Supplemental Security Income Recipients as a 

Share of the Total Population of the Same Age

Percent

10

6

2

8

4

0

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2015 2018 2022

Aged Adults (65+)

Disabled Adults (18–64)

Disabled Children (Under 18)

Actual Projected

CONGRESS OF THE UNITED STATES

CONGRESSIONAL BUDGET OFFICE

CBO

Supplemental 

Security Income: 

An Overview

DECEMBER 2012
CBO

Notes

Unless otherwise indicated, all years referred to are calendar years. 

Figures 2, 3, and 4 use vertical bars to indicate periods of recession. (A recession extends from 

the peak of a business cycle to its trough.)

Pub. No. 4450
Contents

CBO

Summary and Introduction 1

Who Receives SSI Payments? 2

Disabled Adults Ages 18 to 64 3

Disabled Children Under Age 18 4

Adults Age 65 or Older 5

Spending for SSI 5

Payments to Recipients in 2012 6

Trends in Payments 7

How Does SSI Work? 7

Qualifying Disabilities 7

Income and Asset Limits 8

Other Eligibility Criteria 8

Exiting the Program 9

How Does SSI Interact with Other Government Programs? 9

Social Security 9

Medicaid 9

Temporary Assistance for Needy Families 10

Supplemental Nutrition Assistance Program 10

How Much Does SSI Affect People’s Work and Saving? 10

Incentives Created by SSI Payments to Disabled Adults 10

Incentives Created by SSI Payments to Aged Adults 11

Incentives Created by SSI Payments to Disabled Children 11

Programs to Encourage Work 12

Approaches to Changing SSI 13

Program Parameters 13

BOX: COST ESTIMATES FOR THREE SSI OPTIONS 14

Determining Disability Status 15

Program Administration 15

Broader Changes 16

List of Figures 18

About This Document 19
CBO

Supplemental Security Income: An Overview

Summary and Introduction

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, the Congressional Budget Office (CBO) 

estimates.1

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.2

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 SSI recipients has increased faster 

than the overall population during the past few decades.

At the same time, the average SSI payment has increased 

more slowly than total output (gross domestic product, or 

GDP) per person. As a result, federal SSI outlays have 

remained at about 0.3 percent of GDP since the early 

1990s.

In coming years, CBO projects that as the economy 

improves and average Social Security benefits continue to 

increase, the number of SSI beneficiaries will decline 

slightly as a share of the population. In addition, SSI payments per recipient 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. 

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;

1. For additional background and data on the program, see Social 

Security Administration, Annual Report of the Supplemental 

Security Income Program (May 2012), http://go.usa.gov/Y4rW; 

SSI Annual Statistical Report, 2011 (September 2012), 

http://go.usa.gov/Y4rR; and Understanding Supplemental 

Security Income, 2012 Edition, accessed October 12, 2012, 

http://go.usa.gov/Y4rC. SSI recipients also can qualify on the 

basis of blindness; about 1 percent do. For the purposes of this 

report, disabled recipients includes people who are blind.

2. In other analyses, the Congressional Budget Office and the 

Social Security Administration categorize as disabled adults

recipients who are over the age of 65 and who receive payments on 

the basis of disability before they turn 65; in those other analyses, 

only those who are awarded payments solely on the basis of age are 

identified as aged recipients. About half of SSI recipients over age 

65 first qualify for SSI on the basis of disability.
2 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW DECEMBER 2012

CBO

Figure 1.

Supplemental Security Income Recipients and Total Monthly Payments, by 

Type of Recipient

(Percentage of total)

Source: Social Security Administration.

Note: Data are for October 2012.

a. Includes federally administered state supplements.

 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, by creating a separate program for children, or by transferring control of the program to the 

states.

Who Receives SSI Payments?

As of October 2012, the SSI program had about 8.3 million recipients, classified into three groups (see Figure 1). 

The largest group consists of disabled adults ages 18 to 

64. That group accounts for 59 percent of the program’s 

recipients and receives 62 percent of the program’s total 

payments. 

Social Security Disability Insurance (DI), the other major 

federal program that provides cash benefits to people 

with disabilities, uses the same disability standard for 

working-age adults that applies in SSI, but it differs from 

SSI in several respects. For example, DI is available only 

to adults (and their dependents) who have a sufficient 

record of work, but past work is not a requirement for 

SSI eligibility. DI also places no limits on beneficiaries’ 

income or assets, but SSI recipients must have low 

income and few assets. In addition, DI is funded primarily by means of a dedicated payroll tax, but SSI is funded 

out of general revenue.3

Disabled children (under the age of 18) make up 

16 percent of SSI recipients and receive 19 percent of 

the program’s payments. The remaining 25 percent of 

SSI recipients are people age 65 or older; the average payments they receive are smaller, and they collect 19 percent 

of the program’s total payments. 

Most working-age and aged-adult recipients of SSI payments live in their own households. The most recent data 

Recipients

(8.3 million)

 Paymentsa

($4.6 billion)

0

20

40

60

80

100

25%

16%

59%

19%

19%

62% Disabled Adults

(18–64)

Aged Adults

(65+)

Disabled Children

(Under 18)

3. For more information, see Congressional Budget Office, 

Policy Options for the Social Security Disability Insurance Program

(July 2012), and Social Security Disability Insurance: Participation 

Trends and Their Fiscal Implications (July 2010).
DECEMBER 2012 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW 3

CBO

Figure 2.

Supplemental Security Income Recipients, by Type

Source: Congressional Budget Office.

available indicate that about half of working-age SSI 

recipients in 2006 had not graduated from high school or 

received a GED certification and that many lived in 

households with income below the federal poverty 

threshold.4

Disabled Adults Ages 18 to 64 

About 4.8 million people in the 18-to-64 age group—

about 2.4 percent of the U.S. population in that age 

group—received SSI payments in 2011 (see Figure 2). 

To qualify for SSI, those recipients must demonstrate 

that their disability prevents them from participating in 

“substantial gainful activity,” which in 2012 is considered 

to mean work that would produce earnings of more than 

$1,010 a month. (That amount is adjusted annually for 

average wage growth.) Older adults are more likely than 

younger adults are to receive payments: Fewer than 2 percent of people between the ages of 18 and 29 receive 

payments; slightly more than 3 percent of people between 

the ages of 50 and 64 do. Especially among younger 

adults, eligibility for the program is determined most 

commonly on the basis of mental disability: Threequarters of participants ages 18 to 39 were awarded 

payments primarily because of a mental disorder. That 

share declines with age, as conditions such as spinal 

As a Share of the Total Population of the Same Age

Number (Millions of people)

(Percent)

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022

0

1

2

3

4

5

6

Disabled Children (Under 18)

Aged Adults (65+)

Disabled Adults (18–64)

Actual Projected

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022

0

2

4

6

8

10

Disabled Children (Under 18)

Aged Adults (65+)

Disabled Adults (18–64)

Actual Projected

4. The actual share of SSI recipients in poverty is not known. One 

analysis of the 2006 National Beneficiary Survey, which surveyed 

only SSI and Social Security Disability Insurance beneficiaries, 

contained an estimate that 70 percent of SSI recipients lived in 

poverty; see Gina Livermore, David Stapleton, and Allison Roche, 

Work Activity and Use of Employment Supports Under the Original 

Ticket to Work Regulations: Characteristics, Employment, and 

Sources of Support Among Working-Age SSI and DI Beneficiaries

(report submitted by Mathematica Policy Research, Inc., to 

the Social Security Administration, April 2009), p. 8, 

www.mathematica-mpr.com/disability/tickettowork.asp. An analysis of earlier data from the Current Population Survey showed a 

substantially lower poverty rate for that group, about 40 percent 

in 2002; see Joyce Nicholas and Michael Wiseman, “Elderly Poverty and Supplemental Security Income,” Social Security Bulletin, 

vol. 69, no. 1 (May 2009), pp. 45–73, http://go.usa.gov/g4QQ.
4 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW DECEMBER 2012

CBO

Figure 3.

New Supplemental Security Income Recipients as a Share of the

Total Population of the Same Age

(Percent)

Source: Congressional Budget Office.

disorders and heart disease become more prevalent. 

Among SSI recipients between the ages of 60 and 64, 

for example, one-third receive payments because of 

mental disorders, one-quarter receive payments because 

of musculoskeletal disorders, and one-tenth receive payments because of circulatory disorders. Because people 

who qualify on the basis of a physical disorder tend to be 

awarded payments at later ages, they generally spend less 

time in the program.

The share of adults ages 18 to 64 receiving SSI payments 

has increased over time, rising from slightly more than 

1 percent of the population 30 years ago to more 

than 2 percent today. The change accelerated in the early 

1990s, in part because of a loosening of disability standards for mental and musculoskeletal disorders that was 

passed in the Social Security Disability Benefits Reform 

Act of 1984 and implemented in subsequent years. That 

rule change increased the weight placed on applicants’ 

ability to function, thus reducing the weight put on medical diagnoses. Applications for SSI also increased in the 

early 1990s because the Social Security Administration 

(SSA) stepped up its public outreach regarding the 

program.5

The share of working-age adults receiving SSI payments 

also has increased when jobs have been especially difficult 

to obtain, such as during the early 1990s and in the past 

several years. During those periods, SSI applications tend 

to rise, and more people enter the program (see Figure 3). 

CBO projects that, as the economy improves in coming 

years, the number of new, disabled-adult recipients will 

decline and then stabilize, falling from 734,000 in 2010 

to about 600,000 in 2016 and thereafter. As a share of the 

population, the number of disabled-adult recipients will 

reach 2.5 percent in 2013, CBO projects, and will remain 

at about that percentage for the following decade. 

Disabled Children Under Age 18 

Children who qualify for SSI must be disabled and, in 

most cases, must live in a household with low income and 

few assets. To be considered disabled, a child must have a 

physical or mental impairment that results in marked and 

severe functional limitations and that is either expected to 

last for at least 12 consecutive months or to result in 

death. Most child recipients—three-quarters of recipients 

between the ages of 5 and 17 and one-third of those 

under the age of 5—qualify because of a mental disorder. 

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022

0

0.2

0.4

0.6

0.8

Disabled Children (Under 18)

Aged Adults (65+)

Disabled Adults (18–64)

Actual Projected

5. Jerry L. Mashaw and Virginia P. Reno, eds., Balancing Security and 

Opportunity: The Challenge of Disability Income Policy (Disability 

Policy Panel, National Academy of Social Insurance, 1996), p. 70, 

www.nasi.org/research/1996/balancing-security-opportunity

-challenge-disability-income. 
DECEMBER 2012 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW 5

CBO

Disabled children normally require more support 

than other children do, and SSI payments help parents 

and other caregivers pay for disability-related expenses 

and help compensate for the lower wages that parents 

might earn because of the demands of caring for a disabled child. In all, 1.3 million disabled children are SSI 

recipients, or about 1 in 60 of those under the age of 18. 

The rolls of disabled children receiving SSI payments 

increased gradually after the program was established in 

1974, and by the 1980s, about 0.3 percent of children 

were SSI recipients (see Figure 2 on page 3). In that 

period, the determination of disability was based entirely 

on specific diagnoses, called medical factors. In 1990, the 

Supreme Court’s opinion in Sullivan v. Zebley invalidated 

the SSA’s child disability regulation, and children were 

then able to qualify on the basis of functional limitations, 

such as the inability to walk or to attend school.6

 The 

number of new, disabled-child recipients spiked after the 

Zebley decision, growing from less than 0.1 percent of 

children to more than 0.3 percent in 1993 (see Figure 3). 

As a result, the number of new child recipients more than 

quadrupled, from about 50,000 in 1989 to 240,000 in 

1993, by which time 1.0 percent of all children were SSI 

recipients. 

The broad-based welfare reforms enacted in 1996 had 

countervailing effects on the number of children receiving SSI payments. On the one hand, lawmakers tightened 

the definition of functional limitations for children, 

which tended to reduce SSI applications for children. On 

the other hand, benefit rules for Temporary Assistance to 

Needy Families (TANF, a new program established at 

that time) that were stricter than those for Aid to Families 

with Dependent Children (the program that TANF 

replaced) led some poor parents to seek support for their 

children through SSI instead. In addition, because SSI is 

funded entirely by the federal government, whereas 

TANF is funded in part by the states, the states have an 

incentive to encourage residents to apply for SSI. On 

balance, the share of children receiving SSI payments 

declined slightly after welfare reform before resuming an 

upward trend in 2000. 

Rising poverty also seems to have contributed to growth 

in the number of child SSI recipients. Simply being poor 

is not a guarantee that an applicant will meet the SSI 

income and asset tests, but poor people are more likely 

to meet those tests, so an increase in the poverty rate 

generally leads to an increase in the number of SSI recipients. Between 2005 and 2011, both the number of poor 

children and the number of children who received SSI 

increased by about 25 percent; in 2011, 1.7 percent of all 

children were recipients. CBO projects that the share of 

children receiving SSI payments for the first time will 

decline slightly over the next few years as poverty rates fall 

because of an improving economy. However, the agency 

also projects that, as in past economic recoveries, the 

share of SSI recipients exiting the program will not 

change significantly, so the share of children in the program will remain almost stable for the next decade.

Adults Age 65 or Older

People age 65 or older can qualify for SSI on the basis of 

low income and assets alone; they need not be disabled. 

As a result, people in that age group are more likely than 

younger people are to qualify for the program; about 

2.1 million, or 5 percent of the elderly population, do. 

(About half of those recipients qualified as disabled 

recipients before they turned 65.) 

The share of the aged population that receives payments 

has fallen by more than half since 1974 because of the 

increase in the share of that population eligible for Social 

Security and because of the real (inflation-adjusted) 

increase in the average Social Security benefit. Many 

more women now have had sufficient earnings to qualify 

for Social Security benefits based on their own work. In 

addition, the Social Security benefits that each new group 

of beneficiaries receives are linked to average wages in the 

economy, which generally increase faster than SSI benefits, which are linked to prices. As more people qualified 

for Social Security benefits and as the benefit amounts 

rose, fewer people met SSI’s income standard. CBO 

projects that this long-standing downward trend in the 

share of aged adults who receive SSI payments will continue, with the share falling from about 5 percent to 

about 4 percent over the next 10 years. 

Spending for SSI

The federal government will spend about $53 billion on 

SSI payments in fiscal year 2013, about 3 percent more 

6. 493 U.S.C. 521, 541 (1990). than it did in fiscal year 2012 (after accounting for
6 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW DECEMBER 2012

CBO

Figure 4.

Federal Outlays for Supplemental Security Income Payments, by 

Type of Recipient

(Percentage of gross domestic product)

Source: Congressional Budget Office.

differing number of payments), and it will spend an additional $4 billion to administer the program. Payments 

will represent about 1.6 percent of total federal outlays 

and 0.3 percent of GDP, roughly the same share of the 

economy that the program has claimed since the early 

1990s (see Figure 4). 

In the coming decade, CBO expects, the share of the 

population receiving SSI payments will decline slightly, 

for the reasons discussed above. In addition, SSI payments per recipient will grow more slowly than average 

earnings in the economy. As a result, total SSI outlays will 

grow more slowly than the economy, CBO projects, and 

fall to about one-quarter of one percent of GDP by fiscal 

year 2022.

Payments to Recipients in 2012

The maximum SSI payment is specified in law, and the 

amount someone receives is the difference between that 

maximum and the recipient’s “countable income,” a measure of that person’s income (for details, see “Income and 

Asset Limits” on page 8). People whose countable income 

exceeds the maximum are not eligible to receive SSI 

payments.

The current maximum monthly SSI federal payment is 

$698 for an individual or $1,048 for a couple, but most 

actual payments are lower; in October 2012, federal 

payments averaged $497 for all recipients. Forty-four 

states and the District of Columbia supplement federal 

payments for some or all recipients, and states can choose 

to administer payments or to have the federal government determine eligibility and make payments. About 

one-quarter of all recipients receive federally administered 

state payments as well as payments funded by the federal 

government itself; federally administered state supplements total about $3.5 billion annually, and state 

supplements administered by the states total about $1 billion annually. (States also can choose to provide payments 

to people who are ineligible for federal SSI because of 

excess income. Only 3 percent of SSI recipients receive 

federally administered state payments without federal 

payments.) The average federally administered state 

supplement in October 2012 was $122.7

Payments for aged adults tend to be lower than those for 

younger recipients, in part because many recipients who 

are 65 or older also receive Social Security benefits, thus 

reducing their SSI payments. In October 2012, federal 

monthly SSI payments to aged adults averaged $380, disabled adults received $516, and children received $607. 

Actual Projected

Disabled Children (Under 18)

Aged Adults (65+)

Disabled Adults (18–64)

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022

0

0.1

0.2

0.3

0.4

Fiscal Year

7. For sample data on monthly payments by eligibility category, age, 

and source of payment, see Social Security Administration, 

Research, Statistics, and Policy Analysis, “SSI Monthly Statistics, 

October 2012,” Table 7, http://go.usa.gov/g45H. 
DECEMBER 2012 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW 7

CBO

(As a result of federally administered state supplemental 

payments to some recipients, aged adults received a total 

of $415 in monthly SSI payments, disabled adults 

received $533, and children received $615, on average.) 

Trends in Payments

Since 1983, SSI payments have been indexed to inflation, 

as measured by growth in the consumer price index for 

urban wage earners and clerical workers (CPI-W). 

Therefore, the purchasing power of those payments (as 

measured using the CPI-W) has remained constant. 

However, the payments have shrunk relative to average 

earnings, which tend to grow faster than inflation. In 

1984, the maximum individual SSI payment was 23 percent of average earnings (as measured by the national 

average wage index, according to SSA). By 2011, that 

ratio had declined by about one-fifth, to 19 percent of 

average earnings. CBO projects that earnings growth will 

continue to outpace inflation and that SSI payments 

will continue to gradually decline as a share of average 

earnings.

In CBO’s baseline projections, which generally 

follow current law, outlays for SSI payments grow from 

$51 billion in fiscal year 2012 to $68 billion by fiscal year 

2022. As a share of GDP, however, outlays are projected 

to decline by about one-fifth over that period, from 

0.33 percent of GDP today to 0.27 percent in 2022. 

(Those projections adjust outlays to account for the variation in the number of monthly payments per fiscal year; 

in most years there are 12, but in some years the October 

1 payment date falls on a weekend, resulting in 11 or 

13 payments during a given fiscal year.)

How Does SSI Work?

Program eligibility rules differ somewhat for each type of 

recipient.8

 People with qualifying disabilities, income, 

and assets who meet other eligibility criteria receive 

monthly payments based on current income or, in some 

cases, the income of a spouse or parent, and payments fall 

as income rises. Eligibility for payments ends if the disabling condition improves or if income or assets rise 

above the eligibility thresholds.

Qualifying Disabilities

Disability determination services (DDSs), which are run 

by states but funded by the federal government, assess 

whether children and adults under age 65 meet the disability criteria for SSI. Although SSI is separate from the 

Old-Age and Survivors Insurance and Disability Insurance (DI) programs of Social Security, SSA administers 

all three. Slightly fewer than half of adult applicants 

under age 65 who meet the financial criteria for the 

program are ultimately approved for payments. 

Applications for SSI, like DI applications, are filed with 

SSA, which first determines whether an applicant’s 

income and assets are low enough to meet the standards 

for eligibility (discussed below). If that determination is 

positive, a DDS then reviews a case file and rules on 

whether the applicant is sufficiently disabled to qualify. 

About one in three applications reviewed by a DDS is 

approved.9

Roughly 40 percent of all applications by disabled 

adults that initially are denied by a DDS are appealed. In 

40 states and the District of Columbia, the appeals are 

then heard at what is known as the reconsideration level, 

in which, depending on the reason for rejection, the 

decision is reviewed either by the DDS or by SSA; only 

about 10 percent of such appeals result in an approval. In 

the 10 states without the reconsideration level, appeals 

advance automatically to the next level.

More than two-thirds of the people whose applications 

are denied at the reconsideration level appeal again, this 

time to an administrative law judge (ALJ); those judges 

also hear all cases from states without reconsideration.10

In most such cases, the earlier denial is reversed, and 

about one-quarter of all awards to disabled adults are 

made by ALJs. Although it is not known precisely why 

ALJs reverse so many earlier rulings, several factors 

probably contribute:

8. For details on issues summarized in this section, see Social 

Security Administration, Understanding Supplemental Security 

Income (2012), http://go.usa.gov/g4NG.

9. SSI Annual Statistical Report, 2011 (September 2012), Table 69, 

“Outcomes of Applications for Disability Benefits,” 

http://go.usa.gov/Y4rR. About one-quarter of applications are 

rejected by SSA for nonmedical reasons, such as income or assets 

that exceed the program limits, and about one-half are rejected by 

DDSs because the applicants are judged not to be disabled. 

10. ALJs are judges who preside over administrative trials and hearings 

on claims made by individuals affected by agency determinations 

or decisions.
8 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW DECEMBER 2012

CBO

 More applicants have legal representation at a hearing 

before an ALJ than they have earlier. 

 In some cases, the medical disorder worsens between 

the time of the initial application and the time of the 

appeal hearing.

 DDS employees have an incentive to deny 

applications because those results are not as likely 

to be reviewed by SSA as approvals are. In contrast, 

approvals handed down by ALJs are not reviewed, 

and their denials can be appealed first to an Appeals 

Council and then to the federal courts, although few 

applicants choose to do so. 

 DDS examiners review only the case file, but ALJs 

typically meet applicants in person, thus allowing 

applicants to respond directly to questions. In addition, whereas it is common for applicants to have 

lawyers or other representation at the hearings, SSA 

has no legal representation to advocate against an 

application at a hearing. 

Relatively fewer appeals are filed on behalf of children 

than are filed for adults whose applications have been 

rejected, and ALJs are less likely to reverse the decision to 

deny a child’s application than an application for an 

adult. As a result, more than 90 percent of awards to children are made at the initial DDS review. In recent years, 

about 40 percent of child applicants have been accepted 

into the program.11

Income and Asset Limits

About one-quarter of all applicants are disqualified on the 

basis of financial resources. To be eligible for payments, 

recipients’ assets and their countable income must fall 

below statutory thresholds. The amount of payments is 

reduced by the amount of recipients’ countable income. 

Several sources of income are not countable:

 The first $20 of income received in a month from any 

source, in addition to other types of excluded income 

listed below;

 The first $65 of wages and self-employment income, 

and half of the remaining amount;

 The value of in-kind benefits, such as food stamps or 

heating assistance, as well as need-based assistance 

from state and local agencies; and

 Money from loans, grants, and scholarships.

The income of parents of children under 18 is generally 

considered (or “deemed”) to be available to those children 

and is included in the computation of countable income 

for a potential or accepted child recipient. For married 

adults of all ages, the income of a spouse with whom the 

recipient lives is deemed to be available to the recipient. 

Countable income includes cash received from friends or 

relatives but excludes money spent by other people for 

expenses other than food or shelter.12 SSI recipients must 

apply for all other available private and public sources of 

income, including benefits from other means-tested programs, pensions, Social Security, and unemployment 

insurance. 

In addition to meeting low-income criteria, recipients 

must have minimal assets. Specifically, their “countable 

resources” must total less than $2,000 for a single person 

or $3,000 in joint assets for married people. Countable 

resources include financial assets and most other items 

that could be sold. Exceptions include a home, household 

goods, and one vehicle. (Applicants who give away assets 

or sell them for less than their market value may have to 

wait up to 36 months to qualify for SSI payments.) 

Other Eligibility Criteria

In general, SSI applicants must be U.S. citizens. (Until 

1996, legal permanent residents also were eligible.) However, immigrants who arrived in the United States by 

August 1996 and those who have worked enough to 

qualify for Social Security retirement benefits can collect 

SSI payments if they are otherwise eligible to do so. In 

general, refugees and people who have been granted 

asylum are eligible for seven years after they enter or are 

granted asylum here. In 2008, that period was temporarily extended (until the end of fiscal year 2011) to nine 

years. In general, residents of nursing homes or other 

medical institutions for whom more than half the cost of 

care is paid by Medicaid receive a federal monthly SSI 

payment of $30; residents of public medical facilities and 

prisoners are ineligible.

11. SSI Annual Statistical Report, 2011 (September 2012), 

Table 69, “Outcomes of Applications for Disability Benefits,” 

http://go.usa.gov/Y4rR.

12. However, payments are reduced by one-third for recipients who 

live in another person’s household and do not pay for food and 

shelter.
DECEMBER 2012 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW 9

CBO

Exiting the Program

SSI recipients become ineligible when a disabling condition improves sufficiently or their income or assets rise 

above the eligibility thresholds. To ascertain whether 

recipients continue to have qualifying disabilities, they 

are subject to continuing disability reviews (CDRs). By 

law, CDRs are required for low-birth-weight infants on 

their first birthday and for disabled children who have 

reached the age of 18. About half of the infants and more 

than one-third of the 18-year-olds are found to be no 

longer disabled.13 The frequency of review for other cases 

depends on the estimated likelihood of recovery and on 

funding available for reviews. Each year, about 1 percent 

of disabled adult SSI recipients leave the program after 

their disabling condition improves. Very few SSI recipients (less than 1 percent) leave the program each year 

because their own earnings increase.

How Does SSI Interact with Other 

Government Programs?

SSI recipients often participate in other government 

support programs, including Social Security, Medicaid, 

TANF, and the Supplemental Nutrition Assistance 

Program (SNAP, formerly known as the Food Stamp 

program). 

Social Security

Many SSI recipients in the disabled-adult and aged-adult 

categories also qualify for Social Security benefits; such 

recipients are known as dual beneficiaries. About 25 percent of disabled-adult SSI recipients also receive Social 

Security DI benefits, and about 55 percent of aged-adult 

SSI recipients also receive Social Security benefits, mostly 

from Social Security’s retirement program, Old-Age and 

Survivors Insurance. Because Social Security benefits 

represent countable income for SSI, SSI payments are 

reduced dollar-for-dollar by the amount of Social Security benefits after taking into account the $20 monthly 

general income exclusion. In effect, the SSI payment is a 

floor on the sum of SSI and Social Security benefits. 

Qualifying for SSI is valuable even for recipients who 

qualify for DI benefits that are equal to or larger than 

their SSI payments because qualifying for SSI can provide 

earlier access both to cash and to medical benefits. First, 

SSI payments begin immediately after the payment is 

awarded, whereas DI benefit payments begin five months 

after the onset of disability. Second, SSI recipients qualify 

for Medicaid health benefits immediately, whereas DI 

recipients become eligible for Medicare 24 months after 

becoming eligible for DI benefits. 

Medicaid 

People who qualify for SSI also generally qualify for Medicaid benefits. (In 39 states and the District of Columbia, 

qualification is automatic; in 11 states, Medicaid eligibility rules differ from the SSI rules, but SSI recipients in 

those states generally qualify for Medicaid as well.) Gaining Medicaid eligibility through SSI is most valuable for 

disabled adults—and most costly to the government—

because that group tends to have significant medical 

needs. Most disabled adults are not eligible for Medicare 

because they are too young to qualify on the basis of age 

and have not had enough work history to qualify for 

Social Security DI benefits. Medicaid is also valuable for 

disabled children, but most of them would qualify for 

that or other health care programs separately from SSI. 

Average Medicaid outlays for aged recipients are lower 

than they are for younger recipients because Medicare is 

usually the primary source of health insurance for the 

aged and Medicaid pays only the costs that Medicare does 

not cover. (However, average Medicaid costs are very high 

for those who receive long-term care.) In 2011, the 

annual federal Medicaid costs for disabled-adult recipients of SSI averaged $9,250; for disabled-child recipients, 

they averaged $8,300; and for aged-adult recipients, they 

averaged $5,840.14

For people who expect to have large health care costs, a 

significant incentive for applying for SSI is to receive 

Medicaid benefits.15 However, about 70 percent of SSI 

recipients would qualify for Medicaid even if they were 

13. Social Security Administration, Annual Report of Continuing 

Disability Reviews, Fiscal Year 2010 (transmitted to the Honorable 

Joseph R. Biden Jr. and the Honorable John A. Boehner on 

May 1, 2012), http://go.usa.gov/YyPC. 

14. Federal Medicaid costs for beneficiaries who were not on SSI were 

substantially lower because such beneficiaries are much less likely 

than SSI recipients to be disabled and therefore likely to use less 

health care. In 2011, those costs averaged $1,350 for children, 

$1,760 for adults, and $3,430 for aged Medicaid beneficiaries.

15. For information on how eligibility for SSI and DI affects access 

to Medicare and Medicaid, see Kalman Rupp and Gerald F. Riley, 

“Longitudinal Patterns of Medicaid and Medicare Coverage 

Among Disability Cash Benefit Awardees,” Social Security 

Bulletin, vol. 72, no. 3 (August 2012), pp.19–35, 

http://go.usa.gov/g4Uh.
10 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW DECEMBER 2012

CBO

not SSI recipients because they are members of other 

qualifying groups, such as low-income children or their 

parents.

Beginning in 2014, the Affordable Care Act will allow 

states to choose to expand Medicaid coverage to anyone 

whose income is below 138 percent of the federal poverty 

level.16 In states that do so, almost all SSI recipients will 

be eligible for Medicaid based on income alone, even if 

they do not qualify for SSI. SSI recipients who are not 

eligible for Medicaid but whose income is equal to or 

above 100 percent of the poverty level will be eligible for 

subsidized insurance through the exchanges that will be 

established under the Affordable Care Act.

Temporary Assistance for Needy Families

Poor families with children may qualify for cash payments through the state-administered TANF program, 

and they also may qualify for SSI if their children meet 

SSI’s disability criteria. States receive federal funding for 

TANF in fixed amounts, in contrast with SSI, under 

which federal outlays change with the number of recipients. Because of that difference in funding structures, 

increasing SSI payments to TANF beneficiaries gives 

states additional overall resources. Families that receive 

TANF benefits also can be better off when they qualify 

for SSI because they generally receive larger total payments.17 Therefore, states have an incentive to ensure that 

TANF beneficiaries receive any SSI payments for which 

they qualify. In 2006, about one-sixth of TANF families 

included at least one person receiving SSI. 

Supplemental Nutrition Assistance Program

Many SSI recipients also qualify for food assistance, most 

commonly through SNAP.18 About half of households 

that receive SSI payments also receive SNAP benefits. 

Although the eligibility criteria for the two programs 

differ, a demonstration project, the SSI Combined 

Application Project, is experimenting with an integrated 

process for applications and benefit computations. Participation in that project is generally limited to aged people 

who live alone and have no income from earnings.19

In fiscal year 2010, 18 states had demonstrations of 

the project, and about 8 percent of all SSI recipients 

participated. 

How Much Does SSI Affect People’s 

Work and Saving?

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.

Incentives Created by SSI Payments to 

Disabled Adults

Work behavior among disabled adults is affected by the 

fact that SSI payments are reduced by 50 cents for each 

dollar of earnings after the first $65. That reduction in 

payments is effectively a tax on earnings, which reduces 

the incentive to work. 

However, most adults who qualify for SSI on the basis of 

a disability probably would not work much even in the 

absence of SSI. Among the considerations supporting 

that conclusion are the following four:

16. See Congressional Budget Office, Estimates for the Insurance 

Coverage Provisions of the Affordable Care Act Updated for the Recent 

Supreme Court Decision (July 2012). The Affordable Care Act 

comprises the Patient Protection and Affordable Care Act and 

the health care provisions of the Health Care and Education 

Reconciliation Act of 2010.

17. Steve Wamhoff and Michael Wiseman, “The TANF/SSI 

Connection,” Social Security Bulletin, vol. 66, no. 4 (2005/2006), 

pp. 21–36, http://go.usa.gov/g2rW. 

18. Brad Trenkamp and Michael Wiseman, “The Food Stamp 

Program and Supplemental Security Income,” Social Security 

Bulletin, vol. 67, no. 4 (2007, released June 2008), pp. 71–87, 

http://go.usa.gov/g2gB.

19. Mathematica Policy Research, Technical Documentation for the 

Fiscal Year 2010 Supplemental Nutrition Assistance Program Quality 

Control Database and the QC Minimodel (report submitted to 

the Department of Agriculture, Food and Nutrition Service, 

September 2011).
DECEMBER 2012 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW 11

CBO

 Most disabled-adult SSI recipients have little or no 

work history; according to one study, fewer than onethird were working at the time they became disabled.20

 A disabled adult with a significant work history can 

generally receive more from Social Security DI benefits than from SSI payments, so the availability of SSI 

is unlikely to affect such a person’s decision to work. 

 SSI payments are much lower than are earnings from 

even low-wage work: Excluding the effects of fringe 

benefits and taxes, which are generally small for 

people with low wages, the earnings for full-time 

minimum-wage work are more than twice the average 

SSI payment. However, some participants might only 

be able to work limited hours or sporadically, in which 

case the SSI benefit could be comparable to or greater 

than their potential earnings.

 As discussed below, few disabled-adult recipients 

return to work even though SSI includes provisions 

designed to mitigate work disincentives.

In the other direction, among the considerations that 

suggest that some SSI beneficiaries would work more in 

the absence of SSI are the following:

 Giving up SSI sometimes entails the loss of Medicaid 

benefits and the loss of benefits from other programs 

that assist low-income people.21

 For various reasons, including the time and effort 

required for work, some recipients probably prefer 

receiving SSI payments instead of working.

Because DI benefits can be higher than SSI payments 

and because DI sets no limits on assets or nonwage 

income, adults who qualified for SSI as children have 

an incentive to work for long enough to qualify for DI 

benefits. Still, that incentive is dampened by the existence 

of SSI payments.

The SSI asset limit is unlikely to have a large effect on 

savings. Most low-income families have little opportunity 

to save and few financial assets. 

Incentives Created by SSI Payments to Aged Adults

In the years before they turn 65, some people who are not 

disabled probably work less and save less because they 

expect to receive SSI when they reach age 65, especially if 

they live in states where SSI supplements are larger.22 For 

example, a 60-year-old man could know that his Social 

Security benefit will be lower than his SSI payment no 

matter how much he works. In that case, any additional 

work by him would result in more earnings, but it would 

not increase the total payments he would receive after 

turning 65. In addition, if he expects to receive SSI payments, he might consider it less important to prepare for 

retirement by saving or by accruing pension benefits. 

Because only a small portion of workers expect to receive 

SSI, and because the behavior of only some of those 

workers is affected, the effect of SSI payments to aged 

adults on overall work and saving is small.

Incentives Created by SSI Payments to 

Disabled Children

When SSI recipients turn 18, the Social Security 

Administration assesses their eligibility for continuing 

in the disabled-adult program; about two-thirds of child 

recipients at that age meet the SSI eligibility criteria for 

disabled adults.23 CBO is aware of no analysis that demonstrates the influence of SSI payments on the future 

work patterns of child recipients. On the one hand, 

disabled-child SSI recipients who anticipate continuing 

to receive payments as adults may be discouraged 

themselves, or be discouraged by their parents or other 

advocates, from pursuing entry-level jobs or from seeking 

the type of education that would prepare them to enter 

the workforce. In addition, some parents might believe 

20. John Bound, Richard Burkhauser, and Austin Nichols, “Tracking 

the Household Income of SSDI and SSI Applicants,” in Solomon 

Polachek, ed., Worker Well-Being and Public Policy: Research in 

Labor Economics (Elsevier JAI Press, 2003), pp. 113–158.

21. See Congressional Budget Office, Effective Marginal Tax Rates for 

Low- and Moderate-Income Workers (November 2012).

22. David Neumark and Elizabeth Powers, “Welfare for the Elderly: 

The Effects of SSI on Preretirement Labor Supply,” Journal of 

Public Economics, vol. 78, nos. 1–2 (2000), pp. 51–80, 

www.sciencedirect.com/science/journal/00472727/78/1-2.

23. Jeffrey Hemmeter, Jacqueline Kauff, and David Wittenburg, 

“Changing Circumstances: Experiences of Child SSI Recipients 

Before and After Their Age-18 Redetermination for Adult 

Benefits,” Journal of Vocational Rehabilitation, vol. 30, no. 3 

(2009), p. 211. For additional information, see Jeffrey Hemmeter 

and Elaine Gilby, “The Age-18 Redetermination and Postredetermination Participation in SSI,” Social Security Bulletin, 

vol. 69, no. 4 (December 2009), pp.1–25, http://go.usa.gov/

g24V.
12 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW DECEMBER 2012

CBO

that a child’s designation as disabled by a school system or 

other agency will improve the chance of a successful SSI 

application. That designation or actions that the parents 

might take to get the child’s disability officially recognized could result in the child’s being moved to a weaker 

educational track, or otherwise reduce the child’s educational preparation, in a way that limits his or her prospects for adult work.24 On the other hand, SSI payments 

to a disabled child might help his or her parents support 

the child’s development, and a designation as disabled 

might give a child access to other support services that 

improve his or her ability to work upon reaching 

adulthood.25

The availability of SSI payments for disabled children 

could reduce the work effort of those children’s parents 

because the reduction of 50 cents for every dollar’s 

increase in earnings is a disincentive for some parents to 

work. However, any effect of this sort appears to be 

small.26

Programs to Encourage Work

Several provisions of SSI are designed to mitigate work 

disincentives for disabled-adult recipients. Two in particular reduce the cost of returning to work: 

 People whose income is above what is known as the 

substantial gainful activity amount, currently $1,010 

a month, do not generally qualify for SSI. However, 

section 1619 of the Social Security Act provides that 

people who already receive SSI payments may continue to do so indefinitely, even when their earnings 

rise above that threshold, so long as they remain 

eligible otherwise. (Payments are still reduced by the 

amount of countable earnings, and no payment is 

made if a person’s countable earnings are greater than 

the maximum monthly SSI payment.) In addition, 

recipients whose payments stop because of high earnings can remain on Medicaid as long as their annual 

earnings are below a much higher threshold (which 

varies by state but typically is around $32,000 per 

year), even after they become ineligible for SSI. 

 SSI’s “expedited reinstatement” program allows recipients whose eligibility has ended because of increased 

earnings to return to the program within five years 

without filing a new application if their earnings 

subsequently decline enough that they become eligible 

again.

Two other programs have been created to assist recipients 

in returning to work, although neither appears to have 

been very successful. Under one, recipients can set up 

what is known as a Plan to Achieve Self Support, or 

PASS, which allows them to exclude from SSI eligibility 

calculations any savings for education, equipment, or 

other resources needed to get a better job. Under such a 

plan, a recipient’s monthly SSI payments are not affected 

by those savings. The other program, called the Ticket to 

Work Program, was designed to help recipients prepare 

for and find employment. Ticket to Work is federally 

funded, but its services are provided by state or local 

governments or by private organizations. 

Despite those provisions of SSI and the existence of those 

two programs, however, most SSI recipients do not work, 

and most disabled-adult recipients remain on the program indefinitely. Each month just 5 percent of disabled 

SSI recipients report earnings, and each year only about 

0.5 percent leave the program because their earnings 

increase.27 The programs probably have a limited effect in 

part because some SSI recipients decide not to participate 

in them but also because some do not fully understand 

the opportunities to work while remaining on SSI.

Approaches to Changing SSI

Proposals for changing SSI—some that would expand the 

program and others that would shrink it—can be 

grouped into four categories:

24. See Subcommittee on Human Resources of the House Committee 

on Ways and Means, hearing on Supplemental Security Income 

for Children (October 27, 2011), http://go.usa.gov/Ykqk; and 

Patricia Wen, “The Other Welfare,” Boston Globe, December 12–

14, 2010, www.boston.com/news/health/specials/New_Welfare.

25. Shawn Fremstad and Rebecca Vallas, Supplemental Security Income 

for Children with Disabilities, Social Security Brief 40 (National 

Academy of Social Insurance, November 2012), www.nasi.org/

research/2012/supplemental-security-income-children

-disabilities.

26. One report identified “no evidence of a change in labor supply 

in response to child SSI enrollment.” See Mark G. Duggan and 

Melissa Schettini Kearney, “The Impact of Child SSI Enrollment 

on Household Outcomes,” Journal of Policy Analysis and 

Management, vol. 26, no. 4 (Fall 2007), pp. 861–886, 

http://onlinelibrary.wiley.com/doi/10.1002/pam.v26:4/issuetoc.

27. See SSI Annual Statistical Report, 2011 (September 2012), 

Table 40, http://go.usa.gov/Y4rR; and Paul O’Leary, Gina A. 

Livermore, and David C. Stapleton, “Employment of Individuals 

in the Social Security Disability Programs,” Social Security 

Bulletin, vol. 71, no. 3 (August 2011), pp.1–10, http://go.usa.gov/

g22P.
DECEMBER 2012 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW 13

CBO

 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 eligibility 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 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 (see Box 1): using an alternative measure of inflation 

to adjust for price changes over time, eliminating the $20 

exclusion for unearned income, and reducing total payments to families with more than one child recipient.28

This report focuses on broader potential changes to the 

program but does not include cost estimates for those 

changes.29

Program Parameters

SSI outlays could be adjusted by changing payment 

amounts or by changing the income and asset thresholds. 

For example, if policymakers wanted to increase future 

payment amounts relative to what they will be under 

current law, they could choose to link changes in those 

amounts to changes in wages. Under current law, the 

maximum monthly federal payment—in 2012, $698 for 

an individual and $1,048 for a couple—rises with average 

prices and thus has been unchanged in real terms since 

SSI was created in 1974; over that period, average real 

earnings in the economy have increased by about 30 percent. Alternatively, if policymakers wanted to decrease 

future payment amounts relative to what they will be 

under current law, they could choose to freeze those 

amounts in nominal terms (that is, at the dollar amount 

in effect at that time) rather than stay with current law, 

under which payments increase with changes in average 

prices.

Policymakers also could increase future SSI outlays relative to what they will be under current law by raising the 

asset thresholds and thereby increasing the number of 

people who would be eligible to receive payments. SSI’s 

asset thresholds have been constant, with no adjustment 

for inflation, since 1984, whereas prices have more than 

doubled since then. To make the threshold match its 

amount in 1984 in real terms (as measured by the 

CPI-W), the asset threshold for a single person would 

have to increase from $2,000 to about $4,400. The asset 

rules also could be relaxed by narrowing the types of 

assets considered—for example, by disregarding assets 

held in retirement accounts.30 Alternatively, policymakers 

could reduce future SSI outlays relative to what they will 

be under current law by setting asset thresholds below 

their current amounts.

Any increase in the program’s total payments that stems 

from changes in monthly payment amounts or asset 

thresholds would increase federal outlays. If policymakers 

wanted to obtain offsetting savings within SSI, they could 

adjust other parameters of the program. For example, the 

substantial gainful activity amount could be reduced; 

or—as discussed in Box 1—rather than excluding the 

first $20 of unearned income, all unearned income could 

28. See Congressional Budget Office, Budget Options, vol. 2 

(August 2009).

29. Policies to change SSI by changing the definition of disability or 

supporting work opportunities could also affect DI because the 

programs currently use the same definition of disability and some 

programs to support work are offered to participants in both 

programs. For additional discussion, see Congressional Budget 

Office, Policy Options for the Social Security Disability Insurance 

Program (July 2012). For discussion of possible approaches to supporting work for people with disabilities, see David H. Autor and 

Mark Duggan, Supporting Work: A Proposal for Modernizing the 

U.S. Disability Insurance System (Hamilton Project: December 

2010), www.hamiltonproject.org/papers/supporting_work_a

_proposal_for_modernizing_the_u.s._disability_insuran; 

David Mann and David Stapleton, A Roadmap to a 21st-Century 

Disability Policy, Issue Brief, 12-01 (Center for Studying 

Disability Policy, Mathematica Policy Research, January 2012), 

www.mathematica-mpr.com/publications/pdfs/disability/

roadmap_ib.pdf; and Richard Burkhauser and Mary Daly, 

The Declining Work and Welfare of People With Disabilities

(American Enterprise Institute, 2011), www.aei.org/book/

economics/the-declining-work-and-welfare-of-people-with

-disabilities/.

30. Robert Greenstein and Zoë Neuberger, Removing Barriers to 

Retirement Saving in Medicaid and Supplemental Security Income, 

Retirement Security Project Policy Brief 2008-3 (Brookings 

Institution, October 2008), www.brookings.edu/about/projects/

retirementsecurity/resources.
14 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW DECEMBER 2012

CBO

Box 1.

Cost Estimates for Three SSI Options

As part of its analysis of various options for the federal budget, the Congressional Budget Office (CBO) 

has estimated the cost of three well-specified changes 

to the Supplemental Security Income (SSI) program.1

In each case, CBO estimated the effect on SSI spending over a 10-year projection period, from fiscal year 

2013 to fiscal year 2022. 

Option 1. Use an Alternative Measure of 

Inflation to Adjust for Price Changes Over Time 

According to many analysts, the consumer price 

index for urban wage earners and clerical workers 

(CPI-W) overstates increases in the cost of living 

because of the limited size of the sample of goods 

used to compute it and because it does not fully 

account for the fact that consumers generally adjust 

their spending patterns as some prices change relative 

to others.2

One option for lawmakers would be to link SSI payment adjustments to another measure of inflation—

the chained CPI—which is designed to account fully 

for changes in spending patterns. The chained CPI 

has grown more slowly than the traditional CPI-W—

by an average of about 0.25 percentage points per 

year over the past decade—so indexing payments to 

the chained measure instead of the CPI-W would 

reduce federal spending. Applying the chained 

CPI starting in 2014 would reduce SSI outlays by 

$6.7 billion over the 2014–2022 period, a reduction 

of about 1 percent of total SSI outlays over that 

period. (That estimate assumes that the same change 

would apply to Social Security benefits, and thus that 

those benefits also would be reduced relative to 

current law. SSI payments for dual beneficiaries are 

lower when Social Security benefits are higher, so the 

reduction in SSI spending from this option would be 

larger if Social Security benefits were unchanged.) 

Option 2. Eliminate the $20 Exclusion for 

Unearned Income 

Counting all unearned income in the formula for 

determining payments, instead of excluding the first 

$20 of unearned income per month as under 

current law, would save $8.6 billion over the 10-year 

projection period if it began in 2013 and continued 

thereafter. Some current recipients who receive $20 

or less in monthly federal SSI payments would no 

longer be eligible for the program; others would still 

receive payments, but the monthly amounts would 

be up to $20 less. 

Option 3. Create a Sliding Scale for Children’s 

SSI Payments on the Basis of the Number of 

Recipients in a Family 

Currently, families receive an equal amount for each 

child recipient. However, economies of scale in some 

types of consumption—housing, in particular—

mean that two children generally do not need twice 

the income to be supported as well as one child. 

This option would not change the amount a family 

received for one child but it would reduce the 

amount for each additional child recipient. (A similar 

approach is followed by other programs, such as 

Temporary Assistance for Needy Families.) Under 

this option, proposed by the 1995 National Commission on Childhood Disability, payments would equal 

the SSI federal benefit rate multiplied by the number 

of child recipients in the family and raised to the 

power of 0.7. Creating such a sliding scale on the 

basis of the number of recipients in a family, beginning in 2013, would save $4.6 billion over the 

2013–2022 period.

1. See Congressional Budget Office, Budget Options, vol. 2 

(August 2009).

2. See Ralph Bradley, “Analytical Bias Reduction for Small Samples in the US Consumer Price Index,” Journal of Business 

and Economic Statistics, vol. 25, no. 3 (2007), pp. 337–346, 

http://amstat.tandfonline.com/toc/ubes20/25/3.
DECEMBER 2012 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW 15

CBO

be included in the payment computation. Similarly, any 

decrease in total payments that stemmed from changes in 

monthly payment amounts or asset thresholds would 

decrease federal outlays; if policymakers wanted to use 

those savings within SSI, they could adjust other 

parameters of the program. 

Determining Disability Status

Policymakers could adjust the rules used to determine 

whether applicants are disabled. Payments could be 

adjusted to account for the severity of a disability, 

for example, as is the case for veterans’ disability 

compensation. Under such a system of partial disability, 

payments would be reduced for some current participants 

who would be classified as partially rather than fully disabled. But some people whose disabilities are not severe 

enough to qualify for SSI under current rules would 

probably be considered partially disabled and become eligible for SSI, thus increasing the total number of recipients. In addition, such a system would be more complex 

than the current system.

Program Administration

Increased administrative efforts, such as more frequent 

CDRs and redeterminations, would require additional 

federal outlays for administration but would probably 

reduce outlays for payments. CDRs are used to evaluate 

whether a recipient continues to meet SSI’s definition of 

disability; redeterminations evaluate whether a recipient 

continues to meet SSI’s other eligibility criteria, most of 

which concern income and assets. The required CDRs 

of low-birth-weight infants on their first birthday and of 

disabled children who have reached age 18 frequently 

result in a termination of payments. Such an outcome is 

a less likely result of CDRs for other disabled children 

or for adults, which SSA performs infrequently (less than 

1 percent of those recipients are subjected to review each 

year). Eligibility is terminated in about 20 percent of the 

reviews for other disabled children and in less than 

5 percent of reviews for adults.

In recent years, funding for CDRs and redeterminations 

has increased, rising from about $500 million in fiscal 

year 2009 to $758 million in fiscal year 2011 and to 

$757 million in fiscal year 2012. (Those funds also 

support CDRs for the Social Security DI program.) In 

addition, the Budget Control Act of 2011 established 

adjustments to the caps on discretionary funding for 

additional spending on such efforts through 2021. If 

appropriated by the Congress, moderate increases in 

spending for CDRs and redeterminations from the 

amounts projected under current law would probably 

reduce future SSI payments by more than the amount of 

the additional spending for program administration and 

therefore would reduce federal outlays overall. However, 

the resulting reduction in projected payments would not 

be taken into account under the Congressional scorekeeping rules that CBO follows when it estimates the 

budgetary effects of legislation.31 CBO estimated that the 

adjustments to spending for CDRs and redeterminations 

allowed in the Budget Control Act would generate savings in payments that would be more than three times the 

amount of additional spending for administration over 

the coming decade, and additional savings would occur 

in years after that.32 As such spending increased, however, 

the number of ineligible recipients would decline, and 

each additional dollar of spending beyond the specified 

adjustments would have a smaller effect on payments.

Changes in the way that the disability determination process is administered could alter the number and type of 

people who become SSI recipients. An applicant’s likelihood of qualifying for SSI payments depends in part on 

the detailed federal regulations, known as listings, that 

define disability.33 Other, less-well-defined aspects of the 

disability determination process also are influential, as 

evidenced by the large variation in state DDS approval 

31. In guidelines published in the conference report for the Balanced 

Budget Act of 1997 (Public Law 105-33), Scorekeeping Rule 3 

states that “entitlements and other mandatory programs . . . will 

be scored at current law levels . . . unless Congressional action 

modifies the authorization legislation.” That is, even when 

additional discretionary funding for the administration of such 

programs would be projected to lead to budgetary savings from 

reduced benefit payments, such savings would not be counted as 

reductions in spending for the purposes of scorekeeping.

32. See Congressional Budget Office, letter to the Honorable John 

Boehner and the Honorable Harry Reid, concerning CBO’s 

analysis of the August 1 Budget Control Act (August 1, 2011). For 

discussion of the frequency of CDRs for child recipients, see 

Government Accountability Office, Supplementary Security 

Income: Better Management Oversight Needed for Children’s Benefits, 

GAO-12-497 (June 2012), http://go.usa.gov/YkwT. 

33. See Social Security Administration, Disability Evaluation 

Under Social Security, Blue Book SSA 64-039, ICN 468600 

(September 2008), http://go.usa.gov/YkwA.
16 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW DECEMBER 2012

CBO

rates and by the variation between the rulings of individual examiners and judges. For example, in 2010, the 

Mississippi DDS approved 24 percent of SSI disability 

claims, whereas the Alaska DDS approved 56 percent.34

However, because the reasons for such variations are not 

well-understood, it is not known what the effects of 

specific administrative changes would be.

Broader Changes

Lawmakers also could choose to make more fundamental 

changes to SSI. For example, additional employment 

assistance could be provided in an attempt to reduce 

the number of SSI recipients; the child and adult 

components of SSI could be separated; or the funding 

mechanism for SSI could be changed to a block grant 

model, turning administrative responsibility for the 

program over to the states.

Employment Assistance for Applicants. If lawmakers 

wanted to reduce the movement of disabled workers into 

SSI, they could consider several policy changes. For 

example, to reduce the number of applicants for the program, the government could support the employment of 

people who appear likely to apply for it. Alternatively, or 

in addition, to reduce the number of people who become 

recipients, the government could provide employment 

support to those who chose to apply for SSI. Such efforts 

could be implemented through a new program or 

through the numerous other programs that support 

employment for people with disabilities.35 Assistance also 

could be developed to improve the prospects for the 

future employment of child recipients of SSI.36

The approach of offering employment support before an 

SSI application is made, rather than only after payments 

have been awarded, has received attention in part because 

of the lack of successful programs to encourage work 

among SSI recipients. Earlier intervention might be 

more effective because participants would be more likely 

to have a recent work history. Participants also might 

be more open to trying to find work if they have not 

completed the SSI application process, which requires 

them to actively demonstrate that they cannot work. 

Even if such an approach substantially reduced assistance 

to people who were not working, however, it could 

increase total costs to the government, depending on the 

form and extent of assistance supporting potential SSI 

applicants. For example, total costs could increase if 

employment assistance was not well-targeted and thus 

assisted many people who would not have qualified for 

federal payments in any case. Total costs also could go up 

if the new program was not effective at increasing 

employment and thus did not significantly reduce the 

overall number of SSI recipients.

Separate Program for Children. If lawmakers believed 

that the goals of SSI payments for adults were very different from those of SSI payments for children, they could 

create separate programs for adults and children. In particular, disabled adults receive SSI payments because they 

cannot work, whereas disabled children are not expected 

to work, and SSI payments to their families are intended 

to assist parents or guardians who can face additional 

costs because of the need to care for those children. 

Limiting the current SSI program to adults and creating a 

separate program for children might make it easier to 

ensure that appropriate services are provided to children 

and their families and to integrate SSI with other educational, medical, and social services.37 In addition, the 

Social Security Administration’s expertise lies more in 

determining eligibility and distributing payments than in 

providing services to recipients, so a separate program for 

children might be better administered by state or local 

agencies. Whether such a change would increase or 

decrease administrative costs or total payment outlays 

would depend on how a new program was implemented.

Block Grants to States. If lawmakers wanted to limit 

federal responsibility for SSI, they might consider 

34. See Social Security Advisory Board, “G. Variation in DDS Decision Making,” in Aspects of Disability Decision Making: Data and 

Materials (February 2012), pp. 43–55, http://go.usa.gov/YkGH. 

35. See Government Accountability Office, Employment for People 

with Disabilities: Little Is Known About the Effectiveness of Fragmented and Overlapping Programs, GAO-12-677 (June 2012), 

http://go.usa.gov/YkzH. 

36. Ron Haskins, The SSI Program for Children: Time for Change?

Princeton-Brookings Policy Brief (Spring 2012), 

http://futureofchildren.org/futureofchildren/publications/docs/

22_01_PolicyBrief.pdf.

37. Michael Wiseman, “Supplemental Security Income for the 

Second Decade,” Poverty and Public Policy, vol. 3, no. 1 

(March 2011), pp. 16–19.
DECEMBER 2012 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW 17

CBO

transferring control of the program to the states. One way 

to do so would be to provide block grants to states, essentially making SSI function more like TANF. That shift 

could transfer much of the decisionmaking power for SSI 

from the federal government to the states, depending on 

the conditions attached to the grants. For instance, the 

states’ authority could be expanded to allow them to set 

full payment amounts instead of just state supplements, 

to devise their own eligibility requirements, and to decide 

whether to redirect funds to such support services as job 

training and education. 

Federal policymakers could decide either to set the block 

grants at fixed dollar amounts or to allow the grants to 

vary over time, perhaps along with average prices or some 

other variable. The cost of the program to the federal 

government would be determined by the structure of the 

block grants, the initial amount of spending, and the rate 

of increase over time. Under such an approach, the number of recipients and the type and amount of support 

provided could be lower or higher than under current 

law. Federal outlays probably would be more predictable, 

and if states kept the current practice of making payments to all people eligible for the program, their 

spending would be more variable. States would have 

much greater flexibility in designing system rules and 

would have an incentive to limit spending in excess of 

the grants they received. 
18 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW DECEMBER 2012

CBO

List of Figures

1. Supplemental Security Income Recipients and Total Monthly Payments, by 

Type of Recipient 2

2. Supplemental Security Income Recipients, by Type 3

3. New Supplemental Security Income Recipients as a Share of the

Total Population of the Same Age 4

4. Outlays for Supplemental Security Income Payments, by Type of Recipient 6
DECEMBER 2012 SUPPLEMENTAL SECURITY INCOME: AN OVERVIEW 19

CBO

About This Document

This Congressional Budget Office (CBO) publication was prepared at the request of the Ranking 

Member of the Senate Budget Committee. In keeping with CBO’s mandate to provide objective, 

impartial analysis, the report makes no recommendations.

The analysis was prepared by Noah Meyerson of CBO’s Long-Term Analysis Unit in the Health, 

Retirement, and Long-Term Analysis Division under the supervision of Joyce Manchester and 

Linda Bilheimer. David Rafferty and Elizabeth Bass provided helpful comments.

Paul Davies of the Social Security Administration, Michael Tanner of the Cato Institute, Virginia 

Reno of the National Academy of Social Insurance, and Michael Wiseman of the George Washington 

University reviewed the report. The assistance of external reviewers implies no responsibility for the 

final product, which rests solely with CBO.

Kate Kelly edited the document, and Maureen Costantino and Jeanine Rees prepared it for 

publication. The report is available on the agency’s Web site (www.cbo.gov).

Douglas W. Elmendorf 

Director

December 2012