SSI Asset Limits: Reflections on ADA's 24th Birthday
Before President George H.W. Bush signed the American with Disabilities Act (ADA) into law 24 years (and two days) ago, you're unlikely to have spotted wheelchair-accessible public transportation or commercial buildings. Ubiquitous accessible design regulations may be the ADA's most visible success. Less obvious is the legal weaponry the U.S. Justice Department wields to shield people with disabilities from discrimination.
Unfortunately, these advances have yet to translate into meaningful change in the economic circumstances of most disabled Americans. According to the U.S. Department of Health and Human Services, "people with disabilities are more likely to be unemployed and to live in poverty than any other single demographic group in the United States today." Despite medical and technological advances that facilitate the return to employment, as many as 70% of people with disabilities are unemployed. In 2003, almost 25% were in poverty, compared to less than nine percent of those without disabilities.
Possible explanations for these disparities include persistent employer bias and the inability of government programs targeting people with disabilities to encourage economic self-sufficiency. Many income-based programs discourage work and saving for emergencies and long-term investments like a house or an education. The Supplemental Security Income program (SSI), which offers cash assistance to elderly or disabled people with low incomes and few assets, is no exception. SSI's asset limits of $2,000 per individual and $3,000 per couple have not increased since 1989. In fact, if Congress had indexed the asset limits to inflation from inception in 1974, the limits would be four times as high as they are now.
Asset limits plague several different social safety net programs but the effect is the same: those who need to save can't. And without savings, income-disrupting events are likely to exacerbate the already fragile financial footing of low-income people. For example, a couple weeks ago my car suffered an $850 breakdown. If I was low-income, disabled and approved to receive my $721 monthly SSI payment, almost half my allowable assets would have been wiped out. By prohibiting SSI recipients from building a solid financial foundation, be it an adequate emergency fund or retirement savings, asset limits prolong poverty and dependency on government income supports.
To SSI's credit, certain resources are excluded from the assets test like one's home and car. Individual Development Accounts (IDAs) that restrict savings goals to a first home, postsecondary education or starting a business are also excluded as long as they're funded via Temporary Assistance for Needy Families (TANF) or the Assets for Independence (AFI) Act. However, only 16 states funded IDA programs in 2013 and not necessarily via TANF. AFI IDAs are more widespread across the country, but given their smaller size as local programs, they may not be able to sign up as many participants. Also, SSI recipients must be working to qualify for either IDA, but most people with disabilities are unemployed.
SSI's work disincentives contribute to this high unemployment rate. People with disabilities often have expenses the rest of us don't. SSI and Medicaid, which most SSI recipients automatically qualify for, help them weather these costs. Naturally, a big fear for beneficiaries is losing that support, or for applicants not qualifying, due to excessive income. The Government Accountability Office may have said it best: "[work] incentives need to be aligned so that work becomes the rational choice for [disabled] individuals who can work and not the risky choice."
It doesn't take much to have your SSI application denied because you work. If your monthly earnings average more than $1,070 (barely above the official poverty line, which doesn't factor in often costly disability expenses), you're ineligible unless you're blind. Income exclusions help those already on SSI earn somewhat more, but at the cost of a sharply reduced SSI payment.
Prosperity Now recommends increasing asset limits, indexing them to inflation, and exempting restricted accounts like 401(k)'s and 529 education plans. Members of the House and Senate proposed creating tax-free accounts specifically for people with disabilities so they can save money for an array of assets, such as education, housing and transportation. Now we just need the votes.
Happy birthday, ADA. Make a wish that asset-friendly disability policies attend next year's party.