The federal Supplemental Security Income (SSI) program provides monthly cash assistance to individuals who are handicapped, blind, or older and have very little income and few assets. Back in December 2013, nearly 8.4 million people collected SSI benefits (see Figure 1). For almost three-fifths of recipients, SSI represents their sole source of revenue.
Congress made SSI in 1972 to replace the patchwork system of national grants to states for aid to the aged, blind, or disabled. According to the Social Security Administration (SSA), which administers SSI, those grants were”intended to supplement the incomes of individuals who had been ineligible for Social Security or whose benefits could not provide a basic living.” Since its launch in 1974, SSI has guaranteed a minimum level of earnings to people who qualify.
What Is Supplemental Security Income?
Although run by precisely the same agency, SSI differs from the Old-Age, Survivors, and Disability Insurance (OASDI) programs popularly known as Social Security. But the two apps often overlap. Many SSI recipients have worked long enough to collect Social Security but their Social Security benefit is reduced enough they also qualify for SSI. Nearly one-third of mature SSI recipients under age 65, and almost three-fifths of recipients over 65, also get Social Security.
Means-tested applications are available only to individuals with very few resources in the form of income or assets. Typically, recipients must also meet additional standards; in the case of SSI, they must also be older, blind, or disabled. The Social Security Administration describes SSI as”assistance of last resort.” While many SSI recipients also collect Social Security, work history is not required for SSI. Means-tested programs like SSI have generally had difficulty in achieving high rates of participation among those eligible.
Social insurance programs protect workers and their families from common risks to their economic security, like the loss of earnings and the cost of health care. To discuss these risks as broadly as you can, social insurance plans aim to be universal in their policy. Social Security is the biggest U.S. social insurance plan. Almost all employment is covered by the program, and benefits reflect the number of earnings where a worker has made payroll tax contributions. Anyone who is covered under Social Security can collect Social Security benefits after he or she works a long time and reaches age 62 or becomes disabled. While Social Security benefits differ from person to person, everyone with a work history (or the qualified dependents and spouses of these employees ) is qualified to accumulate from the program. Virtually every qualified person claims their advantage.
To qualify for SSI, applicants should be aged or disabled and have little or no income and few assets (no greater than $2,000 in resources for an individual or $3,000 for a couple, in most cases).
In 2014, the simple monthly SSI benefit is $721 for a person and $1,082 to get a couple. Beneficiaries who live in another person’s household and receive in-kind maintenance and encourage qualify for one third less than this amount, while beneficiaries who receive long-term care in a Medicaid-funded institution qualify for $30 per month.
These benefits, however, are reduced when recipients have other income. In determining a person’s SSI eligibility and benefit amounts, SSA exempts the first $20 per month of unearned income, including Social Security benefits, pensions, interest, or child support (this is known as the”general income exclusion”) in addition to the first $65 per month of earnings (this is known as the”earned income exclusion”). Above those thresholds, every dollar of unearned income decreases SSI benefits by a buck, while every dollar of earned income decreases SSI benefits by just 50 cents — a supply that is meant to promote work. SSA also exempts particular work-related expenses when decreasing SSI benefits due to earnings. Even though a small fraction of SSI recipients possess some earnings and also a somewhat greater percentage to have unearned income, most recipients don’t have any other source of income (see Figure 2).
Even though the basic monthly SSI benefit for an individual was $710 in 2013, other sources of earnings decreased the average monthly benefit to just $529 in December 2013.
SSI recipients may also secure non-cash types of assistance. In most states, anyone who receives SSI benefits is automatically eligible for Medicaid. About half of SSI recipients also get food stamps. About one-fourth of recipients reside in public housing or get other home assistance, like vouchers.
SSA will verify the applicant’s identity, age, work history, and financing qualifications. In the case of handicap software, state bureaus known as Disability Determination Services (DDSs) monitor the medical and associated signs to judge whether the candidate meets the standards set out in legislation — basically, whether he or she suffers from a severe handicap that will last at least 12 months or result in death and making it impossible to engage in substantial work. (A slightly different definition applies to disabled children under age 18.) If the DDS initially denies the program, individuals have several levels of appeal and may opt to be represented by an attorney.
Since 1974, the number of SSI recipients has slightly more than doubled (see Figure 3). During that time, SSI has shifted from an application that mostly supplemented Social Security income for older adults into some wider anti-poverty program that aids the disabled of all ages. SSI is an increasingly important tool for children and individuals with disabilities.
A considerable number of children — 1.3 million in December 2013 — get SSI benefits. Children with disabilities may be eligible for SSI because a child’s disability can impose additional costs on their caregiver. The amount of children receiving SSI has slowly increased since 1974 and accelerated dramatically after a 1990 Supreme Court judgment liberalized the disability criteria for SSI children. Reforms enacted in 1984 that expanded benefit eligibility for the emotionally disabled (and that took several years to implement) also affected the surge in children receiving SSI. Congress tightened the SSI eligibility rules for children in the 1996 welfare-reform law, nevertheless.
Most children who get SSI reside with a single parent and get special schooling; on average, SSI payments supply almost half of their family’s total income. SSI program rules motivate parents to function; one-third of child recipients in single-parent households, and two-thirds of those in two-parent families, have a working parent.
The huge majority — 86 percent — of SSI recipients in 2012 were entitled due to a disability, and 6 in 10 handicapped recipients had a mental handicap. The talk of SSI recipients that are disabled (rather than older ) has increased steadily since the program’s invention. But since the mid-1990s, SSI recipients under age 65 have stabilized as a percentage of their respective age categories. And the percentage of people 65 and older who get SSI has continued to fall (see Figure 4), mainly due to increases in Social Security payments and limitations on eligibility for legal immigrants who arrived after 1996. Thus, even as the number of recipients continues to grow, SSI isn’t normally growing faster than people.
How Is SSI Funded?
Contrary to Social Security (which is financed by dedicated payroll taxes), SSI is funded from general revenues. At a price of just over $50 billion in the fiscal year 2012, SSI constitutes a small part of the federal funding — 1.4 percent of overall spending that year. SSI expenditures were 0.33 percent of gross domestic product (GDP) in 2012 and therefore are expected to decline to 0.23 percent of GDP from 2037.
How Successful Is SSI?
SSI benefits are about three-fourths of the poverty line for a single person and slightly over 80% of poverty for a couple. Thus, while SSI alone is not enough to lift someone who lives independently out of poverty, it’s instrumental in cutting the number of people in extreme poverty, and it greatly lessens the burden on other relatives. An SSA study found that, in 2010, the poverty rate (based on household income) of recipients could be 65 percent without restricting SSI payments; the true rate, including SSI, was 43 percent. Most families with an SSI recipient remained under 150 percent of the poverty threshold.
SSI is exceptionally effective in reducing the aggregate poverty gap — that is, the total quantity of money required to lift families out of poverty — one of SSI recipients. In 2010, SSI reduced the aggregate poverty gap from over two-thirds. However, more than two-fifths of all SSI recipients live in households with incomes below the poverty threshold, even after accepting their benefits into account, and a lot more elderly or handicapped persons in need of aid don’t get any benefits. The next reforms could increase benefit adequacy and improve SSI participation among eligible men and women.
Raise reward levels. Congress could look at raising the basic SSI award into the poverty level. If SSI benefits equaled 100 percent of the poverty level, the fundamental SSI award for people would increase from $721 to $973 in 2014 and the fundamental SSI award for couples could increase from $1,082 to $1,311. Lawmakers could also analyze how SSI benefits are adjusted from year to year. Currently, SSI benefits increase with inflation with a cost-of-living alteration but are never adjusted to reflect actual wage growth in the market. Thus, unlike wages, SSI benefits have remained almost unchanged in real terms for decades.
Update the asset limitations. The asset limit of $2,000 for individuals and $3,000 for couples can prevent many elderly and disabled persons that are truly in need of qualifying for SSI. These asset thresholds were last updated in 1989 — the just time they’ve increased since SSI was created in 1972. (Moreover, that increase only partly captured the effects of inflation.) In case the asset limits had been indexed to inflation since 1989, they would be nearly twice as large as they are now — and if they were indexed since the program’s 1974 launch, they’d be nearly four times as large (see Figure 5). What’s more, the decline of defined-benefit retirement programs and also the spread of defined-contribution and comparable arrangements have created a pressing need to modernize the treatment of retirement savings from the SSI program.
Update the limits on other income. Like the asset limit, the general income exclusion and earned income inclusion is in dire need of adjustments for inflation. The amount of income that SSA disregards when calculating SSI benefits has not changed since 1972. As time passes, this collapse has eroded SSI benefits for people on Social Security or people who work.
For example, the $20 general income exclusion was designed in part to ensure that SSI recipients with substantial work history, and who consequently receive Social Security benefits, would have higher total incomes than SSI recipients who had little or no work history. Yet because the exception has remained frozen for four decades, the difference in united SSI and Social Security benefits between recipients with and without significant work history has largely disappeared. Likewise, the $65 exclusion for earned income is so low that its function incentive has considerably diminished.
Improve the treatment of legal immigrants. Until 1996, poor immigrants who were legal permanent residents of the USA usually qualified for SSI on precisely the same basis as U.S. citizens. The 1996 welfare law removed most noncitizens’ eligibility for SSI unless they fall into one of three chief groups: legal residents who entered the USA from August 1996; refugees and other humanitarian immigrants who entered after that date (who can receive SSI only on a temporary foundation, place in seven years); along with ordinary immigrants who entered after August 1996 and have earned 40 quarters of coverage under Social Security. Congress temporarily expanded the seven-year limitation for refugees to nine years in 2008, but this provision expired in 2010, immediately terminating benefits for several thousand poor refugees who’d fled to the United States to escape persecution.
A 2002 SSA study simulated how chosen SSI program changes would influence program participation and poverty status among the elderly. SSA found that the most effective though also the most expensive reform was increasing the income exclusion amounts, which increased participation by 20 percent and decreased the aggregate poverty gap among the older by 8%.
In sum, SSI is an effective anti-poverty program that represents a relatively small part of the national budget. SSI is essential in reducing extreme poverty among the elderly and disabled. But, policymakers may take several measures to create SSI even more effective in helping those that cannot support themselves due to advanced age or disability.