TN 21 (12-23)

RS 01301.260 Foster-Care Payments - Damon v. Secretary of HEW (2nd Circuit)


Vermont statutes define foster care as “care of a child, for a valuable consideration.”

The regulations of the Vermont Department of Social Welfare refer to foster care as “purchased.”


1. Issue

In the case of Damon v. Secretary of Health, Education and Welfare , 557 F.2d 31 (2nd Cir. 1977), the Court of Appeals held that in the State of Vermont, foster-care payments to foster parents are not to be treated as support to the child from the State of Vermont but as property of the foster parents.

The court concluded that the payments made to a foster parent are the foster parent's property and are not public assistance payments to the adopted child. The use of the payments by the foster parent for the foster child's needs constitutes support by the foster parent from the parent's income and is not support by a public assistance agency. (In the Damon case, the worker adopted the child after the child became entitled to Social Security benefits.) This decision is incorporated into Social Security Administration AR No. 86-16(2).

2. Applicability

a. General

The Damon AR is effective May 20, 1986 and applies at all adjudicative levels within the Second Circuit (Connecticut, New York and Vermont). These instructions apply where the foster child lives in one of the States in the Second Circuit and only as far as each individual State's laws include provisions that foster-care payments are the property of the foster parents and are not public assistance payments. Currrently, only Vermont has such a specific statute; Connecticut has no such provision and New York law is vague on the issue. However, any future changes in the individual State statutes could affect how these payments are handled.

b. Case Involves New York or Connecticut

If the situation as described in 4. below arises in either Connecticut or New York and the payments are material to a finding of one-half support, the question of the foster-care payments should be submitted through normal procedures to the Office of the General Counsel (OGC).

c. Ruling Does Not Apply

Where this ruling does not apply, treat foster-care payments as contributions for support from the public assistance agency that actually pays the monies.

3. Suspension and Termination Events

Benefits paid because of this ruling will not be suspended or terminated simply because the foster child is no longer a resident of the Second Circuit. Normal termination, suspension, deduction and nonpayment provisions apply (RS 00203.030-RS 00203.035).

4. When Payments Constitute Contributions Toward Support

Payments may constitute contributions toward support if the following exists:

  1. a. 

    The foster child lives in the State of Connecticut, New York or Vermont at the time the determination on one-half support is made;

  2. b. 

    The foster child was legally adopted in a court of competent jurisdiction within the U.S. by the worker after the worker's entitlement to Social Security benefits;

  3. c. 

    The child was living with the worker in the U.S. and receiving at least one-half support from the worker at the necessary point in time (GN 00306.000);

  4. d. 

    The worker was receiving payments as a foster parent from the State of Vermont; and

  5. e. 

    The foster-care payments were actually used toward the support of the child.


1. FO Instructions

If all of the conditions exist in 4. above, one-half support is to be computed in the normal manner (RS 01301.190) with the foster-care payments counting as a contribution from the worker. Process these cases following normal procedures. List the cases under listing code 554 ( Damon Acquiescence Ruling) and annotate the routing form “Foster-Care Payments, Listing Code 554.”

2. PC Instructions

List these cases under listing code 554 ( Damon Acquiescence Ruling).

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RS 01301.260 - Foster-Care Payments - <Italic>Damon v. Secretary of HEW</Italic> (2nd Circuit) - 12/27/2023
Batch run: 12/27/2023