The Hidden Value of Social Security Disability Insurance: Why It’s Important During Benefits Enrollment
For example, 60.5% of households where a person with a disability resides are considered too “asset poor” to live even at the federal poverty level for three months. With the mass unemployment brought by COVID-19, these individuals were in more danger of slipping off a financial cliff than ever before.
Too often, the public assistance programs designed to help the economically underprivileged neglect the most vulnerable communities and their abilities to progress. Qualifiers like asset limits only exacerbate the problem. Here, we explore how the inequality furthered by asset limits and how COVID-19 made the situation even worse.
How Asset Limits Prevent Progress
Asset limits are the provisions attached to public assistance measures in an attempt to reach only those who need it most. In practice, this restricts these public assistance programs from actually allowing the recipients to save. In a world where student debt is a commonality, these asset caps make saving for university for yourself or your children a difficulty that can spiral inequality cycles into subsequent generations.
For example, the way current Social Security Disability and Supplemental Security Income (SSI) programs are set up means that you risk losing assistance if you have virtually any money tucked away for a rainy day. SSI has capped their “resource limit” at $2,000 for individuals or $3,000 for couples.
Typically counting towards this resource limit are the following:
- Cash
- Bank accounts, stocks, and savings bonds
- Personal property
- Any vehicles outside one vehicle necessary for transportation
- Additional personal property that can be liquidated
While some additional programs can be used for redirecting funds towards a Plan to Achieve Self Support (PASS), the architecture of disability benefits often discourages any kind of savings. For example, saving for a comfortable retirement requires opening a 401(K) or IRA account. However, these accounts can be a threat to your disability benefits without the right approval.
As a result, individuals with disabilities are more likely to have limited access to banking because of asset limits. For instance, one study found that low-income families receiving food assistance were 5% more likely to have a bank account in states with less strict asset limits. With incentives against saving money, getting out of student loan debt or saving for the future is hardly possible, even with long-term disability insurance.
The coronavirus pandemic demonstrated just how damaging these effects can be to populations living with disabilities.
How COVID-19 Highlighted Inequalities
When COVID-19 struck it created problems for everyone. Those with disabilities, however, were frequently placed in further complicated and financially challenging positions.
For instance, simply determining how one’s benefits would be affected by COVID relief measures themselves was complex by the nature of the system. Then, receiving those payments on time while being underrepresented in terms of banking became a significant financial barrier. Forget saving that money for future stability.
In the meantime, those with disabilities have either made adjustments in how they work or put themselves at greater risk on the frontlines of the pandemic. The risk of lost paychecks and work has increased. With less access to banks, those with disabilities are more likely to experience longer times in waiting for stimulus checks.
All these factors snowball into a riskier situation for anyone living with a disability in the era of COVID-19. Asset limits only put another wrench into the machine of financial management, forcing those with disabilities to take extra care in the ways they manage expenses on their less-than $1,260 per month.
As we look to the future of what public assistance can look like, asset limits only seem to limit the potential of individuals and families. COVID-19 underscored this reality. Now, it is up to us and our representatives to work towards a more equitable future of public relief.
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