I have heard that the only way for someone receiving Supplemental Security Income (SSI) can participate in a non-federally funded Individual Development Account (IDA) is to include it in a Plan for Achieving Self-Support (PASS), how do I go about doing this?

Many programs that offer Individual Development Accounts are opting to forego federal funding due to the restrictive nature of Assets For Independence Act (AFIA) IDAs. This can be both good and bad for people with disabilities. The current rules state that a person can participate in a federally funded IDA (either receiving AFIA or TANF funds) without it counting as an asset for any benefit program (this applies to all means-tested benefit programs- Supplemental Security Income, Medicaid, Food Stamps, or Temporary Assistance for Needy Families). A downloadable Word document can be given to case managers that outline the exemption.

However, for those IDA programs that do not have federal funds, a person that receives Supplemental Security Income can still participate if they include their IDA in a Plan for Achieving Self-Support (PASS). For more information on the basics of a PASS plan, see the EQUITY Responds section from November 2004.

Including an IDA in a PASS plan has been a challenging process for several reasons. The first is that Social Security PASS Cadres and others in charge of approving PASS plans have limited knowledge of IDAs. PASS plans must be approved by Social Security, so it is important for them to understand that an IDA can be incredibly helpful in supporting the employment process. Connecting with a benefits planner that has experience writing PASS plans is an important step.

The second challenge is that a PASS plan requires that everything (disbursements and contributions) be carefully tracked. Individuals must keep accurate records, in addition to following the requirements of the IDA program. While not always required, it can be beneficial for separate accounts to be set up for the IDA, the PASS, and for an individual’s personal finances.

Third, a person must be eligible for Supplemental Security Income (SSI) to start a PASS. Someone receiving Social Security Disability Insurance (SSDI) can achieve this, but the difficulty is that a person has to live on SSI levels, which are nearly always less than SSDI. An individual can place SSDI money into a PASS in order to qualify for SSI, but they have less total income to live on. For some people, this is very difficult; yet, for others it just takes some financial planning and adjustment. They are not losing the money, but money put into a PASS plan has to be used for their employment-related goal. When combined with saving for an IDA, it can prove to be very difficult to save and adjust to living on less income. For a person that is already qualified for SSI and is not a “dual-eligible” (receiving both SSI and SSDI), a PASS combined with an IDA is an excellent way to be able to have more earnings from work without loosing any benefits (including Medicaid).

Example:

Sherry currently receives $920 per month in SSDI and works a part-time job that pays $365 a month. She would like to start an IDA that does not receive federal funds in order to buy a van with a lift. The van would make it much easier for her to get to work than relying on the bus. She has also had a very hard time paying for attendants because she does not receive Medicaid and has been dependent on her sister for her care.

One option Sherry could choose is to write a PASS plan that includes an IDA. With the help of a knowledgeable benefits planner, Sherry writes a PASS plan to pay for the van. Because Sherry’s living expenses are fairly low (she has a Section 8 housing voucher that greatly reduces her rent), she agrees to set aside $900 of her SSDI in the PASS. The IDA allows Sherry to place $300 a month into her account, even though they only match 2:1 for the first $100. This means that Sherry has only $65 in countable income, qualifying her for SSI. Instead of living on $1285 a month, Sherry now has $688 ($603 in SSI +$20 in SSDI, non-earned income + $65 from earnings), however, with careful planning, it is enough to pay her bills. Sherry is saving $900 in SSDI in the PASS every month. Additionally, she has $300 in earned income in the IDA, which receives $200 a month in match from the program. Sherry is saving $1400 a month towards her van. In two years, Sherry will have saved $33,600 to buy a slightly used van with a lift.

However, the only way this works for Sherry is that because she now qualifies for SSI, she is also eligible for Medicaid, which pays for her attendant services and other health care expenses. The added bonus is that once Sherry has saved enough for her van in two years, she will be able to go back to earning $1285 a month and still qualify for Medicaid because of the 1619(b) work incentive.

While it is a sacrifice (she must live on half the amount she was accustomed to, in order to save for a van and to pay for expensive, essential attendant care) ultimately Sherry will have a van and attendant care that will increase her independence.

Recommendations for Improvement:

1. Social Security officials responsible for approving PASS plans need to be informed about IDAs and the benefits they offer towards individuals achieving their employment goals.

2. Knowledgeable fiscal intermediaries must be provided to help individuals in need of assistance in tracking and record keeping required by PASS plans.

3. Benefits planners and program navigators need training on the complexities involved in combining the variety of options available to increase financial independence.

4. Asset building programs need to understand that while it is difficult for a person on disability benefits (either SSI or SSDI) to be employed and participate in IDA programs- there are ways to make it work.

5. IDA programs should allow lump sums (such as Earned Income Tax Credits and Social Security back-payments) as allowable IDA contributions, rather than requiring that an individual have a set savings amount each month.

6. IDAs should allow the flexibility for an individual that has started to save in a PASS to transfer that savings into an IDA. This would mean that an individual would not have to save in a PASS and an IDA simultaneously, but could save their earned income in a PASS and then place those savings into an IDA. For an individual receiving only SSI, this would allow for them to save earnings to start a PASS and then transfer it into an IDA to receive the match without requiring savings in each at the same time.