Proposed SSI Savings Penalty Elimination Act

I’ve previously written about some problems with Social Security’s Supplemental Security Income (SSI) program. I also wrote about efforts that had been underway to address these problems. While these efforts seemed to have stalled, a new proposal has been introduced to address one of these major problems with the SSI program. The proposal has been called the SSI Savings Penalty Elimination Act.Gavel On A Stack Of Money

This bill has been proposed to update the resource limit for SSI eligibility. Since January 1, 1989, an unmarried individual has been ineligible for SSI if they had more than $2,000 in the bank (or in cash). A married individual who has more than $3,000 has been ineligible. I’ve written about a financial mechanism known as an ABLE account that can provide some relief from these eligibility requirements. Still, ABLE accounts are only available to someone who becomes disabled before their 26th birthday. As of now, someone who becomes disabled after the age of 26 and does not have the work credits for a Social Security disability Insurance (SSDI) benefit is unable to receive SSI if they have enough money saved to replace a furnace or pay for a major car repair.


The SSI Savings Penalty Elimination Act Would Change This. 

It would raise the SSI resource maximum to $10,000 for an individual and $20,000 for married couples. These amounts would then be increased with inflation, something the current law has not provided since 1989 (when a gallon of gas cost $1). 

This is, of course, a positive change. It would allow those receiving SSI to have some meaningful “rainy day fund.” It would also protect those receiving SSI from losing it if they were to inherit a modest amount of money or win a scratch-off lottery ticket. With a resource limit of only $2,000, someone may be unable to save enough for a damage deposit and the first month’s rent on an apartment without precluding SSI eligibility, especially in more expensive urban locations. So, this change needs to be made, and I would be surprised if anyone had a reasonable disagreement with it.

However, Based on my experience, I wouldn’t expect this to significantly impact SSI eligibility for new claims. Most people with disabilities who contact us with a new SSI-only claim have no assets. I would expect the number of people with new SSI applications who have between $2,000 and $10,000 in assets (and thus be impacted by this bill) to be pretty limited. This change would probably be most helpful for those who have already been on SSI for a while, as they could build some savings.

There Is Still Room for Improvement.

It's disappointing that the bill doesn’t address the more significant issues regarding eligibility for new SSI claims. The biggest problem I see is the so-called “marriage penalty.” Spousal income is considered for purposes of SSI financial eligibility. Even if a married person is undoubtedly medically disabled and has no savings, a modest spousal income can prevent them from receiving SSI. At this time, someone with a spouse working full time and earning $16.50 per hour could not receive SSI, regardless of their medical problems.

Two unmarried people living together could each receive an SSI amount, which, when combined, would be greater than the poverty-level income for a married couple. However, if both partners in a married couple receive only SSI, their combined income would be below the poverty level. (The monthly base amount for an individual on SSI is below the poverty level.)

SSI also currently disincentivizes any part-time or accommodated work a disabled person may be capable of performing. After the first $85 in earned income, SSI benefits are reduced by 50 cents for every dollar earned.

Perhaps the most maddening SSI rule I encounter regularly is the SSI reduction for “in-kind support and maintenance” or “ISM.” Under this rule, if a disabled person is living with a friend or family member without paying rent, the Social Security Administration treats the value of this “ISM” as unearned income. After the first $20 of unearned income, it is deduced from someone’s SSI benefits on a dollar-for-dollar basis. Under this rule, someone receiving an SSI benefit already below the poverty line can reduce their SSI by around $300, approximately one-third of the base benefit amount.

Even if the “SSI Savings Penalty Elimination Act” passes, the program must be strengthened to provide more robust support for its beneficiaries. This Act should be seen as a “baby step” towards future progress instead of a solution for “fixing” SSI. On a macro level, I would encourage you to support further reforms. For a discussion of your individual situation regarding SSI or other disability benefits offered by Social Security, you can contact a Social Security attorney at our office.

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