Problematic rules strip many of financial security and the ability to get married.

After the passing of another year, Congress has still not corrected a number of problematic Supplemental Security Income (SSI) rules that impede economic and social liberties, including the freedom to pursue work and to get married. A bipartisan effort, the Savings Penalty Elimination Act, aimed to modernize several program requirements for all recipients, but ultimately fell short. Now, the lead Republican sponsor of that bill, Rob Portman, has left the Senate, making it uncertain whether a similar legislative push can be attempted in 2023.

Recipients will continue to face increasingly tighter economic conditions without congressional action. The reason is straightforward: The financial eligibility restrictions for SSI do not automatically update with increases to the cost of living. To remain eligible for benefits, recipients must abide by strict asset limits – $2,000 for individuals and $3,000 for married couples – which were last updated in the late 80s. The bill by Senator Portman and his fellow Ohioan Sherrod Brown sought to raise these thresholds to $10,000 and $20,000, respectively, and index them to inflation moving forward.

The program’s income rules also hinder recipients’ opportunities, and have gone untouched for longer. Benefits are reduced by 50 cents for every dollar earned above just $85 in monthly income. Meanwhile, unearned income, like Social Security benefits, and in-kind assistance, such as groceries provided by family or friends, face harsher penalties.

Congress has attempted to support recipients in recent years by providing access to ABLE accounts, special savings accounts whose funds are not factored into the asset tabulations. But this policy approach has been largely unsatisfactory on its own. For one, not all SSI beneficiaries can qualify for ABLE accounts, even after last year’s expansion. Second, the need to maneuver this savings system saddles recipients with yet another layer of administrative burdens. The accounts have a very low usage rate due to poor promotion as well as the various challenges with setting up and managing them. 

Federal policymakers, especially those concerned about maximizing labor force participation and marriage rates, should not be satisfied with these cumbersome carve-outs; upgrades to the general asset and income rules are necessary as well.

Put in a fragile position

All of the existing red tape is much more consequential because the largest possible SSI payment is below the poverty line. The benefits are not sufficient on their own and supplementing the program funds is difficult; as discussed, recipients essentially must work twice as hard to earn a buck while also worrying about being disqualified for going over a meager $2,000 savings limit.

A large proportion of SSI recipients are squeezed into the lower end of the income distribution as a result. Data from the American Community Survey (2019), although limited by measurement uncertainties, helps to illustrate this issue. Half of adult SSI recipients are found in the lowest family income quintile (the bottom 20%). Furthermore, the most commonly occurring income percentile for SSI recipients was the 8th percentile, right around the maximum individual SSI benefit for 2019 ($9,252). This can be seen in the figure below, which shows the proportion of SSI recipients at each family income percentile. (Note that a minor fraction of families on the upper end of the income distribution include SSI recipients; these are often households where disabled adults live with well-off relatives but are not fully financially independent themselves.)

A comprehensive set of reforms, including a benefit hike and elimination of the asset limits, would be most helpful. However, given the political constraints, it is worth emphasizing that even modest changes to the asset and income rules would help. Consider the impact of more remote-work options over the past several years. Giving people greater flexibility to work from home has led to employment rates for disabled individuals that far surpass pre-pandemic levels. SSI recipients could improve their financial security and pursue more work by reducing or (ideally) eliminating the existing program penalties

Marriage for me, not for thee

The asset and income rules also serve as painful roadblocks for major life decisions. Importantly, marriage can cause your benefits to go down or be forfeited entirely due to a spouse’s earnings and wealth. Additionally, dual-eligible couples face a smaller combined benefit and asset cap if they marry. It can make a lot of financial sense to avoid marrying your significant other.

Perhaps that is a key reason why SSI recipients are married at such low rates relative to their non-recipient counterparts, as shown in the figures below, where the marriage status of adult SSI recipients and non-recipients is broken down by age. The groups look similar in early adulthood, but then the marriage disparities bulge. For example, only 20% of 40-year old SSI recipients are married, compared to 61% of 40-year old non-recipients. More broadly, you can see that the SSI group has a lower proportion of married individuals, as indicated by less blue shading. Of course, what we don’t see here is how many married SSI non-recipients are forfeiting disability benefits they could receive if they were single. 

This marriage gap could simply be an artifact of the SSI population being poorer than the non-recipient population. Generally, those in worse financial shape tend to have lower marriage rates, and the marriage rates are indeed greater for higher-income SSI recipients relative to their lowest-income counterparts. However, marriage disparities are still present when comparing the SSI population to the non-recipient population within each family-income quintile (seen in the appendix figure). SSI recipients are facing unique burdens. 

The financial barriers to marriage are especially notable for low-income recipients. Those in the bottom 20% of family income – half of recipients – rely on SSI for 40% or more of their family income on average, as seen in the figure below. They simply cannot afford to put those benefit dollars at risk.

Recipients in families with income above the 20th percentile are less reliant on SSI benefits, but the financial marriage disincentives are still serious. Losing even 5%, let alone 15% or 20%, of one’s family income is a financial setback that couples would aim to avoid. Another important reason is that recipients may not want to jeopardize losing the valuable Medicaid coverage linked to their SSI eligibility, including long-term care services.

Who will step up now?

These ongoing challenges can only be meaningfully addressed during this congressional session with the support from members of both parties. Yet, with Senator Portman’s departure, positive SSI reforms risk falling by the wayside. His conservative colleagues should find it in their interest to take up the effort, as improving the asset and income rules would make it easier for recipients to pursue work and to get married.

Appendix Figures:

Note again: This data counts SSI recipients as high-income if they live in well-off households, even if they are not financially independent themselves.

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