Sunday, February 8, 2015

SSI The Trojan Horse Of Welfare

Gaming the system has become a national pastime for many Americans. Once on these programs it is often hard to get someone off of them, on the contrary getting on one program often helps a person qualify for another, then another. Today people do this in many ways, we have layered layer upon layer of programs to help the poor and needy. One such program that is often misunderstood and sometimes confused with Social Security Disability insurance and many people are not even aware exist is Supplemental Security Income.

SSI is a Federal government program originally created to provide "stipends" and help low-income people who are either age 65 or older, blind, or disabled.  The program is administered by the Social Security Administration and funded by funds from the treasury and not social security taxes. SSI is a massive program that tends to lay just below the surface out of sight of many hard working Americans busy trying to earn a living. It has become the go to "sweet spot" for aid. Unlike food stamps, SSI is structured like the earned-income tax credit and unemployment insurance in that it delivers benefits in the form most poor people find most useful, cash.

What is Supplemental Security Income?
Supplemental Security Income (SSI) is a Federal income program funded by general tax revenue;

It is designed to help aged, blind, and disabled people, who have little or no income; and 

It provides cash to meet basic needs for food, clothing, and shelter.

To see if you are eligible for SSI benefits you merely have to link onto a government screening tool and take 5 to 10 minutes to answer a few questions. This also will tell you if you are also eligible for other benefits. For a little background on this program SSI was created in 1974 to replace federal-state adult assistance programs that served the same purpose. The restructuring of these programs was intended to standardize the eligibility requirements and level of benefits. The new federal program was incorporated into Title XVI (Title 16) of the Social Security act. Today the program has grown to provide benefits to approximately eight million Americans.

One requirement for SSI is that the individual's resources are below a certain limit. This amount is $2,000 for a single individual and $3,000 for an individual and their spouse (whether the spouse is eligible for SSI or not), $4,000 for a child applicant with one parent living in the household, and $5,000 for a child applicant with two parents living in the household. However, conditional benefits may be paid if a substantial portion of the resources are considered non-liquid, resources that cannot be sold within 20 working days, if they agree to sell the resources at their current market value within a specified period and repay the money after the non-liquid property is sold. However, it should be noted that not all actual resources are counted in calculating an individual's or couple's resources for SSI purposes. The numbers below show the rising cost of this program, I did not show every year to save space, after 2009 the numbers became elusive.
  • 1990 - 4,817,127 - $16,132,959,000
  • 1992 - 5,566,189 - $21,682,410,000
  • 1994 - 6,295,786 - $25,291,087,000
  • 1996 - 6,613,718 - $28,252,474,000
  • 1998 - 6,566,069 - $29,408,208,000
  • 2000 - 6,601,686 - $30,671,699,000
  • 2002 - 6,787,857 - $33,718,999,000
  • 2004 - 6,987,845 - $36,065,358,000
  • 2006 - 7,235,583 - $38,889,000,000
  • 2008 - 7,520,501 - $43,040,000,000
  • 2009 - 7,676,686 - $44,906,000,000

This could be interpreted to mean that when you get older you will not be forced to live within your means and on your meager social security if you have saved nothing, and if you are younger the same fact may apply. The SSI program, or Title XVI of the Social Security Act 1611, provides monthly federal cash assistance of up to $698 for an individual and $1,011 for a couple (as of 2011) to help meet the costs of basic needs of food, shelter and clothing. In most states, SSI eligibility usually assures concurrent access to important medical coverage under the various state Medicaid programs and sometimes access to section 8 housing benefits.  

In some states, supplemental payments are made by the state, increasing the cash assistance available through SSI. For example, the state of California, through its State Supplementation Program (SSP), increases the cash assistance by $171 per month for a disabled or aged individual with access to cooking facilities in 2011, making the total SSI benefit $845 per month. So while supporters hail SNAP as a key income support for the working poor, seniors and the disabled, as well as an “automatic stabilizer” it must be noted the government already has programs, and bureaucracies, for each of those groups and policy goals. This means as an example, a third of the seniors living on food stamps also get Supplemental Security Income (SSI).

A big question is whether once on SSI a person will ever start looking for work again in time. Look at U-6 unemployment over recent years and it suggests many of the people on the edge of the labor force have hit the exit. One explanation for that may be government benefits directly affect incentives to look for work. This means more generous unemployment benefits tend to elevate participation rates since workers must be looking for work to qualify. With disability insurance (DI), however, the opposite applies: to qualify applicants must generally demonstrate that they cannot work. In theory, disability and unemployment should not be correlated and for many years they were not. Due to changes in 1984 DI eligibility criteria were eased so that applicants could qualify based on a combination of conditions rather than just one.

Since then, highly subjective conditions such as back pain and mental illnesses have grown to account for most DI beneficiaries, and claims have become more correlated with unemployment. This strongly suggests that many workers find a way to qualify for DI when other benefits have been exhausted.  Although DI recipients may initially have climbed because the economy was weak, their numbers will almost certainly not decline as it strengthens. Past figures show only 4% of beneficiaries return to work within ten years. The proportion of working-age adults on DI has risen from 1.3% in 1970 to 4.6% in 2013 and while the participation rates appear cyclical at first it is beginning to look more structural. Europe may hold some important lessons as to what we face going forward.

In the 1970s DI became more generous in the Netherlands, and case loads exploded. Had the increase in disability numbers shown up in unemployment instead, the Dutch unemployment rate, which was 6% in 1980, would have surged to 13.4% says a 1992 report. The crushing expense of DI eventually forced the Dutch government to make reforms years ago that made employers bear more of the expense of employees who end up on the system. Since then, case loads have dropped. In America the DI trust fund is expected to run dry in 2016 if current trends continue. This would lead a person to see the long term implications of people not working but turning to more government aid will become a heavy burden for society.

 Footnote;  Other related articles may be found in my blog archive, thanks for reading and comments are encouraged. Below are a few of those on a similar subject.

1 comment:

  1. Thanks for providing a thorough breakdown of SSI. Being handicapped is crippling enough; financial insecurity can further hinder the disabled from living their lives. It would be good to know more about this kind of programs that help better the lives of others who are not as fortunate as most people. Good day!

    Brad Post @ Jan Dils