Recently, support for updating the Supplemental Security Income (SSI) program has gained bipartisan support and momentum with the introduction of the SSI Savings Penalty Elimination Act in the House and the Senate. The proposed legislation seeks to increase the asset limit for individuals and married couples, making it easier for people who receive SSI to save for emergencies and to have continued access to health care through Medicaid.
The legislation would raise the assets limit for individuals receiving SSI from $2,000 to $10,000, raise the assets limit from $3,000 for married couples to $20,000, and index both to inflation going forward. The asset limit was established in 1974 but was only partially updated for inflation in 1989. Although this legislation could provide a much-needed adjustment, other SSI program rules and thresholds also need updates, including the federal benefit level, restrictions on in-kind support and maintenance, and limits on the amount of income that can be received or earned before benefits are reduced.
SSI plays a critical role in helping meet the basic needs of more than 8 million people who are either over age 65 or disabled and have low incomes and few assets. Evidence from the Supplemental Nutrition Assistance Program (SNAP) and other research on the SSI program suggest that increasing the SSI asset limit would improve the financial security of beneficiaries and their families; if combined with other long-overdue updates, increasing the asset limit would lift millions of people out of poverty, reduce costs for the Social Security Administration, and limit the administrative burden on beneficiaries.
Increasing asset limits can increase families’ financial security
Research by the Urban Institute found that when asset limits in the SNAP program were relaxed or eliminated, households with low incomes saved more and were more likely to participate in the mainstream financial market. Families with low incomes were 8 percent more likely to save $500 or more and 5 percent more likely to have a bank account when asset limits were relaxed. Having savings of $250 to $749 can help families avoid eviction, avoid missed housing or utility payments, and reduce the odds of receiving public benefits after a job loss, health issue, or large income drop.
An analysis by the Center on Budget and Policy Priorities also finds that increasing the SSI asset limit would improve access to the SSI program by reducing “churn”—the number of beneficiaries who have their benefits reduced or terminated, then reinstated—which would reduce administrative costs for the Social Security Administration. An average of 70,000 SSI beneficiaries have their benefits reduced and 40,000 have their benefits terminated each year for exceeding resources limits. When asset limits were increased in the SNAP program, households were 26 percent less likely to cycle on and off the program. The study also found that a higher asset limit generated a small increase in the number of elderly people with low incomes, adults with low incomes, and children with disabilities that received assistance from SSI.
Importantly, expanding access to cash assistance through the SSI program would change how families access other benefit programs. An increase in SSI participation resulting from a higher asset limit would reduce participation in other benefit programs, including SNAP. Increased SSI eligibility would also increase eligibility for Medicaid.
Updates to the SSI program would dramatically reduce poverty
Analysis by the Urban Institute using the ATTIS model estimated the effect of four updates to the SSI program put forward in previous legislation, including increasing the maximum federal benefit to 100 percent of the federal poverty level for individuals and to 200 percent of the federal poverty level for married couples, adjusting the earned and unearned income exclusions for inflation, and reforming “in-kind support and maintenance” rules for beneficiaries living with others.
Taken together, the four provisions would more than halve the share of SSI recipients in poverty from 35.7 percent to 16.1 percent and reduce the number of people in poverty by 3.3 million, including 1.2 million people over age 65, 1.2 million adults with disabilities, 558,000 adults who live with an SSI recipient, and 402,000 children. While not estimated in that study, an increase in the asset limit as proposed in the SSI Savings Penalty Elimination Act would be expected to further reduce poverty.
These improvements in financial security for SSI beneficiaries are particularly important for Black and Latino seniors with low incomes and disabled people. Because of persistent health and economic disparities arising from systemic barriers and structural racism, people of color are likelier to develop a disability and meet SSI’s strict financial requirements.
Increasing the SSI asset limit would increase financial security and stability for beneficiaries and their families while generating administrative savings for the Social Security Administration. Combining it with other long-overdue updates to the program would cut poverty among SSI beneficiaries in half while reducing costs in SNAP and other income security programs. Ultimately, all these changes would play a vital role in the bettering the lives and increasing the upward mobility of millions of people nationwide.