Policymakers Can Expand SSI to Cut Poverty for Seniors and People With Disabilities

As policymakers consider economic recovery legislation, they should seize the opportunity to expand and simplify the Supplemental Security Income (SSI) program, as we have recommended. The House Ways and Means Committee did not include SSI improvements in its proposal this week, but policymakers still have time to incorporate them as they consider recovery legislation. Updating SSI could cut poverty among SSI beneficiaries by more than half and lift over 3 million people above the poverty line, new research from the Urban Institute shows.

SSI provides monthly benefits to people who are disabled or elderly and have little income and few assets. SSI benefits are critical for people who need them, but the program is woefully out of date.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 more than a third of beneficiaries have incomes below the poverty line even after their benefits are considered. The program’s meager income and asset limits penalize savings and work. Its complicated rules are inefficient to administer and intrusive to beneficiaries.

The SSI Restoration Act, introduced in the Senate by Senator Sherrod Brown and in the House by Representative Raúl Grijalva, gives policymakers a set of options for program improvements, and President Biden proposed similar changes during his campaign.

Key provisions of the SSI Restoration Act together would lift 3.3 million people above the poverty line and would cut poverty among SSI beneficiaries by more than half, from 36 to 16 percent, according to the Urban Institute. (The Urban Institute analyzed the effects of the proposal using the Supplemental Poverty Measure, which accounts for non-cash benefits.)

Urban’s findings include:

• Increasing individual SSI benefits would lift 2.4 million people above the poverty line. When policymakers established SSI, they sought to ensure that “aged, blind, and disabled people would no longer have to subsist on below-poverty-level incomes.” But maximum federal monthly SSI benefits are well below the poverty line, leaving many beneficiaries impoverished and unable to cover basic living expenses. The SSI Restoration Act would raise the individual SSI benefit to the official poverty threshold.
• Eliminating SSI’s marriage penalty would lift more than 700,000 people above the poverty line. Two SSI beneficiaries who marry one another receive only 150 percent of the individual benefit amount. The SSI Restoration Act would allow each member of a married couple to instead receive the full amount of the increased individual benefit, providing a further benefit enhancement and eliminating a disincentive to marry.
• Updating SSI’s income disregards would lift nearly 400,000 people above the poverty line. SSI’s rules for those who have other sources of income have remained unchanged since the program’s creation in 1972. Working SSI beneficiaries can earn only $65 per month before their SSI benefits are reduced by 50 cents for each additional dollar of earnings, which hurts beneficiaries with incomes well below the poverty line. The income disregard for unearned income (such as Social Security benefits) is even lower: SSI beneficiaries can receive only $20 per month before their SSI benefits are reduced dollar for dollar. The SSI Restoration Act would raise these amounts to what they would have been if they’d been indexed to inflation from the outset, and automatically increase them each year.
• Eliminating SSI’s “in-kind support” rules would lift over 70,000 people above the poverty line and simplify administration. SSI requires beneficiaries 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. Social Security Administration employees, already facing customer service challenges due to underfunding and the pandemic, often identify this as one of the most difficult aspects of SSI to administer. The SSI Restoration Act would repeal them.

The SSI Restoration Act would also make the important improvement of updating SSI’s asset limits, along with other smaller changes. SSI’s current asset limits of $2,000 for individuals and $3,000 for couples haven’t been updated since 1989 and are far too low, leaving SSI beneficiaries vulnerable in the event of an accident, unexpected bill, or other expense. If beneficiaries exceed the limit by even a small amount — for example, after receiving a gift from a family member — they lose eligibility until they spend the savings. The asset limits are also out of step with those in other low-income programs, which policymakers have liberalized or eliminated. The SSI Restoration Act would increase them as if they had been indexed to inflation since SSI’s passage in 1972, and automatically increase them each year.

The Urban Institute did not model the changes to SSI’s asset rules because they would have an indirect effect on beneficiaries’ income, and thus their poverty status. However, the report notes that increasing the asset limit “would further enhance the antipoverty impact of these proposals” by expanding eligibility and improving beneficiaries' material circumstances. Updating SSI’s asset limit would also have a modest cost.

Updating SSI is necessary to ensure that low-income seniors and people with disabilities have the resources they need to afford rent, food, and other basic needs. Policymakers still have time to cut poverty among seniors and people with disabilities by incorporating some important SSI improvements into the Build Back Better legislation, even if the package cannot accommodate the full SSI Restoration Act.