Enhancing Social Security for Low-Income Workers : Coordinating an Enhanced Special Minimum Benefit with Social Safety Net Provisions for Seniors

The existing Social Security special minimum benefit, which offers an alternative benefit formula for long-term workers with low levels of wages across many years, has the potential to reduce poverty among the elderly, while rewarding significant numbers of working years. The paper proposes tying the benefit formula for the special minimum benefit to a modernized poverty measure based on the National Academy of Sciences (NAS) recommendations, or about 125 percent of the current poverty threshold. An increase in the special minimum benefit will affect access to means-tested social supports for seniors. Thus, the paper outlines the potential interaction effects that would occur with an increase the special minimum benefit for low-income seniors who currently benefit from Supplemental Security Income (SSI), Medicaid, and the Supplemental Nutrition Assistance Program (SNAP) and provides several policy options for addressing program interactions. Proposals include policies to ensure maintenance of Medicaid eligibility for special minimum beneficiaries as well as increases in the general income exclusion and asset limits in SSI, which are not indexed to inflation. The authors suggest that through an enhancement of the Social Security special minimum benefit and a modernization and coordination of program rules for other programs affecting low-income seniors, policymakers can do much to enhance the social safety net for seniors with low lifetime earnings. This Working Paper was completed with support from the National Academy of Social Insurance and the Rockefeller Foundation through their Strengthening Social Security for Vulnerable Groups project