If you're a representative payee with money in a dedicated account, you've probably wondered exactly what you can—and can't—use those funds for. The rules are more restrictive than regular SSI benefits, but they're also more flexible than some people realize. Understanding the approved spending categories helps you use these funds to genuinely improve your child's life.
In this article, we'll cover:
- Why dedicated accounts have spending restrictions
- Approved spending categories for dedicated account funds
- Specific examples of what qualifies
- What you cannot spend dedicated account money on
- Documentation and record-keeping requirements
- What happens if you use funds incorrectly
Why Dedicated Accounts Have Restrictions
Dedicated accounts exist because Congress recognized that large SSI back payments need special handling. When a child receives thousands of dollars in past-due benefits, there's a risk that money could be spent quickly on everyday expenses rather than addressing disability-related needs that might otherwise go unmet.
The restriction isn't about distrust—it's about ensuring these one-time windfalls have lasting impact on the child's wellbeing. Regular monthly benefits cover ongoing needs like housing, food, and clothing. Dedicated account funds are meant for things that improve the child's situation related to their disability: therapies that help them develop, equipment that increases independence, education that prepares them for the future.
This also explains why dedicated accounts are excluded from SSI's $2,000 resource limit. The funds serve a different purpose than regular benefits, so they're treated differently for eligibility purposes.
Approved Spending Categories
Medical treatment and related expenses. This includes any medical care connected to the child's disability that isn't covered by insurance, Medicaid, or other programs. Doctor visits, specialist consultations, prescription costs, medical equipment, and supplies all qualify. Mental health treatment, including therapy and counseling, is covered. Dental care, vision care, and hearing-related expenses connected to the disability are also appropriate.
Therapy services. Physical therapy, occupational therapy, speech therapy, behavioral therapy, and other therapeutic services directly related to the child's condition qualify. This includes both the therapy sessions themselves and any equipment or materials needed for therapy at home. If a therapist recommends specific items for continued practice between sessions, those purchases are appropriate.
Education and job training. Expenses that help the child learn and prepare for eventual employment qualify. This might include tutoring, special education services beyond what the school provides, learning materials, educational technology, vocational training, or college preparation. Adaptive educational equipment—like specialized software or devices that help the child learn—also falls into this category.
Personal assistance services. If the child's disability requires personal care assistance, dedicated funds can pay for it. This includes in-home aides, personal care attendants, respite care for family caregivers, and similar services that directly support the child because of their disability.
Special equipment and assistive technology. Wheelchairs, walkers, communication devices, hearing aids, adaptive technology, specialized computer equipment, and any other devices that help the child function better due to their disability qualify. This also includes maintenance, repairs, and upgrades to such equipment.
Housing modifications. If the child's disability requires changes to the home—wheelchair ramps, bathroom modifications, widened doorways, safety equipment, or other accessibility improvements—dedicated funds can cover these expenses.
Specific Examples That Qualify
To make this concrete, here are examples of purchases that would typically qualify. A communication tablet for a nonverbal child. Leg braces or orthotics not covered by insurance. Tutoring for a child with learning disabilities. Music therapy sessions. A specialized car seat for a child with physical disabilities. Sensory equipment for a child with autism. Home modifications to create a safe space. Therapy co-pays that add up over time. A service dog and related training.
The common thread is a clear connection to the child's disability and how the expense improves their condition, capabilities, or quality of life related to that disability.
What You Cannot Spend Dedicated Funds On
Regular living expenses are the main prohibition. Food, clothing, rent or mortgage payments, utilities, transportation costs (unless specifically for medical appointments), and other day-to-day expenses don't qualify—even though these same expenses are appropriate uses of regular monthly SSI benefits. The logic is that monthly benefits cover ongoing living needs; dedicated funds address disability-specific extras.
Entertainment and recreation generally don't qualify unless there's a specific therapeutic connection. A vacation to Disney World wouldn't qualify, but a therapeutic horseback riding program might.
Savings for general future use isn't an approved purpose. You can't simply leave money in the dedicated account as a general savings fund. However, planning for known future disability-related expenses—like anticipated medical procedures or upcoming therapy programs—is appropriate.
Expenses for other family members never qualify. Dedicated funds are solely for the child whose SSI benefits created the account, not for siblings, parents, or anyone else.
Documentation and Record-Keeping
Every withdrawal from the dedicated account needs documentation. Keep records showing the date of withdrawal, the amount, exactly what was purchased, and how the expense relates to the child's disability. Save receipts, invoices, explanations of benefits from insurance, and any other paperwork.
For larger expenses—medical equipment, therapy programs, home modifications—get documentation showing the medical necessity. A letter from a doctor, therapist, or other professional explaining why the expense is needed for the child's disability strengthens your record.
You'll report dedicated account activity on your annual Representative Payee Report, and Social Security may request detailed documentation at any time. Having organized records protects you from any misunderstanding about whether funds were used appropriately.
Consequences of Incorrect Spending
If Social Security reviews your dedicated account and finds that funds were used for non-qualifying expenses, you could be required to repay those amounts from your own money. This applies even if you genuinely believed the expense qualified—documentation and clear disability connection are key.
In serious cases—repeated misuse, large amounts, or evidence of intentional fraud—consequences could include removal as representative payee and potential legal action. The dedicated account has specific protections (exclusion from resource limits) that come with specific responsibilities.
If you're ever unsure whether an expense qualifies, it's better to ask before spending. You can contact Social Security or consult with a benefits counselor who can help you understand the rules as they apply to your specific situation.
Managing dedicated account funds requires careful attention to the rules. Purple offers representative payee accounts with tools that help you categorize and track spending, making it easier to document that dedicated account funds are used appropriately.