BEYOND THE NUMBERS
As Congress finalizes the details of the House-passed Build Back Better legislation, it has a rare opportunity to improve the Supplemental Security Income (SSI) program for low-income seniors and people with disabilities. With the Senate moving to consider the legislation, there doesn’t appear to be room for the comprehensive, permanent changes the program needs, but policymakers still can temporarily improve the rules for beneficiaries who work. Some members of both parties have voiced support for simpler, more generous rules for working SSI beneficiaries, most recently at a Senate Finance Committee hearing in September. If Congress doesn’t act now, it may be years before there’s another opportunity to fix a rule that cuts SSI benefits for even the most minimal earnings.
SSI’s rules for beneficiaries who work are extraordinarily miserly. SSI exempts (or “disregards”) the first $20 per month of total income and the first $65 per month of earned income. Then, after a mere $85 in monthly income, each $1 of earnings reduces SSI benefits by 50 cents. These rules begin to reduce benefits even when a recipient’s income is well below the poverty line, keeping many working beneficiaries in poverty.
Congress has never raised the amount of income that SSA disregards when calculating SSI benefits, even to account for inflation, since creating SSI in 1972 — nearly 50 years ago. Freezing these thresholds has increasingly eroded the value of benefits for SSI recipients who work.
Congress should increase SSI’s $65 earned income exclusion, as the SSI Restoration Act would do. Had the exclusion been indexed to inflation since 1972, it would be $416 a month in 2021.
Updating SSI’s earnings rules is a cost-effective way to improve the circumstances of working beneficiaries and encourage work. Raising the income disregards would help about 300,000 working SSI beneficiaries a year, incentivize others to try to work, and reduce poverty. Increasing the earned income exclusion would cost just $11 billion over ten years, or $1.1 billion per year. By updating this woefully outdated rule as part of Build Back Better, Congress can enable working SSI beneficiaries to keep more of the income they have earned.