The Biden Administration and Congress seek immediate measures to improve peoples’ lives. Our dysfunctional politics being what they are, immediate help is best provided through simple things that can be passed by majority vote within budget reconciliation. Fortunately, with one sentence, we can fix one of the stupidest and cruelest regulations in American social policy—one that forces millions of Americans with disabilities to remain in poverty.
That sentence would raise the $2,000 countable financial asset limit for eight million Supplemental Security Income (SSI) recipients, most of whom live with significant disabilities. Under this rule, you’re allowed to keep your home, a vehicle, your wedding ring, and some personal effects. And that’s pretty much it. Beyond these, your checking account, your retirement, and your other financial assets can’t add up to more than $2,000, and $3,000 for a married couple.
The limit’s original purpose was to prevent SSI from becoming a universal entitlement. At some level, that’s understandable. Although many progressives disagree, most Americans do not want affluent people to qualify for a monthly cash benefit and for Medicaid in the event they become disabled.
Even if one accepts that basic premise, the $2,000 limit is ridiculously low. It hasn’t been raised since 1989. In 1972, when SSI was enacted into law, the asset limit was $1,500 for individuals, $2,250 for married couples. Had these limits kept pace with inflation, they would be $9,500 and $12,675 today.
This policy prevents people with disabilities from managing their lives. You can’t maintain a strategic reserve to cover unexpected expenses, to fix your car or a blown furnace, to manage family emergencies, let alone to address the myriad practical challenges and uncovered medical expenses that typically accompany disability.
As so often occurs, the $2,000 limit creates unintended complications and disparities, too. It favors homeowners over renters. Its treatment of spousal assets prevents couples from marrying. It leads people to take problematic under-the-table jobs. It induces people to manage their assets through complex strategies that advantage middle-class families with the means and access to financial services to navigate arcane bureaucratic rules.
More subtly, the asset limit pushes families to pursue financial shenanigans that are illegal, risky, or simply unwise. Suppose you are a teacher with two children. Your son became disabled in his late twenties, now uses a wheelchair, and relies on SSI. Your daughter is married and does not live with a disability. To finesse the asset limit, you bequeath her your home. You let her know—but don’t put to paper—that half of that inheritance is really your son’s, intended to meet his needs. Then you pass away. Three years later, your daughter has a messy divorce. Much of the money intended for your son is lost on legal fees or split in the divorce. Or maybe your kids have a falling-out. She keeps the money. He has no legal recourse. If SSI had a more reasonable asset limit (as noted below, say $50,000), families would still face myriad challenges in such situations. At least they would have many more options to navigate these challenges in a transparent and sensible way.
Over the years, Democrats and Republicans have recognized the problem and proposed an increase in the countable asset limit. That hasn’t happened. For reasons that still elude me, Democrats failed to raise the asset limit in the Affordable Care Act.
People who became disabled before age 26 can now invest fairly serious dollars in Achieving a Better Life Experience (ABLE) accounts without threatening SSI eligibility. Families can contribute up to $15,000 per year, and the first $100,000 is exempted from the $2,000 cap. It’s possible to save more without threatening Medicaid coverage, which can be more important than the monthly SSI check. (See here and here for details.)
ABLE accounts are worthy policy, especially for middle-class families like ours that include loved ones with intellectual disabilities. But only about 71,000 Americans hold such accounts. Most Americans with disabilities and their families don’t even know that ABLE accounts exist. By definition, ABLE accounts don’t help the pregnant woman paralyzed by a hit-and-run driver in her early thirties, or the millions of Americans who acquire serious disability later in life.
One bill in Congress would increase SSI’s asset limits to $10,000 for an individual and $20,000 for a married couple, and would index the cap to inflation. The bill would remove other penalties that discourage work and prevent couples from marrying, The Biden, Buttigieg, and Warren presidential campaigns proposed to raise or to eliminate the asset limit. These are good starts.
Americans with disabilities deserve the chance to openly save and plan for their futures. Maybe some limit is appropriate. A $50,000 limit for individuals, $100,000 for married couples, would allow people to meet basic needs and address emergencies, while preventing SSI from becoming an upper-middle-class entitlement. As for ABLE accounts, we could raise the age-of-onset rules, open and subsidize nominal accounts for everyone, too.
These issues stand out for their stark simplicity. Congress could fix them today, with a simple section in a budget reconciliation bill. This wouldn’t need a complicated new program, or 2,000 pages of complicated text. It’s time—actually it’s long past time—to get this done.