Supplemental Security Income

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SUPPLEMENTAL SECURITY INCOME

The Supplemental Security Income program (SSI) was established, in 1974, to provide assistance to poor aged, blind, and disabled people—including children. This entry describes why SSI was created, how the program works, and why it matters to millions of Americans.

SSI is a federal program, funded through the general revenues and supplemented by the states, that provides cash assistance to needy people—an eighty-year-old widow living alone and having no other income than her $125 Social Security benefit and her SSI check; a thirty-five-year-old man with a mental disability, unable to participate in the paid labor force and having no income other than his SSI check; a seven-year-old child with mental retardation living with a single mother whose marginal income leaves the family well below the poverty threshold. For these and millions of other vulnerable people with low or no income, SSI is the program that saves them from destitution.

Early assistance programs

The Social Security Act, legislated in 1935, created the basic programs known today as Old Age, Survivors, and Disabilities Insurance (OASDI) that provides a base of income security for workers and their families when their income stopped due to retirement, disability, or death of the breadwinner. Some, however, did not qualify for these benefits and others qualified only for benefits that were very low. To aid these people, state-administered, means-tested assistance programs for the aged (1935), blind (1935), and disabled (1950) were added to the original Social Security Act. These additions to the law provided only very broad guidelines to the states. There were no maximum or minimum requirements for benefit amounts; federal matching grants augmented whatever payments the states provided.

Within this system well over one thousand different state and local administrative units were created to operate the Old Age Assistance (OAA), Assistance for the Blind (AB), and Assistance to the Permanently and Totally Disabled (APTD) programs—each with different eligibility criteria, different payment systems, and differing benefit amounts. In 1972, for example, a maximum OAA benefit for a couple age sixty-five could be as low as $85 (in several South Carolina jurisdictions) and as high as $414 (in a California county).

Creation of SSI

Legislated in 1972 as title XVI of the Social Security Act (Public Law 92-603), the SSI program began in 1974 to better meet the needs of poor aged, blind, and disabled people by unifying the wide-ranging state and local programs. SSI established a uniform, federally provided, base benefit and gave the states the option to supplement that base.

In essence, SSI reversed the federal and state roles in providing assistance to needy aged, blind, and disabled people. Henceforth the federal government would be responsible for

Funding a basic benefit for aged, blind, and disabled people
Administering a uniform standard for eligibility and benefits based on ‘‘facts that can be objectively determined’’ (i.e., level and type of resources and degree of disability or blindness)
Offering an efficient way of providing benefits
Providing ‘‘very substantial’’ fiscal relief to the states and localities.

The state governments would be responsible only for supplementing the federal benefit as they saw fit to meet the needs of their populations.

Administration and funding

The Congress chose the Social Security Administration (SSA) to administer SSI. SSA had a long-standing reputation for dealing with the public in a fair and humane way, yet with scrupulous regard for the requirements of the law. In addition, SSI would be able to take advantage of SSA’s nationwide network of offices and procedures for paying benefits to large numbers of people. Another advantage of using SSA as the administering agency was that recipients could go to a Social Security rather than a welfare office to apply for benefits. It was hoped that needy elderly who refused ‘‘welfare handouts’’ would see SSI as a supplement to their Social Security, not ‘‘welfare.’’

One disadvantage of SSA as administrator was that it created the ongoing misperception that SSI takes money away from the Social Security (Old Age, Survivors, and Disability Insurance) trust funds. This is not the case. Even though SSI is administered by SSA, federal SSI benefits are administratively and financially distinct from Social Security benefits. SSI is funded from the general revenues, and benefits are based on need. SSI state supplements are paid from state general revenues and are based on state-designed criteria. Social Security benefits, on the other hand, are paid from individuals’ and employers’ FICA taxes, and are based on workers’ contributions and time in the workforce.

SSI federal benefits and poverty

SSI was described in a 1972 U.S. Senate Finance Committee Report as ‘‘designed to provide a positive assurance that the nation’s aged, blind and disabled people would no longer have to subsist on below-poverty incomes.’’ Yet at no time in its history has the federal SSI benefit alone brought recipients up to or above the poverty threshold. The designers of the program assumed that SSI recipients would also be eligible to receive benefits from other programs, such as food stamps, Social Security, and Medicaid. They also assumed that the states would provide supplements that, together with the federal SSI benefit, would bring the total benefit package up to the poverty threshold. In 1974 the federal benefit for an individual was approximately 71 percent of the poverty threshold. That proportion has increased only slightly over the years. According to Deputy Commissioner of Social Security John Dyer, ‘‘the SSI monthly benefit rate over the years has consistently represented just 74 percent of the Federal poverty guideline for an individual [and] 82 percent of the guideline for two persons.’’

Even though SSI benefits alone have never been sufficient to bring recipients above the poverty threshold, benefits maintain their real value (purchasing power) over time. SSI benefits are adjusted every January on the basis of the annual increase in the consumer price index (CPI). This annual cost-of-living adjustment (COLA) is extremely important because it means that federal SSI benefits, by keeping up with inflation, retain their purchasing power over time.

SSI federal benefit levels

The maximum monthly federal SSI benefit amount is the same in all states. In 2000 it was $512 per month for an individual and $769 per month for a couple. Not all beneficiaries receive exactly this amount because some individuals live in states that provide supplements to the federal benefit. In 1999, for example, an SSI recipient in Iowa who was blind and lived independently could receive a state supplement of $22 per month. In Rhode Island a couple receiving federal SSI benefits could also receive a monthly supplement of $120.50 from the state. (State supplements are discussed in a later section.)

Some individuals receive less than the maximum SSI benefit because they or their family members receive other income. SSI benefits are reduced dollar for dollar by the amount of a person’s ‘‘countable income’’—usually cash, checks, and other items that can be used directly, such as food, clothing and shelter.

The aged have consistently received the lowest average SSI benefit amount, followed by the blind. The disabled have consistently received the highest. In December 1999 the average benefit amounts were the following:

$249.36 per month for a person over age sixty-five
$350.72 per month for a person who is blind
$364.24 per month for a person with a disability.

The lower average benefits for those age sixty-five and over can be partially explained by the fact that almost two out of three aged SSI recipients are also Social Security beneficiaries. In addition one in five has a small amount of additional income. These other income sources offset the federal SSI benefit.

Living arrangements can also affect SSI benefits. Federal benefits of persons who live in the home of another and receive support and maintenance in kind are reduced by two-thirds. Recipients in hospitals or medical institutions who have more than half their bill paid by Medicaid receive only a personal needs allowance of $30, which. is intended to take care of personal expenses in an institutional setting. In general, recipients who live in public institutions, such as prisons or halfway houses, are ineligible for SSI benefits. (There are exceptions, such as emergency shelters for the homeless.)

SSI categorical eligibility requirements

The standard requirements for the three basic categories of SSI recipients are clearly delineated.

Aged. The person is at least sixty-five years old.
Blind. The person is totally blind or has very poor eyesight that prevents substantial gainful activity (SGA) (defined in 2000 as earnings of at least $1,170 per month).
Disabled. The person has a medically determinable physical or mental impairment that is expected to last twelve months or to result in death, and prevents the person (age eighteen or over) from doing SGA ($700 per month in 2000). Because children cannot be evaluated on the basis of their ability to do work, children under eighteen must have severe functional limitations.

SSI income and resource eligibility requirements

Actual need for assistance is determined using very strict income and asset rules (see Table 1). SSI takes into account all of an individual’s income and resources. After benefits have been awarded, SSI recipients are reviewed from time to time, to be sure that they continue to meet the requirements.

Income. Income determines both eligibility for and level of benefits. As a recipient’s ‘‘countable’’ income increases, benefits decrease, usually on a dollar-for-dollar basis. In most cases a person is not eligible when countable income is more than the federal base benefit.

Work incentives. A person does not have to be totally without income to receive SSI. Provisions in the law include special work incentives that encourage people who are receiving SSI to try to work while continuing to receive benefits. The first $65 of monthly earned income is excluded, as is half of remaining earnings. Expenses related to work are subtracted from income for blind recipients, and impairmentrelated work expenses are subtracted for recipients with disabilities. Resources or income set aside to achieve a work goal in a plan for achieving self-support, such as tuition, a computer, or start-up fees for a small business, are also excluded.

Section 1619 (a) of the Social Security Act gives special cash benefits to those who cease to be eligible for benefits because of earnings over the SGA limit, and section 1619 (b) allows working persons with a disability to continue to be eligible for Medicaid after earnings have made them ineligible for monthly cash payments.

Resources. An individual cannot own many things and qualify for SSI. Interestingly, while federal law does not allow countable resources of more than $2,000 for an individual and $3,000 for a couple, ‘‘countable’’ is not defined. Rather, the law provides a list of some things that are not countable resources. For example, an individual’s home and the land it stands on are not counted, but the value of an individual’s car over $4,500 is counted.

SSI state supplements

Approximately one-third of SSI recipients also receive state supplements. There are two types of state supplements: optional and mandatory. States have always had the option to supplement the federal benefit in order to meet the needs of their special populations. In addition, states are required by law to maintain the December 1973 income levels of people who were brought from the old state programs to the new SSI program in 1974. (Texas is an exception, because of its constitutional bar against mandatory supplementation.) Because most state benefits were very low and federal benefit amounts have increased steadily, only about eighteen hundred people continue to receive these benefit supplements.

The individual states determine whether they will provide optional supplements, to whom, and in what amount. Some states provide supplemental benefits to all SSI recipients, while others restrict their supplements to specific categories of people, such as residents of care facilities or those living in the home of another. In 2000 only seven states and one territory provided no supplement to the federal SSI basic benefit: Arkansas, Georgia, Kansas, Mississippi, Northern Mariana Islands, Tennessee, Texas, and West Virginia.

State supplement amounts vary widely. For example, in 2000 an individual living in a Medicaid facility in Arizona might receive a $10 monthly supplement, while an individual living alone in New York might receive $87. For those living in homes or residential care, the supplement is often higher. While federal SSI benefits are price-adjusted, no state increased supplements for aged individuals or couples as fast as inflation rose (U.S. Congress, House Committee on Ways and Means, 1998). In other words, over time SSI state supplements for those over age sixty-five have become worth less and less in terms of purchasing power.

Eligibility for other programs

SSI recipients are required to apply for all benefits for which they might be eligible.

Social Security. Social Security benefits are the single largest source of income for SSI recipients. However, Social Security benefits are considered countable income and so they offset SSI benefits dollar for dollar. For example, if an individual is eligible for a Social Security benefit of $200 per month, that person’s $532 SSI benefit could be reduced to $322. The update to 2001 goes from $530 to $330.

Medicaid. The law allows SSI to enter into agreements with individual states to make all SSI recipients Medicaid-eligible. Thirty-two states and the District of Columbia cover their SSI recipients in this way. In seven states all SSI recipients are eligible for Medicaid, but a separate application is required for Medicaid. Eleven states have more restrictive criteria for Medicaid eligibility. These criteria include, for example, a more narrow definition of blindness or disability or more limited financial circumstances than SSI requires. (The law requires that individual state criteria be no more restrictive than the state’s January 1972 medical assistance standards.)

Food stamps. The Food Stamp program was designed to end hunger and improve nutrition and health by assisting low-income households in buying the food they need for a nutritional diet. The program is overseen by the U.S. Department of Agriculture and operated by state and local welfare offices in 50 states, the District of Columbia, Guam, and the Virgin Islands. To be eligible for the program, a household must meet certain income and resource standards and work requirements. The amount of benefits an eligible household receives depends on the number of people in the household and the amount of income the household has. In all states except California, SSI recipients may be eligible for food stamps. Social Security offices notify both Social Security and SSI applicants and recipients of their potential food stamp eligibility and supply them with application forms. Social Security offices forward the applications to the local food stamp office, where the eligibility determination is made.

SSI Recipients

According to Social Security Administration data, the federal SSI recipient population had increased from almost four million in 1974 to over 6.5 million in 1999. In addition to an increase in size, the composition of the SSI population had changed significantly.

In 1974 aged beneficiaries comprised 58 percent of the recipients, and the blind and disabled made up the other 42 percent. Since then a notable reversal has taken place. In 1999 the number of aged recipients had dropped to only 19 percent of the total and, according to SSA estimates, was expected to continue to decline. In contrast, the number of blind and disabled recipients had risen to 81 percent of the total (see Figure 1). Included in the growing number of persons with disabilities was the category of disabled children. In 1974 children comprised only 1.8 percent of the total SSI population. By 1999 they represented 12.8 percent of SSI recipients.

Aged recipients. The decline in participation of the older population in SSI can be credited, at least in part, to the automatic cost-of-living adjustment applied annually to Social Security benefits since 1974. Keeping the value of Social Security benefits in line with the prices of goods and services helped reduce the number of older persons falling into poverty, which in turn reduced the number of older persons receiving SSI.

The significant drop in SSI participation rates, however, should not be construed as a signal that older people no longer need the program. More than two million individuals over age sixty-five are receiving SSI. Of these, 57 percent are age seventy-five or older, and 73 percent are women. Many, if not most, of these women are widowed. Only SSI stands between them and destitution.

Blind and disabled recipients. SSI recipients with disabilities are among the most vulnerable children and adults. SSA estimated that there would be nearly 1.5 million SSI disability applications in 2000—a number projected to increase gradually up to the year 2025, in part because baby boomers (born between 1946 and 1964) are aging and becoming increasingly likely to experience disabilities.

This growth in the number of applications and recipients presents an enormous challenge to SSI: it must find effective ways to encourage and enable recipients with disabilities to work if they can, while ensuring that recipients who cannot work continue to receive the benefits to which they are entitled. To these ends, SSA is attempting to streamline its evaluation process, so that people who qualify can get SSI benefits as soon as possible, and continue to get them as long as they qualify. In 2000, in addition to the established incentives, SSI and SSA launched a series of new work incentives to promote and support return to work.

SSI growth and the economy

The SSI program has grown over its more than twenty years. Total SSI federal benefit payments in 1999 were more than seven times the amount of payments in the first year of the program—$3.8 billion in 1974 ($1.7 billion for the aged, and $2.1 billion for the blind and disabled) and $28.6 billion in 1999 ($3.6 billion for the aged, and $25 billion for the blind and disabled). However, it is important not to misinterpret the numbers. Putting SSI spending in the context of the growth of gross domestic product (GDP) provides a more accurate picture than looking at spending growth alone. When considering SSI as a proportion of GDP, a two-part question must be considered: Is the economy growing rapidly enough to absorb the rising cost of the SSI program? Or is SSI growing faster than overall economic output, thereby increasing the real burden of the program?

In 1974 SSI represented 0.26 percent of GDP. By 1999 that portion had increased to 0.32 percent. Thus, SSI represented a larger portion of the economy in 1999 than it did in 1974. However, the 1999 SSI annual report projects that by 2023 SSI costs as a percent of GDP will have dropped back to the original level of 0.26 percent.

Laurel Beedon

See also Consumer Price Index and COLAS; Economic Well-Being; Medicaid; Poverty; Social Security, Administration.

BIBLIOGRAPHY

Beedon, L. E. Supplemental Security Income (SSI): Yesterday, Today and Tomorrow. Data Digest no. 43. Washington, D.C.: AARP Public Policy Institute, 2000.

Farrell, W., et al. Administration and Service Delivery in the Supplemental Security Income Program, 1974–83. Washington, D.C.: U.S. Department of Health and Human Services, Social Security Administration, 1984.

Social Security Administration. Annual Statistical Supplement to the Social Security Bulletin. SSA. Publication no. 13-11700. Washington, D.C.: Social Security Administration, 1999. Pages 285–308.

Social Security Administration. State Assistance Programs for SSI Recipients. SSA Publication no. 13-11975. Baltimore: Social Security Administration, 1999.

U.S. Congress, House Committee on Ways and Means. Social Security Amendments of 1971, Report of the House Committee on Ways and Means on H.R 1. H. Rpt. 92-231, 92nd Cong., 1st sess. Washington, D.C.: U.S. Government Printing Office, 1971. P. 147.

U.S. Congress, House Committee on Ways and Means. Green Book—Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means. Washington, D.C.: U.S. Government Printing Office, 1998. Pages 262–326.

U.S. Congress, Senate Committee on Finance. Social Security Amendments of 1971, Report of the Committee on Finance to Accompany H.R.1. S. Rpt. 92-1230, 92nd Cong., 2nd sess. Washington D.C.: U.S. Government Printing Office, 1972. Page 384.

U.S. General Accounting Office. Supplemental Security Income Growth and Changes in Recipient Population: Call for Reexamining Program. GAO/ HEHS-95-137. Washington, D.C.: GAO, 1995.

Wu, K.B. Income, Poverty and Health Insurance in the United States in 1999. Fact Sheet no 79. Washington, D.C.: AARP Public Policy Institute, 2000.

INTERNET RESOURCES

Dyer, J. ‘‘Social Security Administration Communications to Congress, the House Committee on Ways and Means, Subcommittee on Human Resources on the SSI Fraud Prevention Act of 1999.’’ Available on the World Wide Web at www.ssa.gov/policy