Supplemental Security Income: An Overview

December 11, 2012

In 1974, the federal government established the Supplemental Security Income (SSI) program to provide cash assistance to people who are disabled, aged, or both and who have low income and few assets. SSI replaced several state-run support programs that had been partially financed by the federal government. In fiscal year 2013, the program will make payments to more than 8 million people at a cost to the federal government of about $53 billion, CBO estimates.

This report discusses how the SSI program works, who receives payments, the program’s spending and its interaction with other government programs, the extent to which SSI affects people’s work and saving, and possible approaches to changing the program.

Participation in SSI Among Disabled Adults Has Increased Significantly Since the Early 1990s

Currently, about 60 percent of SSI recipients are disabled adults (ages 18 to 64), about 15 percent are disabled children (under age 18), and about 25 percent are aged adults (age 65 or over) with or without disabilities. SSI recipients generally are eligible for health insurance through Medicaid, and many also participate in other income-security programs that provide federal support to low-income people.

In the early 1990s, participation in SSI among people under the age of 65—that is, among disabled people—increased substantially, in part because of changes in eligibility rules. Such participation rose again between 2006 and 2011, mainly because of the recession. In contrast, the share of the aged who participate in SSI has declined steadily during the past few decades as more women have qualified for Social Security retirement benefits and as average Social Security benefits have increased, leaving fewer aged people poor enough to qualify for SSI. All together, the number of recipients of SSI has increased faster than the overall population during the past few decades.

Supplemental Security Income Recipients, by Type

Total SSI Outlays Have Been Roughly the Same Share of the Economy Since the Early 1990s but Will Decline Slightly Over the Next Decade, CBO Projects

The average SSI payment has increased more slowly than total output (gross domestic product, or GDP) per person. The combination of that trend and the increase in the number of SSI recipients has left federal SSI outlays close to 0.3 percent of GDP since the early 1990s.

In coming years, CBO projects that as the economy improves and as average Social Security benefits continue to increase—leaving fewer aged people poor enough to qualify for SSI—the number of SSI beneficiaries will decline slightly as a share of the population. In addition, SSI payments per beneficiary are linked to prices, which tend to rise more slowly than GDP per person. As a result of those two factors, CBO projects that total outlays for SSI will decline slightly relative to total output over the next decade, reaching one-quarter of one percent of GDP.

SSI Affects People’s Work and Saving but the Magnitude of Those Effects is Unclear

Any program that provides benefits only to low-income applicants who have few assets will, to some extent, discourage work and saving. SSI is intended to provide income to adults with limited financial resources who cannot perform substantial work, but the dividing line between those who can and cannot perform substantial work is not always clear. Some people who are currently employed have medical conditions that would allow them to qualify for the program if they stopped working. That fact and the incentives inherent in the program suggest that if the program did not exist, if payments were lower, or if income and asset limitations were less stringent, at least some people receiving payments from such programs would work more or save more. However, SSI recipients who are disabled adults have been judged, through the disability determination process, to be unable to perform substantial work, and SSI payment amounts and asset limits are low, so most SSI recipients probably could not earn or save significant amounts.

Proposals for Changing SSI Could Expand or Shrink the Program in Small or Large Ways

Proposals for changing SSI—some that would expand the program and others that would shrink it—can be grouped into four categories:

  • Those that would adjust the parameters of the program, such as payment amounts or income or asset thresholds;
  • Those that would change the criteria used to determine who qualifies for SSI on the basis of disability;
  • Those that would establish more frequent reviews of recipients’ continuing eligibility; and
  • Those that would more fundamentally change the program, for example by expanding programs to support work by people who qualify for SSI under current law, creating a separate program for children, or transferring control of the program to the states.

Estimating the effects of those changes on the federal budget is not possible without detailed specifications for how each would work. CBO has previously produced cost estimates for three well-defined options for changing SSI: using an alternative measure of inflation to adjust for price changes over time, eliminating the $20 per month exclusion for unearned income, and reducing total payments to families with more than one child recipient. This report focuses on broader potential changes to the program but does not include cost estimates for those broader changes.