Income

As Supplemental Security Income hits 50, here’s how it could change

Trade Fg | E+ | Getty Images

A key federal program providing benefits to the elderly, blind and disabled – Supplemental Security Income – turns 50.

The program, which currently serves nearly 8 million beneficiaries, was created by legislation signed by President Richard Nixon on October 30, 1972.

But even though Supplemental Security Income — called SSI for short — provides crucial income for adults and children with disabilities and the elderly, its benefits and requirements have endured for decades without major updates.

“As we mark 50 years of this grassroots program, it’s a bittersweet anniversary to celebrate because SSI has been left to rot on the vine for almost as long as it’s been around,” Rebecca Vallas, Principal Investigator and co-director of The Century Foundation’s Disability Economic Justice Collaborative, said during a recent webinar hosted by the progressive think tank.

Moreover, SSI’s eligibility criteria “have become extraordinarily restrictive, punitive, counterproductive and even downright inhumane,” Vallas said.

The outdated rules have caught the attention of some Washington policymakers.

“We know Washington has neglected this program for too long,” Sen. Sherrod Brown, D-Ohio, said in the webcast. “We know how much more needs to be done to bring SSI into the 21st century.”

SSI recipients can’t have ‘essentially no savings’

Supplemental Security Income benefits were designed for people “subject to great inequality and considerable bureaucracy inherent in the current system,” Nixon said when signing the 1972 legislation.

The first benefits were sent in 1974. The average payment was $117 per month.

Today, payment amounts are a maximum of $841 per month for individuals and $1,261 for married couples. A record 8.7% cost-of-living adjustment for 2023 will bring those totals to $914 per month for individuals and $1,371 for couples.

Still, experts struggled to give the program a passing grade during the Century Foundation’s recent webcast because about half of the recipients live in poverty, while the program’s key rules have remained unchanged for decades. .

This includes a $2,000 asset limit for individuals ($3,000 for couples) that hasn’t been updated since the 1980s. The rule applies to assets held in bank accounts or elsewhere . Therefore, program recipients can have “essentially no savings” in order to maintain eligibility, according to Kathleen Romig, director of Social Security and Disability Policy at the Center on Budget and Policy Priorities.

Learn more about personal finance:
Why Supplemental Security Income benefits are insufficient for many people
Social Security benefits set to increase by more than $140 a month in 2023
Supreme Court denies Puerto Rican residents access to SSI benefits

Other outdated rules are also holding back beneficiaries of the scheme, experts say.

People covered by the program are limited to the income they can earn. The first $65 earned in a month does not count. However, for every $2 earned above this threshold, SSI benefits are reduced by $1.

There is also a marriage penalty for couples with two SSI recipients. Together they receive less money per month than if they claimed individually. Additionally, their asset limit is $3,000, compared to $2,000 each if they claimed individually.

Additionally, recipients are limited to the help they can accept from friends or family, including groceries or housing.

Proposal clears ‘biggest hurdle’

The rules are not only cumbersome for the individuals and families who depend on the program, but also costly for the Social Security administration to administer.

The SSI accounts for about 80% of the Social Security Administration’s administrative costs, in part due to the testing capabilities required by the program, noted Will Raderman, employment policy analyst at the Niskanen Center.

This is despite the fact that the population served by Social Security is eight times the size of SSI. (Granted, some recipients receive both Social Security and SSI, though their benefits are reduced for it.)

Some Capitol Hill lawmakers are making a bipartisan effort to update asset limits. A bipartisan bill – the SSI Savings Penalty Elimination Act – aims to increase asset limits to $10,000 for individuals and $20,000 for couples, and also index them to inflation.

The proposal put forward by Brown and fellow Ohio Senator Rob Portman, a Republican, marks the first bipartisan bill to update the program in more than 30 years.

The change would save recipients money in case of unexpected car repairs, medical bills or other unforeseen expenses.

It would be a step toward updating the program, which also has a lengthy application process and outdated income requirements that make the program “unnecessarily and unfairly difficult,” said Sen. Ron Wyden, D-Ore., Chairman. of the Senate Finance Committee.

“We know our job is far from done,” Wyden said.

For Dyveke Cox of Martinsville, Indiana, whose 21-year-old daughter is on SSI, the change would “definitely be an improvement.”

“For us, asset limits are the biggest hurdle or constant struggle we have with the program,” Cox said.

In the rural area where they live, $2,000 doesn’t leave enough room for a reliable car and savings in the bank, she said. The rules also don’t help her desire to teach her daughter to be financially responsible.

“No parent will say to his child: ‘If you have [$2,000] in the bank, you’re good to go,” Cox said.