Time for Change: Rethinking SSI’s Asset Limits
The Supplemental Security Income (SSI) program was created to provide financial support to low-income individuals with disabilities. While the program aims to offer a safety net for disabled folks with low income, one often-overlooked aspect is the impact of asset limits on SSI recipients. These limits force recipients to live on the edge of economic insecurity, preventing them from saving and achieving financial independence. It is time to significantly raise or eliminate the asset limit, like we have for programs like SNAP and Medi-Cal.
Today, the federal monthly SSI benefit is $914 for individuals and $1,371 for couples. As a means tested program, SSI considers all income and resources an individual has or has access to. Several factors can reduce the already modest benefit amount including other sources of income like Social Security, pensions, child support, or living with someone who provides support.
Current asset limits require individual recipients to have less than $2,000 in assets and couples have less than $3,000. Some assets include cash, bank accounts, stocks, land, life insurance, vehicles, and anything that can be liquidated in a short amount of time. Even retirement accounts that have penalties for withdrawing funds are included. Unfortunately, these asset limits vary for individuals and couples, putting couples with disabilities at a disadvantage. To be equitable, couples should have a $4,000 resource limit. Instead, the limit is capped at $3,000 –a $1,000 penalty. This discourages couples from marrying and economically penalizes them for doing so. Certainly, the Social Security Administration (SSA) should follow a consistent resource limit so individuals and couples can be on the same level.
The asset limit issue stems from values set in an economy from five decades ago in1974. If these limits were to be adjusted for inflation, they would be around $12,378 for individuals and $18,507 for couples. Crunching the numbers, this shows a significant difference of $10,000 to $15,000 in assets, that present price levels are six times higher than in 1974, and that the 1974 dollar has lost significant purchasing power over the years, making these limits increasingly inadequate.
Restricting savings to $2,000 and $3,000 hinders a recipient’s ability to achieve self-sufficiency and leaves them vulnerable to unexpected expenses from health crises, appliance breakdowns, or economic recession, which disproportionately affect recipients, making it that much harder to recover. As exemplified with Nicholas Hemachandra, an SSI recipient with autism, he has to cut back on hours and spend most of his earnings to avoid losing his benefits. Ray, Nicholas’ dad, hopes for a day when his son can have his own apartment when he is no longer around. However, with the $2,000 limit, it “stops him from (buying) pretty much anything (Hyatt)”. These limits create unnecessary uncertainty for parents like Ray and many others. Coupled with inflation, they further strain recipients that are struggling to keep up with rising grocery prices and housing costs. Raising these limits would encourage saving, reduce the need to exhaust savings before meeting basic needs, and encourage recipients who can, to work.
Another issue with the outdated limit is its tendency to disrupt benefits and services, causing “churn.” On average, “70,000 beneficiaries have their benefits suspended annually”(CBPP) due to excess resources. Beneficiaries who exceed the limit not only lose benefits, but for many, more importantly, access to Medicaid. SSI eligibility automatically qualifies them for Medicaid. No senior or person with disabilities should ever have to miss essential medications or lose access to lifesaving services because of savings.
Furthermore, raising the limit would simplify the system and reduce administrative costs. Every year 40,000 beneficiaries have their coverage terminated forcing them to go through the hassle of reapplying. The Center on Budget Priorities and Policies states that SSI administration consumes 35% of SSA’s costs, even though it serves fewer recipients than SSDI (Social Security Disability Insurance), which costs 19%.
Another finding to highlight from CBPP’s article is increasing limits has limited fiscal impact. Raising them to $10,000 and $20,000 for couples only boosts participation to 3%, while $100,000 results in a 5% increase. Surprisingly, removing the resource limit entirely results in a 6% expansion, just 1% more than the $100k threshold. This is because individuals applying for SSI typically have minimal savings, especially recipients with disabilities who have limited earnings.
Scaling resource limits to $10,000 and $20,000 wouldn’t significantly increase costs. In fact, the Center on Budget Priorities and Policy has projected an $8 billion increase over ten years, representing about 1% of program costs over that period.
These proposed policy changes have the potential to alleviate SSA financial strain and, more importantly, empower this vulnerable population towards economic independence. While they may not drastically increase in program participation, they can help uplift recipients to a better state of economic well being and independence. Additionally, it’s important that we push for more dialogue in the policy space and look into other programs such as SNAP and TANF with more flexible asset limits.
Furthermore, it’s worth noting this September, the SSI Savings Penalty Elimination Act was introduced in Congress which aims to update SSI’s asset limits. Western Center supports this bill and will be advocating for its passage.
In conclusion, SSI’s resource limits have far-reaching consequences, forcing recipients on the edge of poverty, hindering financial security, and causing benefit interruptions. Updating these limits is vital for promoting self-sufficiency and ensuring a more effective, equitable system.