2012 Annual Report of the SSI Program

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IV. ESTIMATES OF PROGRAM RECIPIENTS AND FEDERAL EXPENDITURES
UNDER THE SUPPLEMENTAL SECURITY INCOME PROGRAM, 2012‑36
As section III explains, an individual must meet certain requirements related to his or her income and resources to be eligible for SSI payments. In addition, all persons under age 65, and certain individuals age 65 or older, must be blind or disabled. Consequently, future SSI program expenditures will depend on a variety of difficult-to-predict factors, including the performance of national and local economies, distribution of personal income, the prevalence of disability in the general population, and the determination of disability according to the definition in the Social Security Act. Nonetheless, for planning purposes we must develop the best possible projections of future SSI program recipients and expenditures.
This section presents projections of program recipients and expenditures under the SSI program for a period of 25 years. The projections rely on the intermediate demographic and economic assumptions developed for the 2012 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance (OASDI) Trust Funds,1 and they assume that the present statutory provisions and regulations under which the SSI program operates will not change during the projection period. The current projection model starts with estimates of the general population by single year of age and gender. We project transitions into SSI payment status separately for: (1) new recipients resulting from an application for program benefits and (2) returns to payment status from suspended status. We project movements out of payment status separately for: (1) terminations due to death and (2) suspensions of payment for all other reasons.2 We reexamine, and revise if warranted, the assumptions and methods the model uses each year in light of recent experience and new information about future conditions.
A. DEMOGRAPHIC AND ECONOMIC ASSUMPTIONS
We first present select demographic and economic projections from the 2012 Trustees Report that we used for the SSI projections in this SSI Annual Report. The single economic parameter that has the most direct effect on the level of SSI benefits is the Consumer Price Index for Urban Wage Earners and Clerical Workers (hereafter denoted as CPI),3 which is used for indexing the SSI Federal benefit rate. Sections V.A and V.B of the Trustees Report present a detailed discussion of these demographic and economic projections.4  An important feature of the intermediate assumptions in the 2012 Trustees Report is a gradual recovery from the recent economic downturn. This downturn generated a large increase in applications for SSI disability benefits, resulting in an increase in projected SSI expenditures. We expect the level of applications to decline as the economy recovers.
The following two tables summarize the key parameters underlying the estimates in this report. Table IV.A1 presents population projections by selected age subgroups that are consistent with the presentation of SSI recipient projections in the next section. Table IV.A2 presents a complete history of the cost-of-living adjustment factors and Federal benefit rates since the inception of the program, along with projections of such amounts consistent with the economic assumptions underlying the SSI expenditure estimates in section IV.C.
Table IV.A1.—Historical and Projected Social Security Area Population based on the
Intermediate Assumptions of the 2012 OASDI Trustees Report, as of July 1, 1974‑2036
Total
all ages

a
Age as of last birthday.

Notes: 1. Totals do not necessarily equal the sums of rounded components.
           2. Historical data are estimated and subject to revision.
 
 
Table IV.A2.—SSI Federal Benefit Rate Increases and Levels: Historical and Projected on the Basis of the Intermediate
Assumptions of the 2012 OASDI Trustees Report, 1974‑2036
Benefit rate
increase   a
Essential person b
d 4.3%
d 7.0
e 2.5
f 513.00
f  531.00

a
Increases prior to 1984 were effective for the payment due on July 1 of the year. Increases shown for 1984 and later are effective for the payment due on January 1 of the year.

b
A concept carried over from the former State assistance plans. Fewer than 50 of those cases currently remain.

c
SSA paid benefits in January 1974 using the Federal benefit rates established by Public Law 92‑603, enacted October 30, 1972: $130.00 for individuals; $195.00 for couples; and $65.00 for essential persons. SSA subsequently made retroactive payments to adjust initial payments to the higher Federal benefit rates established by Public Law 93‑233, enacted December 31, 1973.

d
Ad hoc increases as specified in the law.

e
Originally determined as 2.4 percent, but pursuant to Public Law 106-554, enacted December 21, 2000, is effectively now 2.5 percent.

f
SSA originally paid benefits in 2000 and through July 2001 based on Federal benefit rates of $512.00 and $530.00, respectively. Pursuant to Public Law 106-554, beginning in August 2001 SSA made monthly payments based on the higher $531 amount. SSA made lump-sum compensation payments based on an adjusted benefit rate for months prior to August 2001.
 

The adjustment to the monthly Federal benefit rate in January of each year reflects the increase in the CPI, generally from the third quarter of the second prior calendar year to the third quarter of the prior calendar year. This cost-of-living adjustment is identical to the adjustment applied to Social Security benefits under the OASDI program after initial benefit eligibility. In previous years, the Federal benefit rate was subject to occasional ad hoc increases, either in place of or in addition to the automatic adjustments. Table V.A1 presents a history of legislation affecting the Federal benefit rate. It is worth noting that the Federal benefit rate did not increase in 2010 or 2011; table IV.A2 shows the increases for January 1, 2010 and January 1, 2011 as 0.0 percent. This unusual situation occurred because the CPI in both the third quarter of 2009 and the third quarter of 2010 was below the actual level achieved in the third quarter of 2008. In the third quarter of 2011, the CPI exceeded the CPI for the third quarter of 2008 by 3.6 percent, resulting in a Federal benefit rate increase of 3.6 percent for January 1, 2012.
 

1
House Document 112-102, published April 25, 2012.

2
The two main reasons other than death for termination of SSI payments are: (1) failure to satisfy income and resource limitations of the SSI program; and (2) recovery from a qualifying disability.

3
Historical values of the CPI are developed and published by the Bureau of Labor Statistics.

4
Ibid, Section V.A, Demographic Assumptions and Methods and Section V.B, Economic Assumptions and Methods.


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