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Kathleen Romig, Center on Budget and Policy Priorities, joins Yahoo Finance Live to break down the Supplemental Security Income program and the need to simplify and expand the SSI program.
ALEXIS CHRISTOFOROUS: In today's "Funding Our Future" segment, we're shining a spotlight on supplemental security income. Here to talk about it is Kathleen Romig, Senior Policy Analyst at the Center on Budget and Policy Priorities. Kathleen, thanks so much for being with us. I know that you believe this program needs to be simplified and expanded. But before we get into that, just explain for our viewers what is supplemental security income, and what purpose does it serve.
KATHLEEN ROMIG: Sure. Well, supplemental security income, or SSI, is sort of the lesser-known program that the Social Security Administration administers. So everybody knows about Social Security and its retirement, and disability, and survivor's benefits. But not as many people know about supplemental security income.
And as the name suggests, it's intended to supplement Social Security benefits-- and that's for people who either earn a very low Social Security benefit or don't qualify for Social Security benefits. And it's intended for low-income seniors and people with disabilities.
KRISTIN MYERS: So then let's now go into what needs to be changed about it. I know that SSI essentially hasn't changed at all since it was first introduced several decades ago. So what are the overhauls, really, that we now need to be made for 2021 and beyond?
KATHLEEN ROMIG: Pretty much, yeah. So SSI was signed into law by President Nixon back in the early 1970s, and it has been changed very little since then. So one example of an outdated rule that hasn't been changed in nearly 50 years is how SSI treats Social Security benefits. And starting in 1972 and for every year since, SSI recipients can only keep $20 if their Social Security. And after that, their SSI benefit is reduced dollar for dollar.
So that's a big deal for a lot of people receiving SSI. A third of them have also earned a social security benefit, but they can only keep $20 of it. And it hasn't even increased for inflation in nearly 50 years. And another rule like that is how much people can have in assets.
Back in 1972, 401(k)s didn't exist, IRAs didn't exist. Lots of other-- we just weren't expecting people to save as much. And again, the program parameters for savings haven't even been updated for inflation, let alone for how much we are asking people to save for their futures. And so right now, individuals can only have $2,000 in the bank, or $3,000 if they're a couple. And the last time that was updated was in 1989.
If that had been increased just with inflation since 1972, it would be four times as high. And arguably, it should be increased even more now that we're asking people to save more, especially for retirement. So those are two of the rules that Congress is looking at right now-- and then also looking at increasing benefits and changing some of the really intrusive and outdated rules about accepting help from family members or marrying other SSI recipients.
ALEXIS CHRISTOFOROUS: Do people or recipients need to reapply for SSI year after year?
KATHLEEN ROMIG: No, they don't. But if they are receiving disability benefits, they do have what's called a continuing disability review that ensures that they continue to meet the medical eligibility requirements. And they also have something called a redetermination, which just makes sure that people continue to meet those financial criteria.
KRISTIN MYERS: I want to ask, how costly would it be to make some of these changes?
KATHLEEN ROMIG: Yeah, it's a good question. It really varies. There's a bill in Congress right now called the SSI Restoration Act. And if that bill were passed in its entirety, it would be about $500 billion over 10 years. The Social Security actuary just came out with that estimate. And I don't think that that's probably in the cards for the kind of package that we're talking about right now on Capitol Hill.
But if you just took parts of it-- like, if you just took, for example, the income rule that I mentioned to you and the asset rule I mentioned to you, that would be less than $100 billion over 10 years-- significantly less. And that might be something that policymakers could fit into a package like the one they're discussing now.
ALEXIS CHRISTOFOROUS: So you talked about expanding it, but what about simplifying it? What is it about the current structure of SSI that needs a little retooling to, perhaps, make it easier for folks to participate?
KATHLEEN ROMIG: Yes, great question. Well, one of the most complicated rules is they're called the in-kind support and maintenance rules. And that's just a fancy way of saying, help that you get that's not cash. So people get-- the benefits are so low, less than $800 a month at the maximum-- and so as a result, people get help from family and friends.
That may be a bag of groceries, maybe a room to stay in. And if they do, the value of their benefits is reduced dollar for dollar. And in order to administer a rule like that, you have to ask people all the time-- are you getting a bag of groceries? Where do you live? Who do you live with-- all kinds of intrusive questions asked repeatedly over and over.
As it turns out, only about one in 10 SSI recipients receives that kind of help. But every single applicant has to be asked, and then over the years, every single recipient has to be asked repeatedly all of these intrusive questions about their lives. It's very expensive to administer, very prone to error. And one thing that's included in this SSI Restoration Act is just getting rid of those rules. There aren't rules like that in any other federal program-- and just getting rid of those rules altogether and allowing people to support their friends and family without being penalized.
KRISTIN MYERS: I did want to ask about the current racial gaps that do exist inside of the program. Racial inequity is something that Alexis and I have been chatting about a lot, especially during this pandemic. So what are those gaps? Do they exist? What are they? And how can some of these changes essentially eliminate or, perhaps, narrow them?
KATHLEEN ROMIG: Yes. That's a great question. So people of color make up the majority of SSI recipients. And that's especially true for younger recipients-- children and adults with disabilities. And you know, as I said at the beginning, this program supplements Social Security benefits, which are earned through work. And so by improving the supplemental security income program, it's a way of trying to mitigate some of those labor force disparities that we see by race. And it's a way to help counteract some of this inequality that we see in all parts of our society.
ALEXIS CHRISTOFOROUS: All right, we're going to leave it there-- Kathleen Romig, Senior Policy Analyst at the Center on Budget and Policy Priorities, thanks so much for being with us today.