This safety net for the elderly and disabled comes with strict rules on savings. That may change

Wealth

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A federal program for low-income elderly and disabled individuals — known as Supplemental Security Income — includes savings limits for beneficiaries that have largely not been updated since the program was created in 1972.

Individuals who receive SSI benefits may have just $2,000 in assets, while married couples or two-parent families with beneficiary children may have $3,000, according to the Center on Budget and Policy Priorities.

The list of assets that counts towards the limit includes money in bank accounts, cash, retirement savings, stocks, mutual funds, savings bonds, life insurance, burial funds and household goods, according to the nonpartisan research and policy institute.

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It may also include assets owned by parents, spouses or immigration sponsors.

Two categories that do not count include primary residences or vehicles.

The current $2,000 to $3,000 asset thresholds for individuals and couples were established between 1985 and 1989, according to the research.

That’s up from the original resource limits of $1,500 per individual and $2,250 per couple when the program was established in 1972.

Today, those thresholds are just one-sixth of their 1972 value, the Center on Budget and Policy Priorities notes, and their worth declines further each year with inflation.

If they had been indexed to inflation, the limits for 2023 would be $9,929 per individual and $14,893 per couple.

How SSI’s asset limits may be raised

In new research, the Center on Budget and Policy Priorities considers the effects of raising or eliminating the asset limits SSI has for beneficiaries.

“A higher limit would encourage — rather than penalize — saving and allow people to retain savings to use when they really need those resources,” the research states.

About 100,000 SSI beneficiaries have their benefits suspended or terminated every year because they went over the asset limits, according to Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities.

That can be triggered by even small inheritances or a birthday gift. People who go over the limits may owe back benefits and have to adjust their life plans when they lose their benefit income, Romig noted.

“On the Hill, they often talk about waste in terms of government spending,” Romig said. “This is a such a waste to make people go through all of this.”

Raising the thresholds would not dramatically increase enrollment in the program, the research finds.

If the limits were raised to $10,000 per beneficiary and $20,000 per couple, participation in SSI would increase by up to 3%, the research finds, based on an analysis of Census Bureau data.

We shouldn’t punish seniors and Ohioans with disabilities who do the right thing and save money for emergencies by taking away the money they rely on to live.
Sen. Sherrod Brown
Democratic senator from Ohio

One bill – the Supplemental Security Income Restoration Act – calls for raising the asset limits to those thresholds, while also indexing them to inflation.

The bill was proposed last April by two senators from Ohio, Sherrod Brown, a Democrat, and Rob Portman, a Republican. While Portman has since retired, there are plans to reintroduce the proposal.

“We shouldn’t punish seniors and Ohioans with disabilities who do the right thing and save money for emergencies by taking away the money they rely on to live,” Brown said in a statement, while calling the rules “arbitrary and outdated.”

“I plan to reintroduce my bill that would update these rules for the first time in decades to allow beneficiaries to save without putting their benefits at risk,” he said.

If the SSI resource limits were raised even further, to $100,000 per beneficiary, about 5% more people would qualify for benefits, the Center on Budget and Policy Priorities found.

That $100,000 threshold would be in line with the amount eligible SSI beneficiaries are currently allowed to hold penalty-free in ABLE accounts, tax advantaged savings programs for people with disabilities.

ABLE accounts are currently available to individuals who became disabled by age 26. Recent legislation called the Secure 2.0 will make it so that age is raised to those disabled by age 46, which will make it so a majority of SSI beneficiaries can have those accounts, the Center on Budget and Policy Priorities notes.

Another change — excluding the consideration of retirement accounts — could also help bolster SSI program eligibility.

Eliminating the asset test entirely would raise participation in the program by 6%, the nonpartisan research and policy institute found.

Changes would save time and money, experts say

SSI’s asset limits can make it impossible for beneficiaries to deal with financial situations that are even a little bit complicated, according to Kristen Dama, an attorney at Community Legal Services of Philadelphia, which represents about 1,100 clients in SSI matters each year.

Even if beneficiaries do not have certain assets the Social Security Administration suspects they have, the onus may be on them to provide the necessary paperwork to prove that, according to Dama.

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Raising the limits may not only help prevent interruptions in benefits, it would also help reduce the administrative burden placed on the Social Security Administration to manage.

Higher asset limits would make it so the Social Security Administration no longer has to look at every single bank statement, Dama noted, saving time for staff members who already face high workloads.

About 35% of the Social Security Administration’s administrative outlays are currently devoted to the administration of SSI, according to the Center on Budget and Policy Priorities.

“It’s going to be an easier program for Social Security to administer and it’s going to save taxpayer dollars,” Dama said of easing SSI’s asset restrictions.

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