BEYOND THE NUMBERS
After Decades of Neglect, It’s Time to Rebuild SSI
As policymakers craft economic recovery legislation later this year, they should include measures to expand and simplify the Supplemental Security Income (SSI) program, which provides monthly benefits to people who are disabled or elderly and have little income and few assets. Members of the House and Senate introduced an updated version of the SSI Restoration Act this month with important SSI improvements, and President Biden proposed similar changes during his campaign. Both plans are consistent with our recent recommendations to improve SSI.
SSI benefits are critical for people who need them, but the program is woefully out of date. The maximum SSI benefit is only three-fourths of the poverty line, and 4 in 10 recipients live in poverty. The program’s meager income and asset limits discourage savings and work. SSI also excludes most immigrants and residents of U.S. territories, most of whom are people of color. And its complicated rules are inefficient to administer and intrusive to recipients. SSI benefits make up only 5 percent of the payments made by Social Security Administration, but the program requires 35 percent of the agency’s administrative budget.
Our recommendations for improving SSI are:
- Update SSI’s asset limits and exclude retirement savings. The current asset limits of $2,000 and $3,000 for couples haven’t been updated since 1989 and are far too low, leaving SSI recipients vulnerable in the event of an accident, unexpected bill, or other expense. They’re also out of step with asset limits in other low-income programs, which policymakers have liberalized or eliminated. In addition, SSI — created before the shift from traditional pensions to personal retirement accounts such as IRAs and 401(k)s — counts savings in these individual accounts toward its asset limits.
- Update SSI’s income disregards. These SSI rules are even more out of date, remaining unchanged since the program’s creation in 1972. Working SSI recipients can earn only $65 per month before their SSI benefits are reduced by 50 cents for each additional dollar of earnings, which hurts recipients with incomes well below the poverty line. The income disregard for unearned income (such as benefits) is even lower: SSI recipients can receive only $20 per month before their SSI benefits are reduced dollar for dollar.
- Treat Social Security benefits as earned income. SSI treats Social Security benefits as unearned income even though beneficiaries earn them through their past work. One-third of SSI recipients receive Social Security, averaging about $500 per month, but because those benefits count as unearned income, they can effectively keep only $20 of their benefits.
- Raise SSI benefits at least to the poverty level. When policymakers established SSI, they sought to assure that “aged, blind, and disabled people would no longer have to subsist on below-poverty-level incomes.” But maximum monthly SSI benefits are well below the poverty line, leaving many recipients impoverished and unable to cover basic living expenses.
- Eliminate SSI’s “in-kind support” rules. SSI requires recipients to disclose any material help that they receive from family and friends, whether groceries or a place to sleep. For each $1 worth of assistance, SSI benefits shrink by $1. No other federal program counts in-kind support when determining benefit eligibility. These complex and intrusive rules make SSI more expensive to administer and burdensome for applicants and beneficiaries.
- Improve SSI’s treatment of immigrants. SSI’s treatment of lawful permanent residents is much harsher than other low-income programs such as SNAP (formerly food stamps), Medicaid, and Temporary Assistance for Needy Families. Until 1996, lawful permanent residents generally qualified for SSI on the same basis as U.S. citizens, but now most are ineligible, including those who became permanently and severely disabled after entering the country.
- Extend SSI to Puerto Rico and the other territories. Among the territories, only residents of the Northern Mariana Islands can participate in SSI. Puerto Rico, Guam, and the Virgin Islands instead receive a federal block grant called Aid for the Aged, Blind, and Disabled (AABD), which provides far lower benefits and has more restrictive eligibility. American Samoa has neither SSI nor AABD.
- Eliminate SSI’s marriage penalties. Two SSI recipients who marry one another have lower asset limits and benefit amounts than if they had remained unmarried. These rules restrict eligibility and cost couples up to about $400 a month for choosing to marry.
These changes are necessary to ensure that low-income seniors and people with disabilities can obtain SSI so they can afford rent, food, and other basic needs.