SUPPLEMENTAL SECURITY INCOME PROGRAM; STATE BUDGETS;

WELFARE - SSI (SUPPLEMENTARY SECURITY INCOME);

Federal laws/regulations; Connecticut laws/regulations;

You asked if the state will still be in compliance with the state supplement to the Supplemental Security Income’s (SSI) pass-along or “maintenance of effort” (MOE) requirements if the legislature passes (1) the governor’s budget, which continues to lower the State Supplement Program (SSP) (cash assistance for low-income aged, blind, and disabled) benefit, or (2) the Appropriations budget favorably reported on April 29, 2003, which keeps the benefits the same from year to year.

SUMMARY

Although passage of the governor’s budget will not initially affect the state’s compliance with the MOE requirement, it could potentially affect compliance once the federal SSI cost-of-living adjustment (COLA) goes into effect next January 1. (The Social Security Administration typically announces COLAs for SSI in the fall, which go into effect the following January. )

According to a DSS analysis, beginning January 1, 2004, the state could be out of compliance with the federal MOE requirement for married couples in which one spouse receives SSP if (1) the legislature passes the governor’s budget and (2) the federal government grants an SSI COLA of 2. 2% or more. The likelihood of a COLA equal to or greater than 2. 2% is unknown. However, in the past 10 years, the COLA has averaged 2. 43% (mean). (See the attached list of COLAs going back to 1975. )

The reason the governor’s budget raises compliance issues is because it continues to freeze both the SSP need standard and unearned income disregard. The effect of these freezes is a lower SSP benefit. Federal law requires that the combined current SSP and SSI benefits at least equal the 1983 combined levels, plus any increases in SSI since 1983. Without “passing along” the SSI increases, either by increasing the SSP need standard or unearned income disregard, the state could fall out of compliance with the federal law. And failure to comply would subject the state to a loss of federal Medicaid matching funds.

If the legislature passes the Appropriations budget, which apparently assumes an increase in the unearned income disregard based on the SSI COLA, the state will remain in compliance, regardless of the SSI COLA amount.

BACKGROUND—STATE SUPPLEMENT MOE REQUIREMENT

Federal Law

As a condition of qualifying for Medicaid federal financial participation (FFP), states that established SSI supplement programs after June 30, 1977 must continue to operate these programs and must meet a MOE requirement to ensure that recipients benefit from annual COLAs they receive in the SSI program (20 CFR § 416. 2098). States can choose one of two ways to show they have met the MOE requirement.

Under the “total expenditure method,” state expenditures for supplement payments (SSP in Connecticut) in the current year must at least equal expenditures in the preceding year. If they are less, the state must increase expenditures in the next calendar year to make up the shortfall. Under the “minimum payment levels” method, the current combined SSI/State Supplement payments cannot be lower than March 1983 levels, adjusted for SSI COLAs.

Computing SSP Benefits and the State’s MOE Obligation

Connecticut stopped passing along SSI COLAs in 1988. This had the effect of reducing SSP caseloads and payment levels because SSP eligibility and benefits are based on an individual’s income and state-determined level of need (what the state determines that person needs to live in the community, including both a rental component and a “personal needs allowance” (PNA)). In general, the state compares a person’s “applied income” (gross income less the unearned and earned income disregards) and compares it to need. The difference, if any, is the

SSP benefit. Previously, the state would increase each year the need amount, as well as disregard a portion of any unearned income that was received (e. g. , SSI) to ensure that clients benefited from the federal COLA.

Because of this, the state went from using the total expenditures method to meet the federal MOE requirement to using the minimum payment level method. It continues to use this method.

But a recent DSS analysis shows that unless the state either increases the need standard or the amount that can be disregarded, the state will fall out of compliance with the MOE requirement. According to DSS, because the SSP payment levels increased rapidly in the 1980s, the state could meet the MOE requirement using the minimum payment method. But now, DSS staff acknowledge that the state will soon reach a point where any “built-up credit” is exhausted.

A table prepared by DSS staff (attached) illustrates both how much SSP benefits have fallen and how close the state is to missing the MOE target for married couples. It shows the (1) amount of combined maximum monthly amount of SSI and SSP benefits a single person living in the community in Connecticut could receive in 2003 and (2) minimum amount that the federal government requires under the MOE provisions, which includes the SSI payment in 1983, the SSP payment that year, and the total of the increases in SSI over the 20 year period. The numbers show a $ 61 margin for single people. For married couples the state is only $ 6 above the “break even point,” below which it will no longer comply.

Application of Law to Current Budget Proposals

The governor’s budget (HB 6548) continues to freeze both the SSP need standard and the unearned income disregard. If SSI benefits were to rise in 2004 by 2. 2% (or by $ 18. 24 for married couples), the combined SSI and SSP benefit would be lower than what federal law’s calculation would yield, hence pushing the federal MOE figure ahead of the state and rendering the state out of compliance.

The FY 2003-05 budget (sHB 6548), favorably reported by the Appropriations Committee on April 29, 2003, apparently includes funding to increase the unearned income disregard by the same amount of the SSI COLA. If this were to pass, the state would remain in compliance.

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