Can Social Security Order a Child Support Review
The Supplemental Security Income (SSI) program serves equally an income source of last resort for elderly or disabled individuals, including blind or disabled children. In determining the benefit amount for a child, the program excludes one-3rd of child support payments from countable income. Legislation reauthorizing the 1996 welfare reform law contains provisions that would encourage states to allow children receiving Temporary Help for Needy Families (TANF) to keep more of the child support paid by an absent-minded parent. These potential changes provide impetus to revisit the way the SSI plan treats child support.
This cursory was prepared by Susan Wilschke and Richard Balkus of the Social Security Administration's Office of Disability and Income Assistance Policy.
Questions almost the analysis should be directed to them at 202-358-6275.
The findings and conclusions presented in this cursory are those of the authors and do not necessarily represent the views of the Social Security Administration.
This policy brief analyzes several options for increasing the SSI exclusion for child back up.
- Excluding all child support from countable income would benefit all children who receive child support but would raise equity issues by allowing some individuals with college income to receive a higher SSI do good.
- Excluding a larger percentage of child back up would brand all children receiving child back up improve off, only children with larger back up payments could exclude more income than those with smaller payments.
- Excluding a flat amount of up to $300 would also benefit all child recipients who receive child support.
- Excluding smaller amounts—up to $200 or $100, for example—would have a positive or neutral issue on most children but would harm a pocket-size number of children who currently receive back up payments exceeding three times the excluded amount ($600 for the $200 exclusion and $300 for the $100 exclusion).
Introduction
Nether current police, the Social Security Administration (SSA) excludes one-third of child back up payments received in a calendar month on behalf of a child on Supplemental Security Income (SSI) from countable income in determining the SSI payment. Should the electric current treatment of child support payments in the SSI program alter? How does it compare with policies in other means-tested programs? Are at that place ways to change the treatment of child support payments that would issue in higher SSI payments for the children most in need, provide better compliance with reporting requirements, and effect in more absent parents making child support payments?
Legislation reauthorizing the 1996 welfare reform law contains provisions that would allow children receiving Temporary Assistance for Needy Families (TANF) to go along considerably more of the kid support paid by an absent parent than current law allows. Assuasive families to keep more child support promotes family unit self-sufficiency and would "let noncustodial parents who pay child back up to know that their support payments are being received by their children" (Senate Commission on Finance 2003).
To the extent that policymakers favor this type of incentive for families of children receiving SSI, this paper identifies several options for doing so. The options would eliminate or reduce the corporeality of child support counted against the monthly SSI benefit. This policy cursory looks at the potential effects that implementing each selection would take on the kid too as on the SSI program.1 It presents these options for purposes of give-and-take, merely it does not make recommendations.
Depending on the selection chosen, changing the rules for counting child support in the SSI programme could potentially resolve several concerns raised by the current policy. Offset, the current policy raises issues of horizontal disinterestedness past allowing children with child support payments to receive higher benefits than children with equal income from other sources. Yet, public policy is better served if absent parents provide child back up. In contrast to other types of income that the custodial parent or kid may receive, kid support seems to warrant more than of an incentive and reward for its receipt. Consequently, some differential treatment for counting kid support would seem to exist adequate public policy. The question is how much. A related result is that children with larger kid back up payments may exclude significantly more support from their countable income than children receiving smaller support amounts. The result is that SSI children with larger child support payments have college net income than those with smaller payments. The 2nd issue to consider is that the full general treatment of child support in means-tested programs may serve as a disincentive for custodial parents to pursue formal child support and to written report on an accurate and timely basis the support payments they receive. For the SSI program in particular, current rules may discourage noncustodial parents from paying support, since two-thirds of the payment offsets the SSI benefit. A more generous child support exclusion may encourage absent parents to pay support and custodial parents to pursue it.
Federal Policy on Kid Back up Enforcement
Congress created the Child Support Enforcement (CSE) program in 1975 as an attempt to reduce public expenditures on welfare by obtaining back up from noncustodial parents to continue custodial parents and their children off welfare. State CSE agencies help custodial parents in obtaining financial and medical support for children past locating noncustodial parents, establishing paternity and support obligations, and enforcing those obligations. Child support payments are included in calculating benefits under both the TANF and SSI programs. As discussed below, child support rules for the TANF program may change with the passage of pending legislation. In examining the proposed changes, it is useful to understand how the TANF program currently treats child support.
Treatment of Child Back up in the TANF Program
Current law requires TANF recipients who receive child support payments to assign the payments to the state government as an implicit reimbursement for welfare expenditures. States are required to give the federal government a share of its child support collections that is proportionate to the share of the land'southward TANF programme that is federally funded.
Under the onetime program of Help to Families with Dependent Children (AFDC), states were required to pass through to the family the first $fifty of kid back up received each calendar month and exclude that amount in determining eligibility and benefits. The amount passed on to the family unit was disregarded when determining the federal share of a state's collection. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 eliminated the pass-through requirement in the new TANF programme. States may laissez passer some or all child back up payments to families receiving TANF, but any support paid to families must be paid out of the land'southward share of collections. As of 2003, 28 states had eliminated the pass-through and exclusion for child support collections.2 The majority of states standing to pass through child support have maintained the $l laissez passer-through and the excluded amount, just a few states let families on TANF to proceed higher amounts of child back up (Roberts and Jordan 2004).
Eliminating the kid back up pass-through is seen as a disincentive for noncustodial parents of children on welfare to participate in the formal child support system. Since back up paid through that system yields piddling or no additional income for their children, many of those parents prefer to make informal contributions (Sorensen and Lerman 1998). Research suggests that many noncustodial fathers make noncash contributions, because those contributions allow them to meet their children's needs more straight. Testify also indicates that child support enforcement discourages some fathers from working in the formal sector and increases informal work activity (Waller and Plotnick 2001). Informal agreements, however, put the custodial parent at risk of noncompliance with TANF requirements. Breezy payments are likely to be smaller and are fabricated at the discretion of the noncustodial parent, leaving the custodial parent little means to pursue nonpayment (Turetsky 2000).
The handling of child support payments for TANF recipients may change with the reauthorization of the 1996 legislation. H.R. 4, the Personal Responsibility, Piece of work, and Family Promotion Deed of 2003, was passed past the House on February 13, 2003. The bill would encourage states to give the custodial parent a larger portion of the child support payment ($100 or $l plus the laissez passer-through allowed by the land as of December 31, 2001, whichever is greater) past waiving the federal government's share of any child back up collections that are passed on to the family unit. On October 3, 2003, the Senate Committee on Finance reported a version of the bill that would waive the federal share of child support passed on to TANF families—up to $400 per month in the case of a family unit with one child, and up to $600 per month in the example of a family with two or more than children.
Proponents of these proposals believe that it would provide an incentive for more absent parents to make payments, because less of their payment would be counted against the TANF benefit. Proponents as well believe that more custodial parents would seek CSE services if the custodial parent kept an increased portion of the child support payment. In that location is some bear witness to back up this position. Sorenson and Halpern (1999) found that the $50 laissez passer-through program increased the likelihood of receiving child support. For case, of the never-married mothers on TANF, the likelihood of receiving child support increased by 4.5 per centum under a pass-through program. In addition, Wisconsin received a federal waiver that immune a full pass-through of child support collections to TANF recipients on an experimental ground. Reports of the experiment show that the full pass-through encourages recipients to cooperate with establishing paternity and results in collecting higher amounts of kid back up (Meyer and Cancian 2002).
Treatment of Kid Support in the SSI Program Under Current Law
Although filing for child back up is a condition of eligibility for TANF, it is not and so for the SSI program. TANF recipients must assign the right to any child support nerveless to the TANF agency, while SSI recipients are required to report this income to SSA. Despite these differences in program design, both programs operate in fundamentally similar ways, using child back up payments to outset benefits.
When determining a child'due south monthly SSI benefit, program rules under the Social Security Act exclude from countable income one-3rd of the child back up payment received from the absent parent. The remaining child support payment is subject to the $20 full general income exclusion. The balance reduces the child's monthly SSI benefit dollar for dollar. The example in Box 1 shows how child back up payments are counted for a child who has no other income.
Box one.
Current computation for child back up payments (in dollars)
This case assumes that the child has no other income.
| Monthly federal do good rate for 2004 | 564.00 |
|---|---|
| Boilerplate kid support payment for June 2003 | 199.00 |
| Minus 1/3 of the child support payment | − 66.33 |
| Minus the $20 general income exclusion | − 20.00 |
| Total countable income | = 112.67 |
| SSI do good (564.00 − 112.67) | 451.33 |
| Full income available to child (199.00 + 451.33) | 650.33 |
| NOTE: This calculation is for the federal Supplemental Security Income payment only. Some states provide supplemental payments to children, enabling them to receive higher benefits. | |
Children who receive both SSI and child support payments have more than available income than children who practice not receive child support payments. Roughly 12 per centum of children who receive SSI (25 per centum of those living with i parent) receive an average monthly child support payment of $199 (equally of June 2003).three
Table ane shows steady increases in the pct of children who receive both SSI and child back up and in their average monthly child support payment.
| Date | Receiving both SSI and child support | Average kid support payment (dollars) | |
|---|---|---|---|
| Number | Per centum of all child recipients | ||
| June 1996 | 81,810 | 8.two | 156 |
| December 1996 | 82,640 | eight.3 | 159 |
| June 1997 | 85,440 | eight.five | 161 |
| December 1997 | 75,750 | eight.6 | 168 |
| June 1998 | 80,690 | viii.ix | 172 |
| December 1998 | 82,010 | ix.3 | 171 |
| June 1999 | 85,410 | 9.eight | 177 |
| Dec 1999 | 84,100 | ten.0 | 176 |
| June 2000 | 88,010 | 10.4 | 181 |
| December 2000 | 89,950 | x.7 | 182 |
| June 2001 | 95,260 | 11.1 | 184 |
| Dec 2001 | 99,830 | 11.4 | 188 |
| June 2002 | 104,470 | 11.6 | 192 |
| December 2002 | 107,520 | eleven.8 | 194 |
| June 2003 | 114,170 | 12.one | 199 |
| SOURCE: Social Security Administration. 1996–2003. Children Receiving SSI. Semiannual report. Baltimore, Md.: SSA, Office of Policy. | |||
Studies point that many custodial parents of children on SSI do not pursue child support from the absent parent or do non study the child support payments they receive. For example, a 1999 written report conducted by the General Accounting Office (GAO) in three of the four states with the largest number of children receiving SSI (New York, Florida, and Texas) institute that less than half of the SSI children who live in single-parent households received CSE services. A 1999 study done by the Social Security Administration of near one,500 unmarried-parent households showed that 47 percent of the custodial parents had not pursued kid back up and that approximately two-thirds of those households might receive support if they pursued it.
In the three states selected for review, GAO also institute that about two-thirds of parents who receive child support for children who become SSI do not report the child back up payments to Social Security. Related to the underreporting is a high book of overpayments associated with child back up. Nonreporting or late reporting of all types of income is a problem for the SSI plan. For almost other forms of income, such as wages, in that location is a centralized arrangement for verifying receipt. Past contrast, no such system exists for kid support, and SSA therefore relies heavily on self-reporting. In financial year 2000, there were well-nigh 660,000 overpayments, totaling $39 1000000, associated with kid support payments.
Options for Changing the Treatment of Child Support in the SSI Program
The amount of child support SSI children receive under current police varies considerably (Nautical chart ane). Almost two-thirds of SSI children reported as receiving kid support receive monthly payments of $200 or less. Three-quarters of the children who receive monthly payments of $200 or less practice not accept any other countable income, including any income from the custodial parent deemed available to the child (deemed income). A change in the amount of child support that is counted when determining children'due south SSI benefits could have a pregnant impact on the full household income for these families.
Chart i.
Number of SSI kid recipients with payments from absent-minded parents, past amount of payment, June 2002
Source: Social Security Administration, SSI Characteristic Extract Record, ten percent information.
Excluding 1-tertiary of the kid support payments raises bug of horizontal equity, considering SSI children who receive child support are eligible for higher benefits than their peers who receive equal income from other sources. For example, excluding i-tertiary of child back up payments allows a kid to receive upward to $874.50 in kid support and still be entitled to a monthly benefit of $one and thus maintain Medicaid eligibility. Other SSI children with unearned income other than child support tin can only receive income up to $583 and all the same exist entitled to a monthly do good of $ane. Furthermore, the more child support an SSI kid receives, the larger the corporeality of the kid support payment that volition be excluded when determining the SSI benefit amount. For case, if a child receives child support payments of $750 a month and has no other income, Social Security does not count $270 of the back up payment. A kid whose only income is a kid support payment of $150 tin can exclude only $seventy. Therefore, the child receiving the $750 child support payment has $200 a month more in total income ($834) than the child with the $150 payment ($634).
Several options would permit children receiving SSI to go on more of the child support paid past an absent parent. Option 1 would exclude all child support from countable income, Option ii would increase the pct of child support excluded, and Option 3 would replace the current rule of excluding one-3rd of kid support with a stock-still dollar exclusion.
Option 1. Exclude all kid support from countable income. This option would provide the greatest incentive for absent parents to provide kid support. It would increment the total income bachelor for the child's care and thereby encourage more custodial parents to seek out CSE services, knowing that the child support would not affect the SSI do good for their kid.
Selection 1 would increase program costs for current SSI child beneficiaries receiving child back up by about $136 million annually.four (Program costs from new recipients are difficult to estimate. Previous studies have shown that many SSI children receive child support that is non reported. Therefore, the number of new applicants who would be eligible as a issue of this increased exclusion may not be equally pregnant as ane might expect.) This selection would also simplify assistants of the SSI program, considering SSA would no longer need to verify child support income or procedure overpayments related to child support.
As with current policy, this option would present some issues of horizontal disinterestedness. For example, a child who at present receives $874.fifty a month in child back up and $one in SSI benefits would, under this selection, receive the full SSI monthly benefit of $564, for a total of $1,438.50. In improver, the total income for some children would significantly exceed the total income for adults receiving SSI. For example, if both members of a married couple were eligible for SSI benefits and received at least $20 in unearned income, their total income guarantee for 2004 would exist $866. Choice 1 would also increment the differential handling of income from the custodial and noncustodial parent. In the example above, assume that the monthly child back up payment of $874.50 represents one-tertiary or less of the absent parent'south earnings. A disabled child living with a parent with comparable earnings would not be eligible for SSI benefits, because a portion of the earnings of the custodial parent would be subject to deeming.five
Option two. Exclude a larger percentage of child support payments. This option would increase the SSI benefits for children receiving kid support by excluding a larger share of the child support payments. This choice would also nowadays problems similar to those in Option 1 by excluding a much larger amount of kid back up for children who receive larger child support payments. By excluding, for case, 1-half of child support payments from countable income, a child could receive up to $i,166 per month from an absent parent and still receive $1 in SSI. Children receiving the average child support payment of $199 per month would see their SSI benefit increase by $33.17 per month, and children receiving monthly child support of $40 or less would have all of their kid support excluded. This option would increase program costs for electric current SSI child beneficiaries receiving kid support by about $38 million annually.
Another variation would be to exclude two-thirds of child support payments received. A kid could receive up to $1,749 in child support without losing eligibility for SSI. Children who receive less than $sixty per calendar month in kid support and have no other income would be able to exclude all of their child back up. Programme costs for current beneficiaries would increase by $76 one thousand thousand per year.
Selection three. Exclude a flat corporeality of kid support payments rather than a percentage. A third option for replacing the current i-3rd exclusion would be to exclude a flat corporeality of child support payments from countable income. This selection is similar to the proposed TANF provision that allows a apartment amount of child support to be passed on to the child. For instance, SSA could exclude (up to the beginning) $300, $200, or $100 of kid support. The flat corporeality could be tied to the cost-of-living aligning.
Exclude up to $300. In effect, the maximum excludable corporeality for child support payments is $291.fifty for 2004, and then an exclusion of $300 would not adversely affect whatever SSI children. All children with countable child support payments (any balance after applying the general income exclusion) would do good from this option. The total monthly child back up payment would exist excluded for about 85 percent of children with reported child back up. A child receiving $883 in kid support would still qualify for a monthly SSI benefit of $1 nether this option—comparable with the total income possible under the current rule. Program costs for current beneficiaries would increase past nigh $117 meg annually. Like the showtime option, this option would likewise provide a considerable incentive for the custodial parent to work with CSE agencies.
Exclude up to $200. Excluding $200 would adversely affect less than one pct of the SSI children receiving child back up—those receiving more $600 monthly in child support. Children receiving more than $783 in kid support would no longer exist eligible for SSI. Those children correspond less than 0.2 percent of all children with reported kid support. The $200 exclusion would cost the program approximately $89 million annually for electric current beneficiaries and would target the neediest of the SSI children who receive kid back up. A child receiving $200 monthly in child back up and no other income would receive $113.33 more in SSI benefits under this option. Since 99 percentage of electric current SSI children receiving child support would do good from this option, 1 would expect that more custodial parents not receiving kid back up payments would avail themselves of CSE services to increase the full income for the household.
Exclude up to $100. If the exclusion were $100, child support payments for about 28 percent of SSI children would be totally excluded. A child currently receiving $100 in kid support (and no other income) would receive a $46.67 increase in his or her monthly SSI benefit. Children whose child support payments were between $100 and $300 would too receive a higher monthly SSI benefit, with more of their child support existence excluded as countable income. This exclusion, therefore, would either benefit or not disadvantage the 85 percent of all SSI children who receive kid back up payments of $300 or less. (Children receiving $300 in monthly child back up payments and children with payments totally excluded nether the general income exclusion would accept no alter in their monthly do good.) Although not as generous every bit the other options, this option would still provide more of an incentive for many parents to seek CSE services than currently exists. The estimated annual program cost of this option for current beneficiaries is about $28 million.
Excluding $100 would be equivalent to the current one-third exclusion for children receiving child support payments of $300. Therefore it would adversely affect children now receiving more than $300 per month (about 15 per centum of all SSI children with reported child support). For instance, children receiving $400 in child support (and no other income) would run across their total monthly income decrease by $33.33. (The majority of children with kid support payments above $300 report payments in the $301 to $400 range.) The effect would be more than significant for the half dozen percent of SSI children who receive payments that are more than than $400, and some would lose their entire SSI do good and possibly their Medicaid coverage. For example, children receiving $684 or more than in child support payments would no longer be eligible for SSI. Virtually 0.v per centum of all SSI children with reported child support receive $684 or more.
Policy Implications
How would these options affect horizontal equity in the SSI plan, the payment of child support, and incentives to report its receipt?
Improving Horizontal Equity in SSI
Excluding all kid support payments would increase differences in income between children who receive child support and other SSI recipients. Although most children who receive kid support do not receive big payments, some children would be able to receive big amounts of child back up while remaining eligible for SSI. An exclusion based on a flat amount (Selection 3) would mitigate the differences in income levels more would an exclusion based on a higher percentage (Option 2) or a full exclusion of kid support payments (Selection 1).
Encouraging Noncustodial Parents to Pay Support
Research shows that fathers are more than willing to found paternity and pay back up when their payments directly benefit their children. Similarly, custodial parents may exist more likely to pursue child back up payments when the financial incentives for their children are greater. Any of the options discussed could increase the monthly SSI do good for children receiving kid back up, thus providing an immediate benefit to children already receiving back up and mayhap resulting in more children receiving support.
Addressing Nonreporting Bug
Totally excluding child support (Option ane) would provide the maximum incentive for absent parents to pay kid support and would eliminate the need for custodial parents to report child support to SSA. In addition, the overpayment workload existing as a effect of the current policy would exist eliminated, which would aid offset the additional costs associated with the choice. Finally, this option goes farthest toward Social Security'southward continuing goal of simplifying the SSI program. Choice ane also is the nigh costly. The other options also take the potential to increase the amount of kid support that SSA excludes from countable income, providing greater incentive for custodial parents to study this income to SSA accurately and on a timely basis.
Notes
one. For an in-depth analysis of child support issues in the SSI program and other options for increasing the receipt of child support payments for SSI children, encounter Wilschke 2001/2002. Options included in that article range from requiring cooperation with Kid Support Enforcement (CSE) agencies and providing better information to custodial parents almost the availability of CSE services and SSI reporting requirements.
2. Alabama retained the pass-through, only the amount is counted equally income.
three. About 63 percent of children receiving SSI alive with 1 parent, ordinarily their mother.
4. Program toll estimates are based on benefits paid in 2002.
5. SSA includes, or deems, the income and resource of parents of minor children and ineligible spouses of married individuals when determining an individual'due south eligibility for SSI and the amount of his or her payment.
References
General Accounting Office. 1999. Supplemental Security Income: Increased Receipt of Child Support Could Reduce Payments. Letter study, GAO/HEHS-99-11 (January 12).
Meyer, D., and Grand. Cancian. 2002. "W-2 Kid Support Demonstration Evaluation Study on Nonexperimental Analyses."
Roberts, P., and M. Jordan. 2004. "State Policy Regarding Laissez passer-Through and Disregard Of Current Month'southward Kid Support Collected for Families Receiving TANF-funded Cash Assistance." Centre for Law and Social Policy, Washington, D.C. Accessed on February 25, 2004.
Social Security Assistants. 1996–2003. Children Receiving SSI. Baltimore, Doctor.: SSA. Office of Policy.
———. 1999. "Draft Child Support Enforcement Report." Baltimore, Dr.., Office of Quality Assurance and Performance Assessment.
Senate Commission on Finance. 2003. The Personal Responsibility and Private Development for Anybody Act. Report to accompany H.R. 4, Report108-162 (October three).
Sorensen, E., and A. Halpern. 1999. Child Back up Enforcement: How Well Is It Doing? Discussion Papers: Assessing the New Federalism, No.99-11. Washington, D.C.: Urban Establish.
Sorensen, E., and R. Lerman, 1998. "Welfare Reform and Depression-Income Noncustodial Fathers." Challenge 41(4): 101–116.
Turetsky, V. 2000. Realistic Child Back up Policies for Depression Income Fathers. Kellogg Devolution Initiative Newspaper: Realistic Kid Support Policies for Depression-Income Fathers. Washington, D.C.: Heart for Law and Social Policy. Accessed on December 12, 2003.
Waller, G., and R. Plotnick. 2001. "Effective Child Support Policy for Low Income Families: Show from Street Level Research." Journal of Policy Analysis and Management xx(1): 89–110.
Wilschke, Due south. 2001/2002. "Improving Child Back up Enforcement for Children Receiving SSI." Social Security Bulletin 64(1): xvi–26.
Source: https://www.ssa.gov/policy/docs/policybriefs/pb2004-02.html
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