Generations
Volume XXIX, Number 1. Pages 6–8 Insuring Health and Income Security
How Supplemental Security Income Works By Robert Applebaum and Michael Payne
cepts are evident in this ebate about how to country’s Supplemental assist those in need Is the safety net Security Income (ssi) prohas been constant gram, and can be seen in a throughout social history. too close to the ground? look at whom the program Approximately 400 years serves and the manner in ago, Francis Bacon (2002) which it serves them. expressed the view that “in charity, there is no excess,” at a time when EngBACKGROUND land was taking a far from generous approach toward its destitute citizens, going so far as to ssi was begun in 1974 as a social safety net beat and imprison beggars who could display for the elderly, blind, and disabled people who no discernible aZiction as reason for their were falling through the cracks of Social Secupoverty. It was even illegal for the charitably rity and other government programs. Prior to inclined to provide alms to those not deemed that time, these people were helped Wnancially worthy of such altruism (Quigley, 1996). by such programs as Old Age Assistance, AssisThough we have come a considerable distance tance for the Blind, and Assistance to the Perfrom some of the more draconian practices of manently Disabled that had been set up by the England’s Poor Laws of the sixteenth and sevU.S. Social Security Administration (ssa) enteenth centuries, the United States today between 1935 and 1950. Though created by fedretains some of the social philosophy upon which eral law, the three assistance programs were those laws were based. The idea of dividing the administered and operated in an extremely fragpoor into two distinct classes, unable to work mented, uncoordinated fashion by a range of (deserving) and able to work (undeserving), for state and local agencies, resulting in markedly example, stems directly from the all-encomuneven beneWts from state to state and, in some passing template of the Elizabethan Poor Law cases, from county to county (Beedon, 2002). of 1601, as does the still prevalent (but mostly ssi consolidated these various programs and unspoken) notion that the poor are responsible guaranteed a uniform, base amount of Wnancial for their own situation and thus merit only a assistance to those considered to be the country’s subsistence level of aid. Traces of these two conmost vulnerable citizens—people age 65 and
D
©2005 The American Society on Aging
Spring 2005
27
Generations older who received little or no standard Social Security and those with visual impairments or other signiWcant disabilities that diminished their ability to work (or engage in “substantial gainful activity”). ssi is administered by the Social Security Administration, which was selected in an eVort to promote the image of supplemental income as insurance rather than “welfare” and to take advantage of the ssa nationwide network of oYces and the eYcient beneWt distribution practices already in place across the country. ssi is funded by general federal tax revenues, but the individual states have the option of supplementing federal beneWts as each deems necessary. Though a U.S. Senate Finance Committee report issued in the formative stages of ssi described the program 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,” Congress in fact set the original ssi maximum beneWt rate for an individual at only 71 percent of the U.S. poverty level. That maximum beneWt rate has risen only slightly over the decades, and in the year 2005 stands at roughly 75 percent of the oYcial poverty rate (current rates establish a yearly income of $9,310 for an individual and $12,490 for a couple). It was expected that state supplements, the Food Stamp Program, Medicaid, and various community services would help ssi beneWciaries reach the poverty level and provide them with healthcare. But that has not always been the case. Although all but eight states oVer some type of supplement to the federal ssi beneWt, in a number of states ssi recipients do not qualify for government health coverage. Also, many people who are eligible for food stamps (typically half) do not use them, for various reasons. BENEFITS ssi remains as originally devised by the government, “an assistance of last resort” provided to those vulnerable populations whose needs cannot be met by other sources. Many ssi recipients also receive Social Security. As with other sources of personal income, the amount of the Social Security payment is deducted from the ssi beneWt. Food stamps, however, are not 28
Spring 2005
Volume XXIX, Number 1. Pages 6–8
counted as income against the ssi beneWt. ssi beneWciaries are allowed to work, with the Wrst $65 in earned income exempt from ssi deduction, but the rest of the ssi beneWt reduced by 50 cents for each dollar earned. ELIGIBILITY To qualify for ssi beneWts, recipients must have limited income and assets. An applicant’s income must be below the maximum ssi beneWt, which is $564 for an individual and $846 for a couple. Personal resources must not exceed $2,000 in worth for an individual and $3,000 for a couple (Social Security Administration, 2004), with the exclusion of one’s home, automobile (up to a value of $4,500), and life and burial insurance (policies up to a value of $1,500). Roughly 6.6 million elderly, blind, and disabled Americans now receive monthly ssi checks, with the average monthly amount close to $400. Of those 6.6 million, 2.5 million receive a state supplement, which averages an extra $138 for each recipient. The maximum ssi monthly payment is adjusted yearly according to the Consumer Price Index (cpi). Total annual ssi payments now stand at approximately $35 billion. RECIPIENTS The approximate breakdown of ssi allotments among recipients is as follows: • Sixty-three percent of ssi payment goes to people ages 18 to 64 who have disabilities (roughly half of which are related to mental disorders). • Seventeen percent goes to people age 17 and under who have disabilities. • Twenty percent goes to people age 65 and older. The composition of the recipients is very diVerent now compared to the composition of recipients at ssi’s inception more than thirty years ago. In 1974, nearly 60 percent of ssi recipients were age 65 and older. Decline in the number of aged ssi recipients is primarily attributable to the Social Security Administration’s decision to adjust Social Security beneWts according to the CPI in the early 1970s, making Social Security more attractive and the prospect of reduced Social Security beneWts as a result of participa©2005 The American Society on Aging
Volume XXIX, Number 1. Pages 6–8
Insuring Health and Income Security
tion in ssi, with its strict eligibility policies, appear worthwhile. FUTURE While the number of ssi clients will continue to grow in the coming decades, government forecasters expect ssi to decline as a portion of the U.S. Gross Domestic Product (gdp)in the next quarter century—from the current 0.30 percent of the gdp to 0.24 percent of the gdp in 2028 (Social Security Administration, 2004) In the meantime, U.S. policy regarding income maintenance will continue to struggle between two values. On one hand, the policy is based on the goal of ensuring that those with very low incomes who are “truly deserving” get the assistance they need; on the other hand, the policy is to avoid providing those in need, no matter how “deserving,” with a beneWt, or income, that surpasses the income of the lowestpaid workers. Consequently, debate continues about how high or low the supplemental security net should be placed in order to signiWcantly break the fall of all those who need it. Many would agree that a safety net designed to catch only those with incomes of no more than 75 percent of the poverty level—as is the current ssi program—is just too close to the ground to oVer the protection that is necessary. Robert Applebaum, Ph.D., is professor, and Michael Payne is a graduate student, both at Scripps Gerontology Center, Miami University, Oxford, Ohio.
Coming up in
Generations
A New Look at Ageism
Jon Hendricks, Guest Editor
REFERENCES Bacon, F. 2002. “Of Goodness and the Goodness of Nature.” In B. Vickers, ed., Francis Bacon: The Major Works. Oxford: Oxford University Press. Beedon, L. 2002. “Supplemental Security Income.” In D. J. Ekerdt, ed., The Encyclopedia of Aging, v. 4. New York: Macmillan Reference usa. Quigley, W. P. 1996. “Five Hundred Years of English Poor Laws, 1349–1834. Regulating the Working and Nonworking Poor.” Akron Law Review 30(1): 73–128. Social Security Administration. 2004. Social Security Online—Actuarial Publications: “The Annual Report of the Supplemental Security Program.” May.
©2005 The American Society on Aging
Fall 2005
Spring 2005
29
