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 are based on the intermediate demographic and economic assumptions developed for
2011 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance (OASDI) Trust Funds,
1 and 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 the assumptions and methods the model uses each year in light of recent experience and new information about future conditions and revise them if warranted.
We first present select demographic and economic projections from the 2011 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 for the 2011 Trustees Report is a continuation of the recent economic downturn, with a return to a sustainable path for the economy over the following several years. The economic downturn appears to have generated a temporary large increase in applications for SSI disability benefits and a consequent increase in projected SSI expenditures, although 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 which 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.
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. We assume that the CPI in the third quarter of 2011 will be 0.7 percent higher than the CPI in the third quarter of 2008, yielding an assumed Federal benefit rate increase of 0.7 percent for January 1, 2012.
