Supplemental Security Insurance 101
Table of Contents:
- What is Supplemental Security Insurance?
- Am I Eligible for Supplemental Security Insurance?
- The Future of Supplemental Security Insurance
The 2020 election has seen candidates on both sides of the aisle propose major changes to long-standing social programs like Medicare and Social Security. While the specific plans and policies are new, these programs have evolved and expanded since Day 1.
One major evolution came in 1972 when President Richard Nixon created the federal Supplemental Security Insurance (SSI) program.
In essence, establishing the SSI program was a way of connecting the numerous state-run benefits systems that were already in place. Instead of state-specific programs for aid to the blind, elderly, or dissabled, SSI combined everything into a single program managed by the Social Security Administration (SSA).
What is Supplemental Security Insurance (SSI)?
SSI provides monthly payments to fixed-income seniors, as well as blind and disabled Americans. While it’s common to receive both SSI benefits and standard Social Security — and the SSA manages both — the programs are quite different. Distinctions between SSI and Social Security include:
- Seniors and their spouses typically have to provide proof of a ten-year work history (and payment of payroll taxes) to receive Social Security. SSI does not require any work history.
- Traditional Social Security is an entitlement program. In theory, it is available to anyone who meets the work requirement. SSI, however, is a means-tested program designed to serve Americans who meet highly-specific financial requirements.
- In most cases, SSI recipients automatically qualify for Medicaid. Combining both federal and state-level healthcare programs, Medicaid generally provides SSI recipients with comprehensive coverage. Seniors on Social Security become eligible for Medicare two years after they become eligible for Social Security benefits. Since Medicare is less sweeping than Medicaid, many seniors supplement their plans with additional Medigap coverage.
- Payouts from SSI and Social Security differ greatly. On average, SSI pays out $783/month (for individuals) and Social Security pays out $1,258/month. Both payouts are affected by other earnings. Earning history can make Social Security payments significantly higher and additional sources of income can reduce payments for SSI recipients.
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Am I Eligible for Supplemental Security Insurance?
For most Americans, Social Security eligibility comes down to little more than turning 65 and proving that you’ve paid payroll taxes for a decade. SSI eligibility is more complicated.
Eligibility for SSI is largely determined through a financial resources test. Individuals are limited to $2,000 in total assets and couples are limited to $3,000. Certain assets — a home, a car, life insurance — won’t count toward this total. Some SSI recipients take advantage of special accounts to build savings without the risk of becoming ineligible.
A second test relates to annual income. Nearly any yearly income will make you ineligible for SSI, but a few exceptions exist. These “income disregards” won’t count against your SSI eligibility:
- Up to $20/month of unearned income (income from investments)
- Up to $65/month of earned income, plus half of earnings over $65
- Refunds from claiming an earned income tax credit
- Grants/scholarships for educational expenses
- Any need-based assistance from the state
It’s important to remember that your Social Security benefits will typically qualify as countable income and could affect SSI eligibility. Seniors should also note that — while SSI is available in all fifty states — it is not available in any U.S. territories aside from the Northern Mariana Islands.
The Future of Supplemental Security Insurance
More than 40% of SSI recipients live below the poverty line, even after taking monthly benefits into account. To boost SSI’s effectiveness, the non-partisan Center on Budget and Policy Priorities recommends a number of changes. They encourage Congress to update both the asset limits and income disregards, while indexing both to account for inflation. Those asset limits have not changed since 1989 and the income disregards listed above have remained static since Nixon introduced the SSI nearly 50 years ago. The outdated policies leave a number of seniors and disabled Americans uncovered.
With Social Security and Medicare on the ballot in 2020, these updates could arrive soon.