legislative attempts, Iowa foster children can still have their Social Security benefits seized by the state. Federal action would immediately protect Iowa's most vulnerable youth while setting a national standard.
A critical gap in the ACF letter
ACF's December 2025 letter to governors addressed survivor benefits but made no mention of disability benefits (SSI).
In December 2025, the Administration for Children and Families (ACF) sent a historic letter to 39 governors calling attention to states diverting foster children's Social Security survivor benefits. This was a major victory for the movement.
But there was a glaring omission: The letter said nothing about disabled foster youth whose SSI disability benefits are also being taken by states. While 37 states have moved to protect survivor benefits, most reforms don't explicitly cover disabled youth receiving SSI.
If it's wrong to take survivor benefits from a child whose parent died, it's equally wrong to take disability benefits from a disabled foster child. We cannot protect one group while leaving another equally vulnerable group behind and call it justice.
Why this matters: Disabled foster youth face some of the worst outcomes of any population—higher rates of homelessness (75%+), unemployment (50%+), and dramatically higher barriers to stability. Taking their disability benefits compounds these challenges.
Federal action must explicitly include disabled youth. Half-measures aren't justice.
Five concrete actions with national impact
Support or introduce legislation prohibiting states from claiming foster children's Social Security benefits—both survivor benefits AND disability benefits (SSI). This would provide a national solution that protects ALL vulnerable youth, not just those who lost a parent.
Call for a Government Accountability Office investigation into the full scope of benefit interception practices affecting foster youth, including Title IV-E reimbursement policies that incentivize states to take children's money.
Through the Senate Finance Committee or Judiciary Committee, hold hearings examining federal policies that enable states to claim benefits meant for orphaned children in foster care.
Work with the Social Security Administration and HHS to issue guidance clarifying that survivor benefits should be protected for foster children, similar to how they're protected for children in private guardianship.
Use Senator Grassley's platform to raise awareness about this issue. Public attention has proven critical in driving state-level reforms—federal attention could accelerate change.
A foster parent's perspective on Missouri's law change
The system took $32,000 from him during our time with him. I was shocked. Those dollars are a big deal.
Had they been saved, or a chunk of it saved, he'd have money for a car and a first-time apartment. Now he's 20 and has exactly zero dollars to his name — which would not be true if the state had put his federal benefits money into an account.
Jason White
Foster Parent, Independence, Missouri
Testified before Missouri House, 2024-2025
Missouri's reform (signed July 9, 2025) bans the state from using foster children's federal benefits to pay itself back for routine care expenses. Jason's advocacy helped make this happen. Federal action would protect foster youth nationwide — including those who've already aged out and deserve restitution for what was taken.
A rare bipartisan opportunity
State reforms have passed with overwhelming bipartisan support—often unanimously. Both sides agree: don't take money from orphaned children.
Organizations across the political spectrum support ending this practice, from foster care advocates to family policy groups.
Senator Grassley can lead federal efforts to protect foster youth in Iowa and nationwide — ensuring vulnerable children keep the benefits their parents earned for them.
37 states have taken action with bipartisan support
Growing calls for federal action to accelerate nationwide reform
Opportunity for Senator Grassley to lead federal efforts and end the orphan tax nationwide
Senator Grassley has a unique opportunity to lead on this clear-cut issue of justice for vulnerable children. Federal action can ensure that no child loses their survivor benefits simply because they're in foster care.
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