The American foster care system is supposed to protect children. But for decades, it has also been doing something that most people outside the system never hear about: taking money from the very kids and families it claims to serve.
Two separate financial practices have quietly drained resources from some of the most vulnerable families in the country. Progress is finally being made on one. The other is still largely ignored, and it may be doing even more damage.
The Orphan Tax
When a child loses a parent who paid into Social Security, that child is entitled to monthly Social Security survivor benefits. The average monthly benefit is around $1,100. For a child who has lost a parent, that money can help stabilize a family. When the child is in foster care, it can be set aside for when they leave care and do not have a parent to help pay for college, rent, or a car to get to a job.
For decades, states took that money instead. States routinely took the benefit checks of children in foster care who were orphans or disabled, using them as reimbursement for the cost of the child’s care, even though, by law, states are required to provide foster care to all children who need it.
In Minnesota alone, a Star Tribune investigation found that in 2022, about 60 counties received roughly $2.8 million in Social Security benefits on behalf of more than 600 children in foster care and used more than $2.5 million of it to cover foster care costs.
In early December 2025, Alex Adams, assistant secretary of the U.S. Department of Health and Human Services, sent a letter to governors of 39 states telling them to end the practice, calling it morally shocking and morally corrupt. That pressure, combined with years of advocacy and media attention, has created real momentum. It is a genuine win for foster youth.
But while the child welfare world celebrates progress on the orphan tax, a second practice is still happening in nearly every state — and getting almost none of the same attention.
Reunification Ransom
“Reunification Ransom” was coined by Richard Wexler, Executive Director of the National Coalition for Child Protection Reform, who has spent years drawing attention to a practice the child welfare system has largely avoided confronting.
Here is how it works: a family’s children are removed and placed in foster care. The state then sends the parents a bill. Monthly payments. For as long as the children remain in care. When parents cannot pay, they fall into debt. In some states, that debt is used as a reason to keep children in foster care longer. In 12 states, failure to pay has been used as grounds to terminate parental rights altogether.
This is an unpaid bill used as a legal reason to permanently sever a family.
An NPR investigation in 2021 found the practice was common in every state. When parents get billed, children spend added time in foster care and the debt follows families for years, making it harder to climb out of the poverty that often contributed to the removal in the first place.
Research from the University of Wisconsin Institute for Research on Poverty found that child support referrals for child welfare-involved families have significant negative consequences for children’s reunification with their parents. Cost-recovery arrears accumulate during and after reunification, compounding financial instability for families already trying to rebuild.
The federal government clarified after NPR’s reporting that states do not have to collect this money. They simply choose to. And in most states, they still do.
In 2025, 46% of children who exited foster care (nearly 78,000) reunited with their parents or primary caregivers. Family reunification is supposed to be the primary goal of the foster care system. Billing parents while their children are in care, and then using unpaid debt as a reason to keep families apart, works directly against that goal.
Why This One Is Harder to Fight
The orphan tax is easy to be outraged about. A child loses a parent. The government takes the money that parent left behind. The injustice is immediate and impossible to defend.
The reunification ransom is harder to fight politically because it is easier to misread. Too many people assume that parents whose children entered foster care must have done something to deserve the bill. That assumption is wrong. Neglect, often rooted in economic hardship rather than indifference, is the single most common reason children enter the system. Billing the poorest parents in the country for a service the government is legally required to provide, and then using that debt to keep families apart, is not accountability. It is a trap.
There is no national tracking system for which states have ended the practice. There is no coordinated advocacy campaign pushing for reform the way there has been for the orphan tax. There is no federal official calling it out by name. The reunification ransom is costing children time with their families, and it is doing it quietly.
What Needs to Happen Now
Progress on the orphan tax proves that public attention and political pressure can move the needle on even the most entrenched child welfare practices. The reunification ransom deserves the same treatment. States should end the practice of billing parents for foster care costs. Federal officials should say so clearly and publicly. And advocates should track which states have acted and which have not, the same way they have done for the orphan tax.
Family reunification is the stated goal of the foster care system. In 2025, nearly 78,000 children went home. Every financial barrier placed between a parent and their child works against that goal. The system should be removing those barriers, not creating them.
If you want to support the young people navigating this system right now, there are real ways to get involved. Get involved with Foster Love today.