Bill to Bring the Amounts SSI Recipients Can Keep and Earn into the 21st Century Starts Climb in Senate

by Chambliss, Bahner & Stophel, P.C.
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On March 7, Senators Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio) introduced a bill that would dramatically increase the amount of money that Supplemental Security Income (SSI) beneficiaries can earn and save, and that would eliminate penalties for applicants who receive free food and shelter.

At the moment, SSI beneficiaries are only eligible for SSI benefits if they have resources worth $2,000 or less.  Although some assets, like a primary residence and a car used by or for the beneficiary, don't count towards this $2,000 limit, cash, investments, retirement accounts and most other items that can be used to pay for food or shelter are included in the resource calculation.  If an SSI beneficiary is over this $2,000 threshold by even one dollar at the end of a calendar month, he will lose his vital access to SSI.  The Supplemental Security Income Restoration Act of 2014, S. 2089, calls for an $8,000 increase to this longstanding individual resource limit, making the new resource ceiling $10,000, and it would also raise a couple's resource limit from the current cap of $3,000 to $15,000.

SSI also has very strict income limitations.  In general, a beneficiary's SSI benefit is reduced by one dollar for every dollar of unearned income she receives during the month, and her SSI benefit is reduced by 50 cents for every dollar of income she earns from working.  If after applying these rules an SSI beneficiary's award is reduced to zero because she earns too much money in one month, she loses SSI benefits and the health insurance that typically comes with them.  

Under current law, the first $20 of an individual's unearned income (income from any source other than working) does not count towards this monthly income limit.  The proposed legislation would increase this monthly general income exclusion to $110.  In addition, the $65 per month of earned income that a beneficiary is now allowed to exclude would increase to $357.  Both the resource limits and the income exclusions would be indexed for inflation beginning in 2016 so that beneficiaries are not stuck using 20-year-old income and resource restrictions, as they are now.

Finally, as things currently stand, an SSI beneficiary who receives free food or shelter in someone else's home has his SSI benefit reduced by one-third. The bill would also eliminate this penalty, commonly known as the one-third reduction rule, so that beneficiaries can live rent-free in someone else's home without seeing their SSI awards reduced.  

In a press release, Sen. Brown explained that "inflation has significantly decreased the ability to qualify for SSI benefits, hurting seniors, the disabled and blind, and more than one million children."  Sen. Brown's office argues that the current resource and income limits prevent people from saving and leave many SSI beneficiaries below the poverty line.

To read the full text of the Supplemental Security Income Restoration Act of 2014 (S. 2089), click here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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