As Supplemental Security Income turns 50, some are calling for the program’s outdated rules to change

Personal finance

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A key federal program providing benefits to elderly, blind and disabled people — Supplemental Security Income — is turning 50 years old.

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

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

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

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

The outdated rules have caught the attention of certain Washington policymakers.

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

SSI beneficiaries can have ‘basically no savings’

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Supplemental Security Income benefits were designed for people who are “subject to great inequities and considerable red tape inherent in the present system,” Nixon said at the signing of the 1972 legislation.

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

Today, the size of the payments is 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 push those totals up to $914 per month for individuals and $1,371 for couples.

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

That includes a $2,000 asset limit for individuals ($3,000 for couples) that has not been updated since the 1980s. The rule applies to assets held in bank accounts or anywhere else. Consequently, the program’s beneficiaries can have “basically no savings” in order to maintain their eligibility, according to Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities.

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Other outdated rules also hold the program’s beneficiaries back, experts say.

Those covered under the program are limited to how much income they can earn. The first $65 earned in a month does not count. However, for every $2 earned over that threshold, SSI benefits are reduced by $1.

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

In addition, beneficiaries are limited to how much help they can accept from friends or family, including groceries or shelter.

Proposal takes on ‘biggest hurdle’

The rules are not only burdensome for individuals and families who rely on the program, but also expensive for the Social Security Administration to manage.

SSI represents about 80% of the administrative costs for the Social Security Administration, due in part to the means testing the program requires, noted Will Raderman, employment policy analyst at the Niskanen Center.

That’s despite the fact the population served by Social Security is eight times the size of SSI. (To be sure, some beneficiaries receive both Social Security and SSI, though their benefits are reduced for doing so.)

Some lawmakers on Capitol Hill are making a bipartisan push to update the asset limits. A bipartisan bill — the SSI Savings Penalty Elimination Act — seeks to raise the 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 Sen. Rob Portman, a Republican, marks the first bipartisan bill to update the program in more than 30 years.

The change would make it so beneficiaries can save money in case of an unforeseen car repair, medical bill or other unforeseen expenses.

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

“We know our work is far from over,” Wyden said.

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

“For us, the 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 to have a reliable car and savings in the bank, she said. The rules also do not help her desire to teach her daughter to be financially responsible.

“No parent is going to tell their child, ‘If you’ve got [$2,000] in the bank, you’re good to go,'” Cox said.

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