chapter ii benefit paymentissues--including … · chapter ii benefit paymentissues--including...

CHAPTER IIBENEFIT PAYMENT ISSUES --INCLUDING PROPOSED INCREASES

IN THE FEDERAL INCOME FLOOR

A. PREAMBLE TO CHAPTER

The national perspective. The SSI program serves aI- --T----popiZatiXn>YqYiring assistance in obtaining at least themost basic of human needs: food, clothing, and shelter.Some may require only cash assistance while others mayrequire help in getting SSI benefits for which they areeligible and/or in reaching other kinds of help in the formof medical care, nutrition, social services, or management ofbenefits.

In undertaking their broad-based review of the SSIprogram, the experts endeavored to make choices that wouldenable people who are aged, blind, or disabled to live theirlives with dignity. In so doing, the experts saw the need toaddress a number of areas which are interrelated and containissues with respect to payment amounts and the way in whichthey are determined.

SSI and poverty. Federal SSI benefits were designed toprovide a nationally uniform income floor for people who havelittle or nothing on which to live. For this reason, effortsto measure the adequacy of benefits and related issuesusually focus on such comparisons as poverty measures andbenefits provided by other poverty-related programs. Withthis in mind, the experts were concerned with theeffectiveness of SSI benefits in providing an acceptablestandard of living.

The September 26, 1972 Report of the Senate FinanceCommittee stated that the legislation which established theSSI program would Vreate a new Federal program administeredby the Social Security Administration, designed to provide apositive assurance that the Nation's aged, blind and disabledpeople would no longer have to subsist on below-poverty-levelincomes.1' The initial Federal SSI benefit standard specifiedthat all individual benefits would be determined on the basisof their relationship to a uniform Federal floor. However,the statutory income floor for 1974 was below the povertyline and has been so ever since.

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B. BENEFIT ADEQUACY

Background Information:

Measures of pover9.- - - - - There are two slightly differentversions of the Federal Government% poverty measure. TheCensus Bureau's poverty thresholds are the official Federaldefinition of poverty for statistical purposes. TheDepartment of Health and Human Services' poverty guidelinesare a simplification of the poverty thresholds foradministrative purposes. The guidelines are generallyconsidered easier to use in such programmatic contexts asestablishing benefit eligibility. The guidelines are updatedannually to reflect cha.nges in prices. However, thethresholds (and, by extension, the guidelines derived fromthem) have been subject to criticism because they do not takeinto account changes in consumption patterns over the pastseveral decades.

SSI benefit standards and poverty guidelines. The 1992----- ---- - ------__Federal benefit standard or income floor for one eligibleperson (adult or child) is $422 per month while the floor fora couple, both of whom are eligible, is $633 per month. (InDecember 1991, nearly 10 percent of the adults who receivedSSI and/or federally-administered State supplementarybenefits did so as members of couples.) The following tablecompares the poverty guideline for a l-person unit with theannual Federal SSI benefit standard for an individual and theguideline for a 2-person family with the standard for acouple:

1992PovertyGuidelines SSI Standard Percentage

IndividualCouple

$6,810 $5,064 74.4$9,190 $7,596 82.7

Other programs' standards and poverty guidelines. A- - - - - - - - - - - - - - - ---,-- - A--------number of Federal programs use eligibility criteria whichinvolve some percentage of the poverty guidelines. Becauseof differences in what indicates Weed" for various kinds ofassistance, 100 percent of the poverty guideline is notalways considered adequate. For example, a number of foodprograms use 130 percent of the poverty guidelines as acutoff for eligibility while several health service programsuse a sliding fee schedule for persons with incomes up to 200percent of the guidelines. See Appendix i (at the end ofthis chapter) for some Federal programs using a percentage ofthe guidelines which is more than 100 percent.

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Areas Where Issues Arise:

Federal benefit standard for an individual. As indicatedabove, the 1992 Federal SSI benefit standard for anindividual is approximately 75 percent of the povertyguideline. This percentage has remained essentiallyunchanged since the program began in 1974.

Federal benefit standard for a couple.-- An eligibleindiv~~u~~~~~~orher-~~~g~~iespouse are paid based on abenefit standard which is 150 percent (rather than 200percent) of the standard for an individual. As a result,members of couples receive lower SSI benefits than would twoeligible individuals. However, as shown above, the benefitstandard for a couple is a higher percentage of theapplicable poverty guideline than is the standard for anindividual. (See C. below for more information concerningtreatment of eligible individuals and their spouses.)

Experts' Discussion of Benefit Adequacy Issues:

Adequacy of Federal benefit standard.-- -_ All of the 20experts whotook-aposition-concerning~~~ benefit standardviewed the current standard as inadequate and said that itshould be increased at least to 100 percent of the povertyguideline. While they expressed several viewpointsconcerning the amount and timing of an increase, most of themsaid that increasing the standard should be one of theirhighest priorities.

Benefit standard for an individual. The expertscons~~~~~-severai-~~p~~~~~~-~~~~~~~~~~~ the adequacy ofan individual% SSI Federal benefit standard (i.e., thenational income floor). These approaches ranged fromincreasing the standard to 100 percent of the povertyguideline over a 7-year period to increasing it to 120percent of the guideline over 3 years.

A majority of the experts favored increasing theindividual's Federal benefit standard to 120 percent of thepoverty guideline because they said the nation's neediestpeople who are aged, blind, or disabled could not attain aminimally decent standard of living at 100 percent of theguideline. One pointed out that often people with incomes atlevels between 100 and 125 percent of poverty suffer the mostbecause they become ineligible for important ancillarybenefits such as Medicaid or Food Stamps. However, in orderto soften the cost impact in the current fiscal climate, mostpreferred a 5-year phase-in period to a shorter one or to asignificant one-time increase.

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Benefit standard for a couple. All but one of the expertsexpressing a view on the point favored maintaining thecouple's benefit standard at the current 150 percent of thestandard for an individual. Setting the couple's standard ata percentage of the poverty guideline (as described above foran individual)--benefit amount--

even though it would mean increasing thewould also have the effect of reducing the

couple's standard from 150 percent to 134.9 percent of thatfor an individual. The majority saw such a result asinequitable since it would ignore all the testimony thatpeople living together cannot share certain expenses, such asfood or medicine, and some couples would experience actualdecreases in benefits.

Impact of Increased Benefit Standards. It is the experts'understanding that increasing the Federal benefit standardsfor individuals and couples, as described above, would resultin 2,128,OOO new Federal SSI recipients by the end of fiscalyear 1997.

Measure of adequacy.------v-----m --- A number of the experts wereconcerned over the need to update the indices used to computethe poverty guidelines. They recalled public testimony tothe effect that, unless the poverty level were "modernized"(i.e., increased in real terms by being recalculated usingpost-1950s consumption data), not even 100 percent of thatlevel would be sufficient to provide a proper diet ormaintain health. These experts concluded that the povertyguidelines understate considerably the true cost of a minimalstandard of living. Nevertheless, they accepted the povertyguidelines as a useful benchmark because they are widelyrecognized and easy to use.

Recapitulation of Experts' Opinions on Benefit Adequacy:

Option

1. Increase the benefit standard foran individual, in equal annualincrements, to:

a. 120 percent of the poverty guidelineover 5 years

ExpertsSupporting

12

Comment: One of these experts alsowould support increasing the standardto 100 percent over 5 years if thepoverty line were updated.

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b. 120 percent of the poverty guidelineover 3 years

Comment: One of these experts, whilepreferring the 3-year phase-in, wouldalso support a 5-year period and isincluded in the count for a. as wellas for b.

c. 110 percent of the poverty guidelineover 3 years

d. 110 percent of the poverty guidelineover 10 years

e. 100 percent of the poverty guidelineover 3 years

Comment: One of these experts alsosupports a longer (unspecified) periodif required by competing priorities.

f. 100 percent of the poverty guidelineover 7 years 1

General Comment: Several experts, most of whom supportincreasing the benefit standard beyond 100 percent ofpoverty, also support reconsideration of other SSIpriorities once the standard reaches 100 percent of thepoverty guideline.

2. Keep the Federal benefit standard for a coupleat 150 percent of that for an individual. 13

Comment: One expert disagrees, saying thatthe couple's standard should be set at thesame percentage of the two-person povertyguideline as an individual's standard wouldbe of the one-person guideline.

c. COUPLES


The Qouplel'-F--7--- as an eligibility unit. The statute------m---;-m-- ------ -----distinguishes between eligibility and payment determinationsfor an eligible individual with an eligible spouse (alkouplelf for SSI purposes),individuals,

and all other eligibleincluding those with ineligible spouses and

those who are children. Being a Wouple" means that each

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spouse is eligible to receive SSI benefits; i.e each isaged I blind, or disabled and their combined countable incomeand resources do not exceed limits which are 150 percent ofthe income and resources limits for an individual.

The couple as an eligibility unit is a concept thatcarries throughout the program. When both members of acouple apply for SSI, they do so with a single application.In determining eligibility for the members of a couple, SSAdeducts their combined countable income from the couple'sbenefit standard to determine the total payment amount; thatamount is then divided equally and paid in separate checks.

When members of a couple separate, they are treated asindividuals the month following the month of separation. Ifthe members of a couple separate and reunite frequently, SSAmust make adjustments in payment and eligibility status.

When one spouse is ineligible.has an ineligible spouse,

If an eligible individual

benefits,only the former can receive SSI

Medicaid.thus qualifying automatically (in most States) forHowever,

circumstances,the statute requires that, under certain

the eligible individual% income and resourcesbe deemed to include the income and resources of theineligible spouse.responsibility'f

This is a carryover of States' "relativelaws used in the antecedent assistance

programs. It says that one spouse has some financialresponsibility for the other spouse, even if they are notlegally married. (See "Definition of %pousel" below.)

The statute sets the resources limit at $3,000 for aperson who has a spouse,eligible.

whether or not that spouse is alsoThe income limit for a person whose spouse is

ineligible can be the same as for a person with an eligiblespouse, depending on the results of the deeming formula.


Couple's income and resources standards. Using income andresources standards for spouses which are 50 percent, ratherthan 100 percent, of those for individuals can be traced tothe social insurance programs under which a spouse isentitled to a benefit equal to half the benefit paid to thewage earner. Today's use of such a ratio in the means-testedSSI program also reflects a premise that two people can livetogether more economically than they could live separately,but only if they are spouses. As a result, an eligiblecouple receives combined SSI benefits which are less than thebenefits payable to two eligible nonspouses (e.g., an agedmother and her disabled son) who may live together.

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Couple's income and resources exclusions. Income__- -----------------------------------,-exclusions apply differently to couples than to individuals.Each individual receives a $20 general income exclusion and a$65 earned income exclusion. In contrast, a couple, as aunit, receives one $20 general exclusion and one $65 earnedincome exclusion.

With respect to resources exclusions, couples also receivetreatment which differs from that given two eligibleindividuals. For example, a couple can have only oneautomobile excluded for necessary transportation and have atotal of $2,000 excluded in household goods and personaleffects. In contrast, two individuals who are not spousesmay each have an automobile excluded and may each have $2,000in excluded personal items even though they live in the samehousehold.

Definition of %pouse? The SSI statute considers a______------- -me-formally married husband and wife to be spouses. However,the statute also requires that two people who are not legallymarried but who hold themselves out to the community asmarried be treated as spouses, whether one or both areeligible. This provision is known as "holding out.1f

Some effects of fQzouplelf rules. When two people, each ofwhom is receiving disability social insurance benefits aswell as SSI benefits, wish to marry, they may face asubstantial reduction in combined income. Each remainsentitled to the same full disability insurance benefit asbefore because entitlement to these benefits is not subjectto a "means" test. However, marriage could make them bothineligible for SSI benefits and, often, for Medicaid.

Examples of effects of ffcouple'f rules. Betty Barnes and----Samuel Short each received $350 in disabled adult childsocial insurance benefits before marriage and each waseligible as an individual for an SSI payment of $92 (at 1992standards). When they married, they became subject to theSSI VouplefV rules. Since their combined social insurancebenefits ($700 less $20 general income exclusion = $680)exceeded the $633 Federal benefit standard for an SSI couple,their total income dropped from $884 a month to $700. Losingtheir SSI eligibility caused a loss of Medicaid as well.

On the other hand, some people benefit from the Vouplef'rules. This can happen when a person with significant incomeis married to someone with little or no income. For example,Mr. Johnson is 63 and receives a social insurance retirementbenefit of $550 monthly: however, because of his income, heis not eligible for SSI or Medicaid. He cannot receiveMedicare because he is neither age 65 nor disabled. His

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57-year-old wife is disabled but does not qualify for awife's benefit (she would have to be at least 62 or have achild in her care) and has no income. As an individual withan ineligible spouse, Mrs. Johnson is eligible for an SSImonthly cash payment of $103,cash income of $653.

giving the Johnsons combined

When Mr.She is also eligible for Medicaid.

Johnson turns 65,they are an SSI %oupleI'.

he becomes eligible for SSI and

combined cash income, Mr.While there is no change in their

Johnson is now eligible forMedicaid as well as for Medicare.

Experts* Discussion of Couples' Issues:

Definition of %pouseY A majority of the experts favoredretaining the existing concept of a %pouseI'%ouplel'

(for bothand spouse-to-spouse deeming purposes) with just one

modification. They said that the "holding out? provisionshould be eliminated so that only legally married personswould be considered spouses. The experts did not viewfavorably having a Federal statutory provision that considerspeople to be married simply because they live together. Theysaw no useful SSI purpose being served through establishingthe existence of what is, in effect, a common-lawrelationship. The experts objected to the SSI "holding out?'provision as having adverse and disturbing effects both withrespect to claimants'administrative process.

personal privacy and to the

The experts discussed briefly, but gave no support to, thepossibility of permitting people to choose whether to betreated as spouses or as individuals. One expert remarkedthat both the Internal Revenue Service and the socialsecurity insurance programs give people such a choice.However, all of the experts taking a position on this issuefelt that, for SSI purposes, such a choice would be prone toinequities because of the complex program rules and thelinkages with programs such as Medicaid.

Income and resources exclusions.P - P - -- - - v - - - - w - - Most of the expertsfavored giving each member of a couple a full set of earnedincome exclusions. They stated that this would provide agreater incentive for both members of a couple to work,particularly if both are disabled. It would also helpcompensate for the higher costs generally experienced bymembers of a couple with both members aged, blind, ordisabled as compared with costs for younger, nondisabledcouples.

In view of the support for increasing the resources limits(see Part D of Chapter III), the experts did not entertainany options for changing resources exclusions with respect tocouples.

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Recapitulation of Experts' Opinions on Couples:

OptionExpertsSupporting

Definitions of %pousel' and Vouple?

1. Eliminate the concept of "holding out? 14

2. Eliminate the concept of %spouse" andtreat everyone as an individual. 2

3. Treat any two adult individuals who livetogether as a couple. 1

Couple% income exclusions.

1. Give each member of a couple a full set ofearned income exclusions; leave the unlearnedincome exclusions unchanged. 18

2. Give each member of a couple a full set ofearned and unearned income exclusions. 2

D. STATE SUPPLEMENTATIONWITH AN INCREASED FEDERAL BENEFIT STANDARD


Federal/State roles with resnect to benefit levels. Whendesigning the SSI program, Congress was aware that SSIbeneficiaries might.have special needs and appreciated theappropriateness of augmenting the Federal benefit level toaccount for those needs as well as for geographic variationsin the cost of living. However, Congress viewed the Federalresponsibility as limited to provision of a basic benefit andthat benefit has been generally regarded as geared towardmeeting a person's basic needs of food, clothing, andshelter. Payments for higher living costs or special needswere left to the States.

The role of State su@ementation. States use optional---r--supplementary payments to achieve more nearly adequatebenefits for people who are aged, blind or disabled.Supplementary payments allow a State to provide an income"floor" that takes into account geographic differences inliving costs and individualized special needs in a mannerthat is not possible with a nationally uniform Federal

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benefit standard. In many States, supplementary paymentsserve as a link to Medicaid eligibility. In March 1992, morethan 2.2 million SSI recipients received Statesupplementation while nearly 3 million did not.

The amount of optional supplementation variessignificantly from State to State as do the conditions underwhich States provide supplementation. For example,California has a number of supplementation levels andsupplements nearly all of its SSI recipients in a variety ofliving arrangements. In that State, most total benefits, SSIplus State supplement, exceed the Federal poverty level. Onthe other hand, Texas does not have any supplementationprogram while several other States supplement only persons incertain protected living arrangements variously known as"domiciliary care" or "board and care". In addition to basicmeal preparation and laundry, these living arrangements mayprovide such services as minimal social supervision orpersonal care assistance. Outside of this kind of livingarrangement, few State supplements increase the benefitstandard above the Federal poverty level.

Administration of supplementation programs.------T-- - - States mayadminister their own supplementation programs or have SSA doso. When SSA administers a State's supplementation program,the Federal Government absorbs all related administrativecosts while the State pays only the cash benefit amount. Atpresent, 26 States administer their own optionalsupplementation programs while SSA does so for 17 States andthe District of Columbia. There are 7 States which do nothave optional supplementation programs.


Statutory supplementation requirement. Soon after the SSIprogram began, some States reduced their costs by reducingtheir optional supplementation when SSI benefits wereadjusted for the cost of living. The result was that somerecipients were no better off after a Federal benefitincrease than they had been before. To avoid this benefiterosion, the SSI statute was amended in 1976 to requireStates to pass along any SSI increases. That is, States mustmaintain their supplementary payment levels, or the totalamount of supplementation, that they pay from year to yearregardless of any SSI benefit adjustments for the cost ofliving. If a State fails to do so, it loses Federal matchingfunds under its Medicaid program.

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Federal administration of supplementation. Under Federaladministration, a State may have up to 18 different paymentlevel variations: 3 based on geographic distinctions, 6based on living arrangements, and 9 categorical variationssuch as aged individuals, blind couples, etc. Thus, SSA'sagreement to administer such varied supplementary paymentsentails such administrative difficulties as the need to doadditional living arrangement development, maintain State-specific operating instructions which are updated at leastannually, provide detailed systems coding, and issuespecialized notices to recipients. All this raises the costof administration borne by the Federal Government.

Experts1 Discussion of State Supplementation Issues:

Statutorysup&ementation requirement. The experts- - - - - ------------- --------discussed possible changes in the role of Statesupplementation as the Federal benefit standard approaches orexceeds the Federal poverty line. (See B. above on benefitadequacy.) All but one of the experts taking a position onthe issue favored giving States greater flexibility in use offunds, particularly considering that some States' costs ofliving are lower than the national poverty level. Theseexperts concluded that States should be able to use funds,now required for cash supplementation, to provide their SSIpopulations with assistance in such other areas as socialservices, medical care, or nutrition once the Federal benefitstandard reaches at least 100 percent of the poverty line.These same experts supported requiring States to"grandfather" existing supplementation levels for anybeneficiary who would otherwise experience a net decrease inthe amount of combined Federal/State benefits.

Alternative uses of supplementation funds. A majority ofthe experts also said that States should be required, forsome period, to spend the amount "saved" on supplementationto provide other services to their SSI populations. One ofthese experts supported a specific and permanent requirementfor States to continue to spend some funds either onsupplementation or on other services for their SSIpopulations; however, the amount so spent would not have tobe at the full rate required under current law. Anotherexpert favored continuing to require States to maintaincurrent supplementary payment levels.

None of the experts supported permitting States to reduceor eliminate supplementation levels until the Federal benefitstandard increases at least to the poverty line. However, ifStates were allowed to eliminate supplementation without suchan increase, three of them endorsed a variable Federalbenefit standard tied to geographic living costs following

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Bureau of Labor Statistics indices. One of these expertsobserved that this option should be relatively easy toadminister since SSA already administers some geographicallyvariable State supplementary payments.

Simplifying Federal administration of supplementation. A--v-mmajority of the experts supported simplifying, and reducingSSA% costs for, Federal administration of State supplementsby reducing the number of possible State payment levelvariations. Specifically, they concluded that allowableliving arrangement variations should be reduced from 6 to 3(not counting supplementation of the $30 payment limit) andcategorical distinctions from 9 to 6; the 6 allowablevariations would consist of up to 3 for individuals and 3 forcouples.costs,

Because of the dramatic differences in livingeven within a State, the experts supported

continuation of the existing three permissible geographicvariations.timeframe,

Most of them said that, within a specifiedStates should be given the choice of limiting

their payment level variations as described, paying SSA foradministering them, or taking over the administrationthemselves.

Recapitulation of Exper-kP Opinions on State Supplementation:

Option

1. Permit States to reduce or terminatesupplements once the Federal SSI benefitstandard increases to 100 percent of thepoverty line. lfGrandfather" extantsupplementation levels for current bene-ficiaries (but not new eligibles) who

would otherwise experience a net benefitdecrease. Require States, for at least 3years after reduction or termination ofsupplementation, to spend any "freed up"supplementation funds for other servicesto their needy residents who are aged,blind, or disabled.

2. Require States, by July 1, 1995, to do oneof the following:

ExpertsSupporting

18

16

a. have no more than 3 supplementarypayment level variations based onliving arrangements (in addition toone, if desired, for people subjectto the $30 payment limit) and no

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more than 6 variations based oncategorical distinctions: up to 3each for individuals and forcouples: plus the existing limit of3 variations based on geographicareas: or

b. pay SSA for administering theirsupplements: or

c. administer their own supplements.

Comment: The President% budgetfor fiscal year 1993 includes aproposal to charge States forthe cost of administering Statesupplementation programs.

E. PAYMENT LIMITS FOR PEOPLE IN INSTITUTIONS


Residents of most public institutions. Individuals who- T - - - - - - - - - -reside in public institutions throughout a month generallyare not eligible for SSI. This ineligibility rule appliesbecause Congress has not wanted the Federal Government toassume the traditional responsibilities of State and localgovernments for residents of their institutions.Historically, Congress has shown some concern aboutsubsidizing institutions if the Federal Government has nocontrol over the quality of care.

Residents of certain public institutions. There are-I---------- -yyy-.---------exceptions to the general ineligibility rule for residents ofcertain public institutions. Exceptions to the ineligibilityrule relate to persons in public emergency shelters for thehomeless, publicly operated community residences for 16 orfewer residents, public institutions for educational orvocational training, and, when certain conditions are met,persons in medical or psychiatric facilities, provided theywere receiving SSI under the provisions of section 1619 (seePart C of Chapter IV) or are expected to have stays oflimited duration. Also, certain residents of public medicalfacilities may be eligible but their SSI payments cannotexceed $30 a month (see material on issues below).

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Residents of private institutions. There is no statutoryrule prohibiting eligibility for residents of privateinstitutions. However, the $30 payment limit may apply to aperson in a private medical institution when the Medicaidprogram is paying a substantial portion of the cost ofhis/her care.

Supplementation of limited payment. Sixteen StatesA-_-Supplernentthelimited~~I-~yme~t~n amounts ranging from $5to $45 for an individual. Nine of these supplements areadministered by the Social Security Administration.


Amount of payment limit. Residents of public or privateinstitutions for whom Medicaid is paying more than 50 percentof the cost of care are subject to a monthly Federal paymentlimit of $30 (minus any countable income). This limitedamount is for the purpose of meeting incidental personalneeds (e.g., toiletries,met by the institution.

soft drinks and entertainment) notThe amount of the maximum payment

has changed only once since the creation of the SSI program--from $25 to $30. Automatic cost-of-living adjustments arenot applicable to the $30 payment limit.

Applicability of Eayment limit.-a----e-v ---- - ---------- The payment limitdescribed above applies since most of the individual'ssubsistence needs are met by the institution, which is beingpaid by Medicaid, another Federal assistance program.However, in other situations where most of a person's needsare being provided by a third party (e.g., a State or localgovernment, a relative, or private health insurance), thatperson remains ineligible, if in a public institution, orremains eligible at the full benefit rate, ifinstitution.

in a private

Experts' Discussion of Payments to Residents of

Amount of payment limit. Nearly all of the.- . .- -- _

Institutions:

experts saidthat there should be an increase in the $30 payment limit forinstitution residents for whom Medicaid is paying more than50 percent of the cost of care. There was discussionregarding the appropriate amount and whether an increaseshould be one time only or yearly,increases.

based on cost-of-living

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One expert indicated that a one-time raise to $35 a monthwould eliminate the complications of cost-of-livingadjustments and would be less costly than yearly increases.Another expert suggested combining the two approaches; thatis, increase the payment limit to $35 initially, and increasethe limit yearly thereafter, based on the cost-of-livingadjustment. This suggestion received the support of nearlyall of the experts.

Applicability of payment limit. The experts discussed thepossibility of expanding the applicability of the $30 paymentlimit to institutionalized individuals for whom cost of careis being paid by any source (e.g., Medicare, privateinsurance, family members, charitable organizations or Statefunds) other than the individual% own income or resources.It was explained that this option would remove theprohibition against eligibility for residents of publicinstitutions who otherwise meet the eligibility criteria;payments would be limited to no more than $30. Additionally,some residents of private institutions who are currentlyeligible for the full SSI payment would become subject to the$30 payment limit.

A few experts expressed the opinion that an expansion ofthe applicability of the $30 payment limit would not bedesirable because, in combination with the rules forcomputing income, ineligibility could result for someindividuals in private institutions who, under current rules,are eligible for benefits without the payment limit. Theexperts considered a variation of the option which wouldaddress only the eligibility of people in public institutionswho are now barred from receiving payments. Under themodified option, SSI.eligibility would be possible forresidents of public institutions without regard to payment .for the cost of care; such payments would be limited to $30.This option would allow limited payments to any otherwiseeligible person who happened to be residing in a publicinstitution, such as a county home, even though Medicaid isnot paying a significant share of the cost. This optionwould not disadvantage anyone now on the SSI rolls. Neitheroption appealed to most of the experts.

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Recapitulation of Experts'of Institutions:

Opinions on Payments to Residents


1. Increase the $30 payment limitto $35, indexing annuallythereafter based on the cost ofliving, and rounding to the nexthigher dollar.

Comments:------*-- One expert, whilesupporting this option, prefers aninitial increase to $40. Anotherexpert supporting this option alsofavors computing the cost-of-livingadjustment retroactively to thebeginning of the program, or at leastto July 1, 1988 when the payment wasincreased from $25 to $30.

2. Expand the applicability of the $30payment limit to apply to institutionalizedindividuals for whom more than 50 percentof the cost of care is being paid by anysource other than the individual's ownincome or resources.

3. Allow SSI eligibility for residentsof public institutions without regardto payment of the cost of care by an outsidesource, but limit the payment to $30.

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1

1

F. ACCOUNTING PERIODS


The Federal benefit standard functions as a limit oncountable income. Thus, after applying all appropriateexclusions to arrive at countable income, the benefit to bepaid is the amount by which countable income falls short ofthe benefit standard. Actual payment amounts are affected bythe accounting period prescribed by statute. From 1974 to1982, SSI benefits were computed using a quarterlyprospective system. That is, income and benefit amounts wereestimated prospectively for each calendar quarter and paid inequal increments for each month of eligibility in thequarter. A prospective accounting system makes it possibleto respond promptly to changes in income. However, becauseincome and benefits were spread over 3 months, the quarterly

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aspect of the arrangement also entailed overpayments andunderpayments and produced situations which were complicatedto explain to recipients.

In 1982, a new statutory provision changed the accountingperiod and ever since SSI benefits have been determined on amonthly retrospective basis. Generally speaking, the benefitpayment is now determined separately for each month usingcountable income from 2 months earlier. However, there arespecial rules for new eligibles and for recipients who loseeligibility for one or more months and then regain it.Certain aspects of the retrospective monthly accounting rulesare considered by many observers to be inequitable.


The accounting period. The 1982 change to retrospectivemonthly accounting was intended to allow time for people toreport changes so that benefit payments could be made withgreater accuracy. However, retrospective accounting is oftenless responsive to immediate need since it takes two monthsfor payments to change in response to decreases in, or lossesOf, other income.

Triple countingand termination of income. Under the- - --------- ~~------------,----rules of retrospective monthly accounting, the currentmonth% payment amount is usually based on the beneficiary%income from 2 months earlier. However, when a beneficiarybecomes eligible for SSI benefits, either initially or aftera period of ineligibility, any countable income received inthe first month of new or regained eligibility is used tocompute the payment amount for the first, second, and thirdmonths. This is true even when income terminates after thefirst month. In initial eligibility cases, the individualmay have to choose between delaying the month of eligibilityor taking a reduced benefit for 3 months. There is no way toavoid the benefit reduction in renewed eligibilitysituations.

Similarly, when a beneficiary with countable incomeexperiences reduction or termination of that income, the SSIpayment continues to be reduced for 2 more months. This canleave the person with total income which may be far below theincome floor.

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Varying numbers of paydays in a month. A beneficiary (ora parent or spouse whose wages are deemed available to thebeneficiary) earning wages close to thebe paid every other week or once a week.

eligibility limit mayFor two- or four-

payday months, income remains under the eligibility limit.However,three-

under a monthly system, the extra earnings in aor five-payday month are enough to result in

ineligibility. While less common, similar situations canarise with unearned income such as unemployment benefitswhich may be paid weekly or biweekly.

The most serious consequence of the "extra payday"phenomenon is the loss of Medicaid coverage. Blind ordisabled recipients who are working, and would be eligibleexcept for their earned income, continue to be entitled toMedicaid under the provisions of section 1619(b) of theSocial Security Act (see Part C of Chapter IV). However,this protection is not available to a recipient who receivesunearned, rather than earned income, nor does it extend toaged beneficiaries.

Monthly verification of wages.P----v--------- -- Because eligibility isdetermined monthly and benefits are computed monthly, it isnecessary for SSA to know the amount of monthly earnings aclaimant received. The law states that "relevant informationwill be verified from independent or collateral sources . ../IThus, SSA requests monthly wage information from employerswhen a worker does not have pay slips.

The verification requirement has proven burdensome,particularly for employers who may not maintain their recordsin the format needed by SSA. Employers provide wageinformation to SSA for retirement and survivors insurance andincome tax purposes and often resent the need to provide yeta different (monthly) breakout for SSI purposes.

State supplementation payments computation.-r-T------ SSAadministers

------------ - --------- -------supplementary payments for some States. However,

persons whose incomes are too high to receive Federal SSIbenefits but low enough to qualify for federally-administeredState supplementary payments are not lleligible" for FederalSSI under the law. This can lead to some unusual paymentcomputations that are very difficult to explain either orallyor in written notices.

For example, an individual may be receiving both a partialFederal payment and a full State supplementary payment. Theindividual's income may increase to the point that it exceedsthe Federal benefit standard, but is below the combinedFederal plus State supplementary payment level. In thisinstance, the individual will receive no Federal payment

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because s/he is not eligible for one, but s/he will stillreceive a full State supplementary payment, because thecomputation for the State payment is based on income from 2months ago. Only after 2 months will the State payment bereduced. In this situation, one change in income produces 2payment changes. Such payment changes result in confusingnotices to some people in States where SSA administers thesupplement.

Experts' Discussion of Accounting Period Issues:

The accounting period. All of the experts who took apos?%i-%-onthe accounting period favored keeping a monthlyaccounting system but making it prospective instead ofretrospective. The experts noted that prospective monthlyaccounting solves the payment computation problems of triplecounting, termination of income, and State supplementation.They also concluded that prospective monthly accounting couldbe more responsive to current needs by making timelyadjustments in benefit payments.

Some experts felt that, in theory, annual accounting mightsolve the problems currently identified with retrospectivemonthly accounting. However, they acknowledged that annualaccounting may result in new problems and adversely impactsome beneficiaries. Therefore, they believed that extensivetesting prior to seeking enactment of annual accounting wouldbe appropriate. Other experts expressed concern that eventesting this option suggests support for it which may notexist.

Varying numbers of paydays in a month. Because of the-----__-preference-fG-%?%%%g a monthly accounting system, theexperts recognized that there would continue to be certainmonths in which some people would lose eligibility due to anextra payday. A majority of the experts viewed the principalproblem in these situations as the loss of Medicaideligibility. Therefore, they concluded that Medicaidcoverage should continue whenever there is a loss of SSIeligibility due solely to calendar-related incomefluctuations.

Monthly verification of income. A majority of the expertssaid that beneficiaries, employers, and SSA staff would allbenefit from some easing of the requirement for incomeverification. These experts concluded that, when it is notcost-effective, SSA should not be required to verify income.

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Recapitulation of Experts I Opinions on Accounting Period:


1. Change from retrospective monthlyaccounting to prospective monthlyaccounting. 19

2. Continue Medicaid coverage whenSSI eligibility is lost solely due toa calendar-related income fluctuation.

3. Do not require income verification whenit is not cost effective.

4. Define eligibility for SSI in termsof income below the combinedFederal/State payment level forbeneficiariess in States for which SSAadministers the supplement.

Comment: One expert expressed concernthat, by supporting minor or "technical1improvements, such improvements mightbe perceived as sufficient andso blunt the impetus for prospectivemonthly accounting.

5. Test one or more methods of annualaccounting, beginning with prospectiveannual accounting, by running a computersimulation of the method ormethods proposed.

19

19

16

13

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G. OPTIONS PREFERRED BY A MAJORITY OF EXPERTSSUMMARY AND COST ESTIMATES

Federal benefit standards. Nearly all of the 20 expertswho took a position on this issue view increasing the Federalbenefit standard as one of the program's top priorities. Amajority of these experts favors increasing the Federalbenefit standard for an individual to 120 percent of thepoverty guideline for one person and doing so in five equalannual increments.

At the same time, a majority of the experts also supportskeeping the Federal benefit standard for a couple at 150percent of the standard for an individual. They say thatreducing the couple's standard to 135 percent of theindividual's standard (the result of using 120 percent of thepoverty guideline for a two-person family) would decreasebenefits to some couples and ignore testimony concerning thefact that, even though people may live together, they cannotshare expenses such as those for food or medicine.

The experts want to see the SSI program live up to thevision of the 1972 report of the Senate Finance Committee.'They feel a sense of urgency about assuring those who areaged, blind, or disabled that they will no longer have tolive in poverty. The experts agree with public testimonythat it is unfair to provide a benefit which keeps such anat-risk population poor and on the brink of homelessness;that it is a national responsibility to provide sustenance tothese people who cannot provide it for themselves--and toprovide it in a measure that affords dignity and security toeach life.

Estimated Cost(In millions)

FiscalYear

19931994199519961997

SSI SSI MedicaidProgram Administrative Program

$ 2,567 $ 250 $ 4357,092 710 1,82512,706 460 2,95019,527 470 4,31027,707 510 5,995

* * * * *

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Cowles: definition of %pouse".-----~~I~~~ w,-- A majority of theexperts supports the existing definition of a Uspousell (forpurposes both of couples1 determinations and of spouse-to-spouse deeming) --with one exception. They say that the SSIprogram should not view a person as another person's spousesimply because they hold themselves out to the community ass uch.

This majority favors continuing the concept of anindividual and spouse, eligible or ineligible, as aneligibility unit, using the combined income and resources ofboth spouses. However, they are concerned that the "holdingout" provision represents an unacceptable invasion ofpeople's personal lives and presents administrativecomplications to no useful end. These experts say that thisis an area where SSI should differ from the social insuranceprograms under which establishing a common-law relationshipcan be beneficial.


FiscalYear

1993 $ 2 Negligible Negligible1994 3 Negligible Negligible1995 3 Negligible Negligible1996 4 Negligible Negligible1997 4 Negligible Negligible


* * * * *

Cosles: income exclusions.-------,-.--- All of the experts whoexpressed a view on this issue support giving each member ofa couple a full set of earned income exclusions. They seethis as an important adjunct of providing incentives forpeople to work, especially in helping compensate for thehigher expenses of a working person who is aged, blind, ordisabled.

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FiscalYear

1993 $ 11994 21995 31996 31997 3


Negligible$ 10NegligibleNoneNegligible

$ 520252535

* * * * *

State supplementation: reduction/termination. Nearly allof the experts say that States should be permitted to reduceor terminate their supplemental payments once the Federalbenefit standard reaches 100 percent of the povertyguideline; however, this should be coupled withgrandfathering any current recipient who would otherwiseexperience a net benefit reduction. As part of this option,States would be required, for at least 3 years after reducingor terminating supplementation, to use their "freed upI1 fundsto provide other services to their SSI populations.

This large majority says that States should be allowed theflexibility to assume new roles with respect to their needypopulations and to use limited funds for purposes other thansupplementation of SSI. These experts conclude that, oncethe Federal benefit standard reaches the poverty line,benefits in some States will move above local costs ofliving; therefore, other kinds of assistance for needy peoplemay be more helpful than cash supplementation of the Federalbenefit.


Fiscal SSIYear Program

19931994199519961997

SSI MedicaidAdministrative Program

NoneNoneNoneNoneNone

(a> $ 435(a) 1,825(a) 1,995(a> 2,195(a) 2,410

(a) : Unable to estimate.

* * * * *

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State supplementation: federally-administered variations.A majority of the experts supports requiring each State whoseoptional supplementation program is administered by theFederal Government, by July 1, 1995, to: (a) have no morethan 3 living arrangement variations--not counting asupplementation level for persons subject to the $30 paymentlimit, no more than 6 categorical variations (3 each forindividuals and couples),distinctions: or

and up to 3 based on geographic(b) pay SSA for administering the

supplementation program: or (c) administer its own programThey view the federally-administered supplementation programsas having become overly complex and costly for Federaladministration and say that an increased Federal benefitstandard should reduce the need for so many variations.


Fiscal SSIYear Program


All None (a> None


* * * * *

Limited payment to residents of institutions. All of the19 experts who expressed a view on this issue support anincrease in the current $30 payment limit applicable tocertain residents of medical institutions. These experts saythe payment should be increased to a maximum of $35, followedby annual cost-of-living adjustments rounded to the nexthigher dollar.

This majority of experts views an initial increase of $5as necessary recognition of ongoing increases in the costs ofthe comfort items for which the limited payment was intended.Thereafter, annual adjustments would keep the payment limitin alignment with living costs. They also say thatapplicability of the payment limit should apply as it doesnow: to persons experiencing lengthy stays in public orprivate medical treatment facilities where the Medicaidprogram pays a substantial part of the cost of their care sothat SSI should continue to fill in only in terms of personalincidentals not provided by the institution or Medicaid.

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FiscalYear

1993 $ 8 None1994 16 Negligible1995 20 None1996 23 None1997 27 None

SSIProgram

SSIAdministrative

MedicaidProgram

NegligibleNegligibleNegligibleNegligibleNegligible

* * * * *

prospective monthly period. AlmostAccounting periods: p----7-all of the experts support use of a prospective monthlyaccounting period for purposes of determining SSI eligibilityand payment amount. The experts want an SSI accountingperiod that is as responsive as possible to changes inrecipients' financial circumstances, that simplifies programadministration, and that produces easily understood resultsin terms of eligibility and payment amount. They also wantto protect Medicaid eligibility for those people affected byvariations in the number of regular paydays per month. Theseexperts conclude that, except for calendar-related incomefluctuations which can occur under any kind of monthlysystem, a monthly prospective accounting period would meetall of the criteria more effectively than the presentretrospective system.


FiscalYear

All

(a) :

SSIProgram


(a) Negligible

Unable to estimate.

(a)

* * * * *

Accounting periods: SSI eligibility-definition. For as--yvylong as the existing monthly retrospective accounting periodremains in existence, a majority of the experts concludesthat SSI eligibility should be defined in terms of thecombined Federal/State supplementary benefit level for thoseStates where SSA administers the supplement.

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FiscalYear

1993 $ 41994 51995 51996 51997 5

SSIProgram


Negligible NegligibleNegligible NegligibleNegligible NegligibleNegligible NegligibleNegligible Negligible

* * * * *

Accounting periods: annual period simulation. A majorityof the experts, all of whom support a change to monthlyprospective accounting, also favors computer simulationtesting of methods of annual accounting, beginning with aprospective annual period. They wish to determine whether anannual period might be justified as simpler and moreunderstandable than a monthly or quarterly one.


FiscalYear

SSIProgram

All None



* * * * *

(a) None

Accounting period: income fluctuations. Almost all of- 7 7 - - - y - - -the experts favor continuing Medicaid coverage when acalendar-related income fluctuation causes loss of SSIeligibility. They see this as consistent with the statutorylinkage between SSI and Medicaid, more equitable, and easierfor the public to understand.

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FiscalYear

All

SSIProgram

None

* *


Negligible Negligible

* * *

Accounting period: income verification. Nearly all ofthe experts also favor-%Eminatingincome verification insituations when such verification would not be cost-effective. They say that this would be an administrativesimplification with little financial risk attached if thecriteria for cost-effectiveness are carefully drawn.


Fiscal SSI SSI MedicaidYear Program Administrative Program

All 0) (a) (a)


* * * * *

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Chapter II, Appendix i

OTHER FEDERAL PROGRAMS' ELIGIBILITY STANDARDSAS A PERCENTAGE OF THE POVERTY GUIDELINES

The following Federal programs are chief among those which,by statute (or regulation), use more than 100 percent of thepoverty guidelines in establishing income cutoffs foreligibility and/or for offering sliding fee schedules forservices. l.J

Poverty GuidelinesProgram Percentage

MedicaidQualified Medicare Beneficiaries 1991-92: 100%

1993-94: 110%1995 on: 120%

Children under 6, infants, 133%and pregnant women

but State may go to185%; 23 States are at185% and 6 others arebetween 133% and 185%.

Spousal impoverishment, minimum 1989-91: 122% of amountprotected income for 2 people

1991-92: 133%07/92 on: 150% of amount

for 2 people.

Food Stamps

Special Supplemental Food Programfor Women, Infants, & Children

Commodity Supplemental FoodProgram

National School Lunch ProgramSchool Breakfast ProgramChild/Adult Care Food ProgramSpecial Milk Program for Children

Food Distribution Program onIndian Reservations

Food Commodities Program

130% for households w/oelderly or disabledmember

Set by States but cannotexceed 185%.

130% (elderly only)

Free meals: 130%.Reduced-price meals:130% to 185%

130%.Set by States. Often130% but may be higher.

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Community Services Block Grants Usually 100% butCommunity Food and Nutrition States may go to 125%.

Low-Income Energy Assistance Greater of 150% of theguidelines or 60% ofState's adjusted medianincome.

Weatherization Assistance forLow-Income Persons

Community Health CentersMigrant Health Centers GrantsNational Health Service Corps

Family Planning Services

125%

Sliding fee schedule forthose between 100% and200%.

Sliding fee schedulebetween 100% and 200%(or 250% in some cases).

Senior Community Service EmploymentProgram 125%

Foster Grandparent ProgramSenior Companion Program

Higher of 125% or of100% + SSI Statesupplement.

* * * * *

NOTE: Benefits for SSI recipients are considerably higherthan those for AFDC recipients but are generally lowerthan benefits provided to retired or disabled workersunder the social insurance programs. (AFDClegislation does not refer to poverty guidelinesalthough a few States have chosen to use a less-than-loo-percent level of the guidelines.) SSIbenefits for children with disabilities are basicallythe same as benefits for adults.

lJ Except for Medicaid, based on excerpts from "FederalPrograms Using the Poverty Guidelines...as anEligibility Criterion or to Target Assistance orServicesV1, Gordon M. Fisher, ASPE/DHHS

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