Impact of the SSI in Puerto Rico

Impact of the Supplemental Security Income in Puerto Rico

Published on June 25, 2020 / Leer en español 

Rosanna close-up
Director - Washington, D.C. Office

The Supplemental Security Income (SSI) was created by Congress in 1972 to replace the Aid to the Aged, Blind, or Disabled (AABD) program. SSI is a federal program that provides cash assistance to the aged, blind, and disabled individuals with limited resources to meet basic living expenses. It is available to residents of the U.S. states, the District of Columbia, and the Commonwealth of the Northern Mariana Islands. However, the old AABD program continues to operate in Puerto Rico, Guam, and the U.S. Virgin Islands (USVI), while SSI does not.

In Puerto Rico, ADSEF, a sub agency of the local Department of the Family administers the AABD program, which provides far less benefits to its beneficiaries than the SSI program. Based on data from fiscal year 2011, the Government Accountability Office indicated that if Puerto Rico participated in the SSI program, beneficiaries would be eligible to receive between $1.5 billion and $1.8 billion each year. This, in contrast with actual federal expenditures on Puerto Rico’s AABD program in FY2017 of $23.7 million for benefit payments and $1.3 million for administrative expenses.

Program eligibility for SSI is conditioned on three factors: disability, income threshold and place of residency. To be categorically eligible for AABD or SSI benefits, applicants must be over 65 years old, blind, or disabled, as defined in the Social Security Act. To be financially eligible for SSI, applicants’ income and resources cannot exceed certain thresholds. Finally, residents of Puerto Rico, Guam and the USVI, who would otherwise qualify for SSI benefits, were not included in the program by Congress in 1972. The SSA has determined this means that US Citizens who reside in those territories for more than 30 consecutive days, who would otherwise be eligible, are ineligible for SSI benefits.

Legal Dispute regarding Puerto Rico’s SSI program

On February 4, 2019, Judge Gustavo Gelpí issued a ruling on United States v. Vaello-Madero, a legal dispute regarding the application of SSI to residents of Puerto Rico. For 28 years, Mr. Jose Luis Vaello Madero was a New York resident and received monthly SSI disability benefits. He moved to Puerto Rico in 2013 and for 3 years continued receiving SSI payments to his bank account in New York. In 2017, the Social Security Administration initiated a collection process for benefits paid to Vaello Madero after his relocation to the US territory, where residents don’t qualify for the SSI.

Vaello Madero argued that the exclusion of Puerto Rico from the SSI benefits program violated the Constitution’s Fifth Amendment’s equal protection guarantees. The U.S. asserted that the denial of SSI disability payments to Puerto Rico does not violate the Fifth amendment. In his ruling, the U.S. District Court Judge granted Vaello Madero’s motion for summary judgment, essentially agreeing with the plaintiff.  Judge Gelpí stated his view that the SSI statute discriminated on the basis of a suspect classification because the overwhelming percentage of the United States citizens who reside in Puerto Rico are of Hispanic origin. He then concluded that: “Allowing a United States citizen in Puerto Rico that is poor and disabled to be denied SSI disability payments creates an impermissible second rate citizenship akin to that premised on race and amounts to Congress switching off the Constitution.”

On April 10, 2020, Judge Juan Torruella, Judge O. Rogeriee Thompson and Chief Judge Jeffrey Howard from the U.S. Court of Appeals in Boston issued a ruling affirming the decision of the lower Court but on different grounds, which are further explained below. The three judge panel declined to overrule existing precedent that allows Congress to the discriminate against U.S. citizens who reside in Puerto Rico, pursuant to its plenary powers under the U.S. Constitution, as long as there was a “rational basis” for Congress’s actions (as Judge Gelpí had done).

Instead the First Circuit applied the lowest level of constitutional scrutiny, the so called- rational basis test, which provides that a legislative classification is permissible if such classification is “rationally related” to a “legitimate state interest”. The Court defined the classification subject to challenge as “individuals who meet all the eligibility criteria for SSI except for their residency in Puerto Rico.” Since that classification is “clearly irrelevant to the stated purpose of the program, which is to provide cash assistance to the nation’s financially needy elderly, disabled or blind”, the Court then had to inquire whether this classification rationally furthers some legitimate governmental interest other than those stated in the legislative history of the SSI program.

Specifically, the panel analyzed Vaello-Madero’s Equal Protection claim applying the three factors the U.S. Supreme Court had previously found sufficient to form a “rational basis” in the case of Califano v. Torres, another case involving the application of federal benefits to residents of Puerto Rico. Those three factors are: (1) Puerto Ricans do not contribute to the federal treasury; (2) the cost of treating Puerto Rico as a State under the statute would be high; and (3) greater benefits could disrupt the Puerto Rican economy. The Court found that those factors were irrational and arbitrary and therefore failed to meet the required constitutional threshold to uphold the differential application of the SSI program to Puerto Rico.  It’s also worth noting that, in 2018, Puerto Rico contributed over $3.3 billion to the federal Treasury.

Therefore, in its conclusion, the appellate court affirmed:

“The categorical exclusion of otherwise eligible Puerto Rico residents from SSI is not rationally related to a legitimate government interest. In addition to the record established by the parties, we have considered even conceivable theoretical reasons for the differential treatment conceded by the government. Having found no set of facts, nor Appellant having alleged any additional theory, establishing a rational basis for the exclusion of Puerto Rico residents from SSI coverage, such exclusion of the residents of Puerto Rico is declared invalid. For the foregoing reasons, we affirm the district court’s grant of Appellee’s motion for summary judgment and the denial of the United States’ cross motion for summary judgment.”

The First Circuit in essence held that the “Fifth Amendment does not permit the arbitrary treatment of individuals (US citizens or legal residents) who would otherwise qualify for SSI but for their residency in Puerto Rico.” It is important to note in this context that the Court cited approvingly footnote 4 of the Carolene Products case, which states in relevant part that “prejudice against discrete and insular minorities may be a special condition, which tends seriously to curtail the operation of those political processes ordinarily to be relied upon to protect minorities, and which may call for a correspondingly more searching judicial inquiry.” The Court is hinting here at the political subordination of Puerto Rico, which essentially makes all its residents discrete and insular minorities, who lack access to the regular political process and therefore may require greater protection from the courts to safeguard and exercise their rights.

The decision fast-forwards the discussion as to the applicability of such policy changes – who is eligible, what is the economic impact, and what administrative changes will take place before eligible beneficiaries can begin to see benefits coming in.

Who is eligible and what is the economic impact?

Based on program eligibility standards, and using data from the 2018 ACS, we compiled the following estimate of potential qualifying individuals to the program: 435,886 at an estimated total of $2.58 billion.

Click on the data tables below to expand the images.

Future Outlook

The appellate court decision starts the clock on the possibility for an appeal from the federal government through a petition for a writ of certiorari from the U.S. Supreme Court.  However, the U.S. Department of Justice has not publicly indicated whether it intends to do so.  In sum, this decision is not yet finalized and leaves many open questions. If the final ruling stands that US citizens or green card recipients residing in Puerto Rico are eligible to receive SSI, administrative changes will need to take place before any money is transferred to Island residents. The appellate court’s decision only determined the constitutionality of the application of the SSI program to Puerto Rico; it did not address the issue of remedies nor mandated the application of SSI to Puerto Rico, which may require further litigation or, in the alternative, Congressional action.

In the video below, Rosanna Torres explains the SSI program and why it should be extended to cover eligible populations in Puerto Rico. The video is in Spanish.