Environment-Level Strategies to Support Independent Control of Finances: A Response to the SSA Review of Financial Capability Determination Review

A key theme running through the report is the environmental context in which people live their lives and manage their finances, particularly conditions related to living in poverty. The report refers to “resource scarcity” research showing that people living in poverty struggle more than others to make good financial decisions (9). It also refers to studies demonstrating that people with low incomes are less financially knowledgeable and have less access to financial services, such as bank accounts and affordable loans, than those with higher incomes; instead, they rely on costly alternative financial services such as check cashers and payday lenders (10,11). The report acknowledges, then, that problems with financial capability are shaped in part by people’s socioeconomic situations, not simply their mental health problems.

Although the committee’s attention to the broader environment is welcome, its report misses an opportunity to make recommendations related to changing that environment to facilitate better individual financial management, which could in some cases obviate the need for a representative payee. The omission of environmental factors from its recommendations could reflect the committee’s view that these factors are outside the SSA’s scope. However, given the SSA’s existing administrative and financial burden of having to manage an ever-growing payee program, and the implied increase in that burden if the report’s recommendations are implemented, it would seem essential to explore interventions that could reduce the need for representative payees. This is particularly true for environmental factors under the purview of other governmental agencies and that, in any case, are essential to support the development of reasoned and informed public policy.

Specifically, there is scope for addressing the problem, mentioned in the report, that people with low incomes lack access to affordable financial services. Considerable progress has been made in developing innovative services and products that help people with low incomes optimize their financial management, such as no-fee or second-chance bank accounts, prepaid cards, simple savings accounts, affordable loans, and credit-building products (some are briefly mentioned in the report, but not in its recommendations). Initial efforts are being made to apply some lessons learned to people with mental illness. For example, a current study funded by the National Institute of Mental Health is exploring ways of helping people with mental illness who do not have a representative payee address their financial difficulties, including partnering with a local bank to offer simple limited-access savings accounts with no possibility of overdraft (12). Given the potential of such services and products, the SSA has a direct interest in considering such efforts.

Adjusting the environment in which people live is particularly pertinent for those in the category addressed in the report’s fourth recommendation—people whose capabilities may fluctuate over time or who struggle only in some areas of financial management. The report recommends development of a middle ground or transitional form of support, enabling people to control their funds but with flexible support and oversight to ensure that basic needs are met. It considers two existing models. One is the Department of Veterans Affairs (VA) supervised direct payment mechanism, under which benefit recipients manage their funds with help from VA service center managers. Another, tested at the pilot level but not replicated widely, is the ATM model (Advisor-Teller Money Manager), in which people with co-occurring mental and substance use disorders voluntarily relinquish control of their funds to a therapist, with whom they work toward the goal of improving spending decisions and limiting substance use. Both models may become valuable components of a future, more flexible payee program. Either model would, however, be complemented by interventions at the level of the environment, which would make it easier for beneficiaries to manage their funds well and which might substantially reduce the level of direct support needed by many people and increase the number able to move to full independent management of their funds.

For people whose capabilities fluctuate as their health condition changes, adaptations to services and products might be made. Examples recently proposed in the United Kingdom include restrictions on access to bank accounts or credit cards that can be set in motion under circumstances predetermined by the account holder and that alert third parties to certain behaviors, such as larger-than-normal withdrawals or expenditures or applications for certain types of loans (13). In the context of retail spending, self-imposed limits to overspending, such as barring oneself from certain types of retail services (paper catalogs or TV shopping channels, for example), cancelling subscriptions with regular automatic payments, and placing limits on online retail, could be helpful for beneficiaries struggling with their finances.

Almost entirely unexamined in the report are ways in which the SSA benefits system itself partly constitutes the environment that negatively affects people’s financial management capability. Benefit levels leave many people living in extreme financial scarcity, rendering assessment of the relative contributions of poverty or symptoms of mental illness to poor financial performance extremely difficult. This group has long been stigmatized as noncompetent. Their poverty further obstructs recognition of their capacities and the development of ways to support them in strengthening and employing those capacities. Although increasing benefit levels may be beyond the immediate scope of the SSA, it should acknowledge the impact of those levels on the lives of beneficiaries.

Asset limits with which beneficiaries must comply to continue receiving benefits also perpetuate poverty. SSI recipients face the greatest limitations; they are unable to hold assets of more than $2,000 without losing benefits. These limits directly contradict all accepted wisdom about good financial management—having a rainy-day fund, saving for larger items rather than buying on credit, and so on. Various SSA programs designed to allow beneficiaries to build assets are helpful for some, but for many others such programs are too complex and the eligibility requirements too rigid. Recent passage of the Achieving a Better Life Experience (ABLE) Act, which enables people to hold a much higher level of assets in special accounts without affecting their benefits, will go some way toward relieving this situation, but program eligibility is limited to those diagnosed before age 26, leaving many unable to participate.