(Des Moines) Gov. Reynolds and the Iowa Department of Health and Human Services today announced an important change in how the state manages existing federal survivor benefits received on behalf of eligible children in foster care, specifically those who qualify because they have a deceased parent or other eligible relative. Under the updated approach, survivor benefits will be preserved and invested for children’s futures rather than applied toward the cost of foster care.
Under the new practice, eligible survivor benefits will be placed in dedicated accounts for each child. Benefits will first be held in escrow for up to 12 months, simplifying the transfer of funds when reunification or permanency through adoption or guardianship takes place during that time. If a child remains in foster care beyond 12 months, funds will be invested through an IAble account if eligible or through a combination of a 529 education savings plan and an escrow account. When youth leave foster care, these accounts transfer to them and can be used for education, housing, transportation, and other expenses that support long-term independence.
“Every child deserves the opportunity to build a secure future,” said Governor Kim Reynolds. “By preserving survivor benefits, we’re helping ensure young Iowans in the foster system have resources to pursue education, secure housing, and build independent, successful lives.”
First Lady Melania Trump has been leading the national effort to improve outcomes for children in foster care and Iowa has been a leading partner — joining Administration for Children and Families “A Home for Every Child” initiative, pledging to open Fostering the Future Accounts, and now preserving survivor benefits for foster youth.
“Thanks to the leadership of Gov. Kim Reynolds, Iowa is the 31st state to end the ‘orphan tax’ and commit to protecting the best interests of children in foster care,” said Administration for Children and Families Assistant Secretary Alex J. Adams. “Preserving survivor benefits for Iowa’s foster youth stands to provide these young people with a financial foundation that can change the trajectory of their lives as they transition out of state care and into adulthood.”
This updated approach complements Iowa’s existing supports for youth transitioning from foster care, including education and training assistance, scholarship opportunities, extended Medicaid coverage, housing assistance, and aftercare services that help young adults achieve independence.
“Survivor benefits exist to support children, and preserving those resources for their future is the right approach,” said Iowa HHS Principal Deputy Director Larry Johnson. “By protecting these funds and pairing them with Iowa’s education, housing, health care, and aftercare services, we’re helping young people leave foster care with a stronger foundation for adulthood.”
By updating its management of federal survivor benefits, Iowa is reinforcing its commitment to improving outcomes for children and youth in foster care by protecting resources intended for them and investing in opportunities that promote lifelong stability, independence, and success.
