If you've received a large SSI back payment—typically covering 6 months or more of past-due benefits—the Social Security Administration (SSA) likely required you to deposit those funds into a dedicated account. But what can you actually spend that money on?
The rules are specific, and spending on the wrong things can put your benefits at risk.
In this article, we'll cover:
- What a dedicated account is and why it's required
- Approved expenses you can pay from a dedicated account
- Expenses that are NOT allowed
- What happens if you spend incorrectly
1. What Is a Dedicated Account?
A dedicated account is a separate savings or checking account that holds large SSI back payments for a child beneficiary. SSA requires these accounts when:
- The back payment covers 6 or more months of benefits, OR
- The back payment is for 3 or more months and is more than the federal benefit rate
The purpose is to protect these funds for specific, approved expenses—not everyday spending. Dedicated account funds do not count toward SSI's $2,000 resource limit, but only if spent correctly.
Important: Dedicated accounts are only required for children receiving SSI (under age 18). Adult beneficiaries may receive lump sum back payments without this requirement, though similar spending discipline is still a good idea.
2. Approved Expenses for Dedicated Accounts
SSA allows dedicated account funds to be used for expenses related to the child's disability. These include:
Medical and health expenses:
- Medical treatment not covered by insurance or Medicaid
- Therapy services (physical, occupational, speech)
- Prescription medications and medical equipment
- Mental health services
Education expenses:
- Special education services
- Tutoring related to the disability
- Educational equipment or technology
- Job training or vocational programs
Personal needs related to disability:
- Assistive technology and adaptive equipment
- Home modifications (ramps, grab bars, accessible bathrooms)
- Vehicle modifications for accessibility
- Specialized clothing or shoes
Other approved uses:
- Legal fees related to disability claims
- Expenses for maintaining eligibility for benefits
3. Expenses That Are NOT Allowed
Dedicated account funds cannot be used for routine living expenses or general purchases. Prohibited uses include:
- Food and groceries — covered by monthly SSI payments
- Rent or mortgage — considered a regular monthly expense
- Utilities — same as above
- Clothing (unless disability-related, like orthopedic shoes)
- Entertainment — video games, toys, vacations
- General savings — you can't just transfer it to another account
- Gifts — for the beneficiary or anyone else
Important: Even if it seems like a "good" expense, if it's not directly related to the child's disability, it's not allowed. When in doubt, contact SSA before spending.
4. What Happens If You Spend Incorrectly
If you use dedicated account funds for unapproved expenses, SSA can:
- Require repayment: You may have to pay back the misspent amount from personal funds
- Reduce or suspend benefits: Improper spending can affect the beneficiary's ongoing SSI eligibility
- Remove you as payee: If you're a representative payee, you could be replaced
- Pursue legal action: In serious cases, misuse can lead to fraud charges
SSA may ask for receipts and documentation at any time. Keep records of every purchase from the dedicated account.
5. How Purple Helps You Manage Dedicated Account Funds
Managing a dedicated account correctly requires careful tracking and documentation. Purple makes it easier with features designed for SSI compliance:
- Dedicated account setup: Keep back pay funds separate from monthly benefits
- Spending categories: Tag purchases as medical, education, or disability-related
- Receipt storage: Attach photos of receipts to transactions in the app
- Transaction notes: Add descriptions to explain how each expense relates to the disability
- Export reports: Generate spending summaries for SSA if requested
- Balance tracking: Always know how much remains in the dedicated account
With Purple, you'll have the documentation you need to prove your spending is compliant—and the peace of mind that comes with it.