Reynolds: Iowa Foster Kids Can Now Keep Survivor Benefits for Their Future

By John Damon

Iowa is changing how it handles Social Security survivor benefits for foster children, letting them keep that money for their own future instead of using it to cover the cost of their care. Governor Kim Reynolds announced the policy shift Wednesday, saying it gives vulnerable youth a real financial foundation as they prepare to leave the system.

The change, requested by the U.S. Department of Health and Human Services, means eligible foster kids with a deceased parent will have their survivor benefits saved in accounts they can use later for education, a home, or other needs. Reynolds made the announcement alongside Iowa Department of Health and Human Services Principal Deputy Director Larry Johnson at Foster SQUAD, a foster care support group in Ankeny.

“I have directed Iowa Health and Human Services to preserve survivor benefits using the most appropriate account type for each eligible child, so that he or she may use the money in the future to support their life’s goals,” Reynolds said. “Whether that means pursuing an education, purchasing a home, or achieving financial stability. This change aligns well with other financial support that already exists for young Iowans who transition out of the foster care system.”

Reynolds tied the move to a national initiative led by First Lady Melania Trump to strengthen support for foster families and help children in the system become independent, successful adults.

How the New System Works

Previously, federal survivor benefits for eligible foster children were used to pay for their foster care. Under the new system, those funds will be placed in accounts that can be returned to the family if the child is reunited with them, adopted, or gains a permanent guardianship within 12 months of entering foster care.

If the child remains in foster care for more than a year, the federal dollars will be invested through a combination of a 529 education savings plan and an escrow account, or through an IAble account if the child is eligible. When the child leaves the foster system, the accounts transfer to them, with the money available for approved expenses like education, housing, and transportation.

Building on Foster Care Reforms

The survivor benefits change is the latest in a series of efforts by Reynolds to improve Iowa’s foster care system. She highlighted other work, including a partnership between Iowa HHS, the Administration for Children and Families, and the Google Public Sector to develop a new comprehensive child welfare information system. Reynolds also signed a law this year updating Iowa’s foster care training requirements.

Johnson said the investment for survivor benefits is “another step Iowa is taking to ensure eligible foster youth have every opportunity to succeed.”

“These efforts reflect the dedication of our child welfare workforce and the collaboration of partners who share a common goal: building a stronger system that helps children and families thrive,” Johnson said. “Protecting and investing survivor benefits reinforces this strategy by giving eligible youth additional resources to build sustainability, pursue education and employment, secure housing, and meet other essential needs as they move into adulthood.”

Who Qualifies for Survivor Benefits?

Social Security survivor benefits are available only to unmarried children in foster care if their parent died when they were 17 or younger, if they are 18 or 19 and still in school full time, or if they developed a disability at age 21 or younger. Benefits can also apply to married children, stepchildren, adopted children, grandchildren, and step-grandchildren under certain circumstances, according to the Social Security Administration.

Officials at the news conference said the change will affect a small percentage of children in Iowa’s foster care system. Johnson noted that “the state will cover the cost of the care for foster care” that survivor benefits currently go toward.

“It is a small amount of children, but it will make a difference for them,” Johnson said.