Monday, May 3, 2010

Expanding the Limits for SSI Eligibility

Congresswoman Tsongas (D-MA), along with Congressman Petri (R-WI), introduced the SSI Savers Act of 2010 (H.R. 4937), proposing to reform the asset test in the Supplemental Security Income (SSI) program, the primary provider of subsistence cash to extremely low-income individuals, seniors and people with disabilities.

In general, eligibility for SSI is limited to those who have no more than $2,000 in assets for an individual and $3,000 for a couple. The SSI test also generally counts all resources deemed accessible to an individual, including defined-contribution retirement accounts, such as 401(k)s and IRAs, as subject to the asset limit.

The current SSI asset test discourages many people with disabilities from working regularly or saving money for fear of losing their benefits. Many people with disabilities and their advocates consider these limits extremely outdated as they force vulnerable individuals to deplete or spend down their savings, thereby limiting their independence, economic security and financial self-sufficiency.

H.R. 4937 proposes to remove savings disincentives in SSI by:
  • Raising the asset limit to $5,000 (from $2,000) for a single and $7,500 (from $3,000) for joint filers and index these limits for inflation.
  • For non-institutionalized individuals under the age of 65, excluding retirement savings from inclusion in the asset test.
  • For non-institutionalized individuals age 65 or older, excluding savings in qualified retirement accounts below a specified ceiling of (indexed for inflation) $10,000 for an individual and $15,000 for a couple or household (indexed for inflation) and potentially treating excess savings in these accounts as an additional asset or alternatively as an imputed income stream.
  • For non-institutionalized individuals age 65 or older, disregarding one-third of the funds drawn down from retirement accounts when calculating household income.
  • Removing the requirement that SSI recipients, if eligible, must apply for periodic payments from their retirement savings.
  • Excluding Education Savings Accounts and Individual Development Accounts funded all or in part with federal dollars or defined in federal programs for those under age 65.
SSI asset limits are set by the federal government, which gives Congress the direct ability to reform the guidelines of the program's asset tests.

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