According to 20 CFR 416.640:
"...We will consider that payments we certify to a representive payee have been used for the use and benefit of the beneficiary if they are used for the beneficiary's current maintenance. Current maintenance includes costs incurred in obtaining food, shelter, clothing, medical care and personal comfort items..."
That's about as clear as the rule gets on WHAT you can spend the money on. Basically, as long as it is for the recipient's benefit, you're good.
A check for a child should be payable as follows: PARENT/REPRESENTATIVE NAME for CHILD'S NAME. When a child under 18 receives more than 6 months worth of past due benefits (or about $4000), then SSA can require you to set a "dedicated account" specifically for those back benefits. (Note...I think maybe this is up to the claims rep processing the claim because I have seen some clients who simply got a check and never heard a thing about dedicated accounts)
Otherwise, a child's check can be deposited into your own checking or savings account...there is no need to open one specifically for the child, although this may be easier for accounting purposes.
If you are required to have a dedicated account, THEN you get into the whole "medically necessary" debate. The rules for spending that money are a little different and the accounting requirements are a whole lot stricter. Money from dedicated accounts can only be spent on the following:
*Medical treatment and education or job skills training;
*If related to the child's impairment(s), personal needs assistance; special equipment; housing modification; and therapy or rehabilitation; or
*Other items and services related to the child's impairment(s) that we determine to be appropriate. The representative payee must explain why or how the other item or service relates to the impairment(s) of the child.
Once the money in the dedicated account is gone, the account can be closed and future benefit checks deposited into your own checking account and spent according to the first set of rules.
You should most certainly keep records of all expenditures of SSI money, dedicated account or not. By law, Social Security can ask you to account for the money at any time and you are required to cooperate with their request.
Also, because SSI is based on income, there is a lag in benefit calculations. Benefits for July are figured using May's income. For parents whose earnings change each pay period or who work sporadically, this can create significant overpayment issues. If an overpayment arises, you'll definately want to be prepared with information on where that money was spent as there will probably be an audit.
The accounting part of it really isn't hard if you keep it simple and think of it in everyday terms. You know what your total monthly expenses are...now divide those by the total number of people in your home. Voile...you've got your child's portion of the rent, food, etc. Extra money left over? Consider it used for "comfort items" such as clothing, CD's, books, movies, etc.
You can get pretty creative with this stuff. I allocate $60 a month for a cell phone so that my son (and his teachers) can always reach me. The rest goes toward after school care. I've had clients allocate money for a computer for the child, karate lessons or a second phone line for the disabled teenager.
Even if you have a dedicated account and an issue arises over the way you are spending the money, remember - everything is appealable. You can always request an appeal of the decision that the expense was not necessary. Administrative Law Judges are a whole lot more understanding about those types of things than some claims reps.
