Senators Brown (D-OH) and Portman (R-OH) recently introduced legislation that would make it easier to qualify for, and stay on, the Supplemental Security Income (SSI) cash welfare program by substantially raising the asset limits for beneficiaries. The federal government pays out about $60 billion annually to more than 7 million SSI recipients. This includes over 4 million adults and 1 million children with disabilities and over 2 million people age 65 or older who meet the program’s income and resource limits. Generally, these recipients have had relatively modest work experience and do not get regular Social Security disability and retirement benefits, or only minimally so. The proposed legislation, the Savings Penalty Elimination Act, would increase the current limits on financial assets allowed to be held, from $2,000 for individuals and $3,000 for couples to $10,000 and $20,000, respectively, and increase them thereafter annually by the rate of inflation.
The advocates for this proposal point out that the asset limits have not been increased since 1989. Inflation since then has raised the cost of living considerably, especially in the last year. Therefore, they say, poor people relying on the government should experience an increase in their ability to save money. On its face this argument makes sense, but it does not consider that there are now many other ways for SSI beneficiaries to save large sums of money, including tax-advantaged ABLE accounts, available since 2014, for those whose disabilities started before age 26. Other major resources excluded from limits for all beneficiaries, include owner-occupied housing with no limit on equity value, and life insurance.
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