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Nebraska among states claiming Social Security owed to foster kids
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Foster care

Nebraska among states claiming Social Security owed to foster kids

LINCOLN — Advocates for children are raising concerns about a state effort to use Social Security payments owed to foster kids to help defray the costs of foster care — a practice state officials say is completely legal.

Since 2009, Nebraska has paid a Virginia company, Maximus Health Services, to research which of the state’s 4,000 foster children might be eligible for Social Security, either due to a physical or mental disability or due to losing a parent, and then go after those benefits.

Over the past three years, the effort has captured about $2.7 million a year in Social Security benefits, which has been used to reimburse state expenses for foster care. The state spent $130 million on all child welfare services in fiscal year 2019-20, which includes both out-of-home care, like foster care, and in-home services.

State Sen. Megan Hunt of Omaha expressed concerns about “mining” of such Social Security benefits after hearing a national report on the practice by the nonprofit Marshall Project and NPR. At least 36 states conduct such programs, and at least 10 states — including Nebraska — hire for-profit companies to comb through Social Security files to find foster children who qualify, the report said.

Hunt said it was “shocking” to learn that foster children weren’t being informed that their Social Security benefits were being used by the state, and that Social Security benefits, according to the story, were considered the “property” of a child by federal law.

“Any time you have a policy that doesn’t have transparency, that’s a problem, especially since this is such a vulnerable population,” the senator said of children in foster care.

About 10% of all foster children in the U.S. qualify for Social Security benefits, the Marshall Project/NPR story said, and the benefits average about $700 a month.

Hunt, in the waning days of the 2021 legislative session, scheduled an interim study of the issue, a move supported by Nebraska Appleseed, an organization that advocates for the poor and children, among others.

“It’s a practice that we’re really concerned about,” said Sarah Helvey, Appleseed’s director of child welfare.

But Garret Swanson, a spokesman for the Nebraska Department of Health and Human Services, said the practice is permitted under both federal and state laws. He pointed to a state statute that says the agency “shall take custody of and exercise general control over assets owned by children under the charge of the department.”

A foster child is not informed if their Social Security payments are used by the state, Swanson said, because they are minors.

State law requires that the first $1,000 in such benefits be set aside in an escrow account, which is forwarded to a child once they turn 19 and exit the foster care system. The Social Security Administration audits the use of a child’s benefits, Swanson added, to ensure the money is being used for the “support and care” of the child.

“The state of Nebraska is aware this practice is being reconsidered in other states. However, there is no legal question under Nebraska law,” he said.

Maximus was hired, Swanson said, because the company has “qualified experience” in the complicated process of applying for Social Security benefits. Appeals are often required, he said.

The state last year signed a $301,500 contract with Maximus to continue finding Social Security benefits through September of 2023. The company has been providing similar services to the State of Iowa since 2004.

An official with Maximus said that state foster care programs are often financially “stretched to their limits,” and that finding additional money, via Social Security payments, is beneficial for a state and for the foster child.

“It’s much easier for a young person to continue receiving Social Security benefits when they turn 18 than to apply as an adult when eligibility benchmarks are more rigorous,” said James Dunn, a vice president for marketing and public relations with Maximus.

But at least one state, Maryland, has changed its law so that more of the Social Security benefits are withheld for foster children to use once they exit foster care.

Helvey, the Nebraska Appleseed official, said that foster children are at high risk of homelessness and poverty when they leave the system because they often have no financial resources.

Cornelius Levering, a 28-year-old former foster child, said he was surprised to learn when he aged out of foster care that he had been eligible for Social Security, and that about $11,000 in benefits had been used by the state. Levering said that when he was in foster care, he often had to walk from downtown Omaha to near Eppley Airport for his job because he couldn’t afford gas for his car.

“Had I gotten that money, it would have saved me from a world of struggles,” he said.


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Reporter - Regional/state issues

Paul covers state government and affiliated issues. He specializes in tax and transportation issues, following the governor and the state prison system. Follow him on Twitter @PaulHammelOWH. Phone: 402-473-9584.

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