Daniel Fortuño, Options: A Benefits Training Foundation
Megan O'Neil, World Institute on Disability

For far too many people, disability and poverty seem to go hand in hand. Many people with disabilities feel trapped in a life of poverty with no way out. Individual Development Accounts (IDAs)¹ and other asset building programs are emerging approaches that provide hope for those wanting to make an investment in their future. These programs promote and reward savings and encourage low-income workers to set long term financial goals. Yet, workers with disabilities must precariously balance their earnings and benefits, always living in constant fear that one wrong move will reduce their benefits or disqualify them altogether. Because these benefit programs are as essential to their survival as their paycheck, many people with disabilities are reluctant to take any chances that might jeopardize those benefits. We hope this article will help clarify some concerns that arise for people with disabilities seeking to find a way out of a life of poverty.

Medicaid

The cornerstone of IDAs is the "earned income" requirement.² However, earned income has repercussions on a variety of benefit programs. One of the most exciting advantages of an IDA applies to Medicaid. (This also applies to SSI- see EQUITY feature article for more details) Federal law requires Medicaid to not count as income deposits made to federally funded Temporary Assistance for Needy Families (TANF) and the Assets For Independence Act (AFIA) IDAs³. For example, if an individual, with an $850 monthly-earned income, contributed $50 a month to an IDA, the individual's monthly income would be considered $800 for eligibility purposes. If IDA contributions are excluded from income, an individual whose income is near the state's maximum level for maintaining Medicaid eligibility could extend their eligibility by contributing to an IDA and having that money subtracted when the state determines income for Medicaid eligibility. States have the flexibility under section 1902(r)(2) and section 1931 (for families) of the Social Security Act to determine what counts as income, including contributions to a non-federally funded IDA.

Supplement Security Income

For those receiving SSI and wanting to start an IDA but are unable to find a federally funded TANF or AFIA IDA program, there is still an option for them. If the non-TANF, non-AFIA IDA is approved as a plan for achieving self-support (PASS), then the Social Security Administration (SSA) excludes these assets for eligibility purposes . The SSA must approve the PASS. It is also important to note that a PASS cannot be used to save for buying a house; it is only to meet occupational goals.

SSDI

Social Security Disability Insurance (SSDI) has no asset restrictions. This means, if Bill Gates had a disability, he could receive SSDI. Concerning IDAs, Bill Gates or anyone above the 200% of the poverty level would not be eligible to participate. However, the point is that SSDI recipients, who meet the specific qualification for that particular IDA program, do not have to be concerned with the treatment of assets and SSDI. They can apply to any IDA regardless of federal funding. However, this rule only applies to SSDI, not to other benefit programs that a person with disabilities may receive.

State's Role

Despite all the confusing rules, one thing is clear: States have considerable flexibility in how they count assets and income for benefit eligibility. States have significant opportunities to encourage IDA participation by changing their restrictive asset and income rules. Most states have been given the authority to allow non-TANF and non-AFIA IDA the same discretion as those that are federally funded. See our Resources section for more information on State specific policy.

Conclusion

We know that there are many unanswered questions about IDAs and how they affect benefit eligibility. Our desire is to show that real options do exist for people with disabilities that are trying to escape poverty. We hope that this has inspired you to find out more about all kinds of asset building opportunities. Options (http://www.optionsfoundation.org/index.html) is a benefits training foundation that offers comprehensive education and training programs for community-based organizations. Options' programs enable organizations to meet the requirements of their clients, accessing the best from both public and private benefits. The World Institute on Disability's Access to Assets (ATA) program offers training and technical assistance to asset building programs on how to best serve participants with disabilities. ATA also assists disability organizations in accessing a range of asset building programs for their clientele. A new toll-free technical assistance number is now available to assist members of both communities- call 1-866-723-1201.

1 TANF: 42 U.S.C. 604(h)(4) AFIA IDAs: P.L. 105-285 Sec. 415 as amended by P.L. 106-554 Sec. 610.

2 What are Individual Development Accounts (IDAs)? IDAs are matched savings accounts designed to help low-income individuals save for furthering their education, homeownership, or starting their own business. Some programs allow for other uses such as buying an automobile or computers. Individuals save regularly, typically over a 2-3 year period and have their savings matched by public or private funders (usually at a rate ranging from $1 to $4 for each dollar saved). Accountholders typically receive financially education and counseling.

3 Who Qualifies for an Individual Development Account? Each IDA program may have slightly different requirements to participate. Generally speaking, you must be within the income guideline of "200% of poverty". In addition to income guidelines, you must have "earned income". Earned income, defined by the Social Security Administration, is salaries, wages, tips, professional fees and other amounts received as pay for physical or mental wok actually performed. Even if you do not meet these guidelines, you should still pursue participating in an IDA program, because the IDA program nearest you may have more liberal guidelines (some programs tie eligibility to Earned Income Tax Credit (EITC), or TANF).