Supplemental Security Income is often confused with Social Security and it’s understandable. The names are similar, the acronyms are similar and they’re both administered by the Social Security Administration. However, the differences in the programs are significant and important to understand.
Supplemental Security Income (SSI) is the program that provides cash assistance to the most vulnerable citizens: low-income over 65, blind, or disabled individuals who either aren’t eligible for Social Security or whose benefits are too low to provide livable income. More than 8 million people rely on SSI to meet basic needs, including 1.2 million children with disabilities.
The largest distinction between these programs is that Supplemental Security Income (SSI) is need based whereas Social Security is an entitlement program. SSI’s full name is Supplemental Security Income for the Aged, Blind, and Disabled and it’s part of public assistance for those who have little income and few resources. In a nutshell, the purpose of the program is to keep people in need above a minimum income threshold so they can afford food and shelter. Social Security is a social insurance program consisting of retirement, disability, and survivor benefits.
Another big difference is that, although both programs are managed by the Social Security Administration, their funding comes from different places. Funding for SSI is through the federal government general fund and Social Security funding comes directly from Social Security employer and employee FICA taxes. This tax is 6.2% for Social Security on income up to $142,000 and 1.45% for Medicare. Employers pay the same amount for a total of 15.3%. Self-employed individuals pay the full 15.3%.
Strict financial requirements must be met to qualify for Supplemental Security Income whereas workers who meet the 40 quarters of work requirement are entitled to benefits for themselves and their families. Roughly only one in three individuals who apply for SSI are granted benefits.
Supplemental Security Income and Social Security are not mutually exclusive. You can receive both benefits at the same time if you qualify. Here are some additional features of Society Security and SSI to help further differentiate the two:
- No income limit. There’s no income limit that reduces earnings after Full Retirement Age (FRA). There are reductions prior to FRA and during the year of retirement.
- Benefits include retirement, disability, and survivor. You can read more about the types of benefits provided here.
- There are family benefits for spouses and children.
- The benefit is the same regardless of which state you live in.
- Benefits will be paid if you live outside the U.S.
Supplemental Security Income:
- The benefits may vary by state.
- Income and assets must be minimal to qualify for benefits. In fact, 66% of adult SSI recipients are poor.
- Cannot be absent from the U.S. for 30 consecutive days
- Benefits include aged, blind, and disability.
- There are no family benefits. Disabled children qualify based on their parent’s income until age 18.
- SSI recipients may also be eligible for food assistance.
Although SSI won’t keep individuals out of poverty, the monthly benefit does help them from falling into severe poverty and lessen their struggles just a bit.
If you’d like to learn more about SSI, click here.
Gayle Evezich, AFC® is a Senior Financial Concierge at Your Money Line and personal finance author. Gayle’s greatest joy is to help others find comfort with their money through financial empowerment. When not working or donating her services, you can find Gayle hiking, cooking creative vegan food, traveling or reading scandalous murder mysteries!