Eileen P. Sweeney1

The rules of many benefit programs tend to discourage people with disabilities from building assets. Some programs apply restrictive low dollar amounts for allowable resources. The situation is further complicated because different programs have different rules. While much can and should be done to improve the resource rules in key programs; it is important to understand that programs, such as SSI and Medicaid, already offer some relief from rigid resource rules. This article focuses on recent developments in SSI that affect assets and provides an update on rules in other federal programs.

Social Security Protection Act of 2003

Congress very recently helped to eliminate some of the confusion that stems from the differing time periods during which certain payments can be held without being counted as an asset in SSI. The President signed this bill on March 3, 2004. Specifically, a few of the shorter time frames have been increased to nine months to coordinate with other provisions already set at nine months.2 Effective immediately, SSA will not count the following funds as a resource for nine months following the month in which the payment is received: a check for retroactive payment of Social Security or SSI benefits, an earned income tax credit refund, or a child tax credit refund.3

Saving for a home while receiving SSI

Probably the most exciting SSI development is that SSI recipients who can enroll in certain Individual Development Account (IDA) programs can now save to purchase a home.6 To save for a home without jeopardizing SSI eligibility, the IDA program must be funded under the U.S. Department of Health and Human Services Assets for Independence Act demonstration program (AFIA) or under the state's Temporary Assistance for Needy Families program (TANF).7 TANF- and AFIA-funded IDAs allow participants to save for buying a home. They are prohibited from being considered when determining eligibility or benefit levels for any federal means-tested program.8

In the past, SSI recipients typically only owned a home under limited circumstances. Such as if they inherited the home, received a substantial lump sum payment used as a downpayment on a home, shared the title to the home with other family members, or owned it before receiving SSI (the home is an excluded resource in SSI). For over two decades, SSI recipients who were working and using the section 1619 work incentive provisions (see EQUITY Tip of the Month) have been frustrated by their inability to save for a home because of the SSI resource rules. The only way to save beyond the general $2,000 resource level while receiving SSI or using the section 1619 work incentives has been through a Plan for Achieving Self Support (PASS). SSA approves some IDAs as a PASS, but under SSA's rules a PASS can not be used to purchase a home.9

It is now possible for a person to have an IDA to save for a home and retain SSI eligibility. If an IDA has funding from TANF or AFIA, then it is no longer necessary for SSA to treat an IDA as a PASS account in order for it to be disregarded as a resource. Because only TANF- and AFIA-funded IDA accounts provide this unique opportunity, it is essential to identify local IDA programs that have access to at least one of these two IDA funding sources. IDA program administrators should request that knowledgeable SSA staff review the IDA before it is finalized to ensure against any problems related to eligibility arising later. People with disabilities and Independent Living Centers are good resources to help local IDA programs understand this very valuable opportunity to work with SSI recipients, so long as they use TANF or AFIA funds. See CFED letter for IDA providers to declare their AFIA and TANF funding for SSA caseworkers. (As a practical matter, because TANF funds must be used to help needy families with children, AFIA funds will be valuable to a greater segment of individuals with disabilities, especially those who are not in a family with children.)

Another important feature of the TANF- and AFIA-funded IDAs is that SSA disregards as income any funds placed in the exempt IDA account when determining eligibility for SSI and the SSI benefit level.10 As a result, just as with PASS accounts, these IDA accounts offer the possibility that some people with disabilities who are not SSI recipients due to excess income may be able to become SSI (and Medicaid) eligible by placing some of their earned income in the IDA. This may provide the person with the opportunity to establish eligibility for the Section 1619(a) and (b) work incentive provisions.

These provisions require that a person have had at least one month of receipt of regular SSI cash benefits before he or she can become eligible for participation. Or, current SSI recipients may be able to increase the amount of their SSI benefit by placing some of their earnings in an IDA account. (Unlike a PASS which allows the use of unearned income such as a Social Security benefit for the contribution, only earned income or income that is related to earnings, such as an EITC refund, can be placed in the TANF- or AFIA-funded IDA.)

Other Program Changes

The same provisions that make TANF- and AFIA-funded IDAs exempt in SSI apply to all other federally-funded means-tested programs, including Medicaid, TANF, and food stamps. Again, this exemption only applies to IDAs funded from these two sources. However, states have the flexibility to exclude other IDAs in their TANF and Medicaid programs and this may enable them to exclude them in food stamps.

In general, households are not eligible for food stamps if they have more than $2,000 in countable assets, or more than $3,000 if at least one household member is a person with a disability or age 60 or older. If all members of a household receive cash assistance through TANF, state maintenance of effort funds (MOE) related to TANF, or SSI, then the food stamp program effectively follows the other program's asset rules.

As a result of a recent change in food stamp law, states may now choose to modify their food stamp rules to align them more closely to their TANF and family Medicaid rules. Thus, if the state already excludes other IDAs (those not funded through TANF or AFIA) in its TANF or family Medicaid programs, the state may disregard such IDAs in the food stamp program as well.11 As of August 2003, USDA was aware of four state food stamp programs - Maryland, New York, Ohio, and Virginia - that now exclude these IDAs.12

There also are significant developments in how states treat vehicles in their food stamp programs. States now have the ability to align their vehicle rules for a first car with the rules they use in their TANF and family Medicaid programs. Thirty-five state food stamp programs now fully exclude the value of at least one vehicle per household.13 In addition, SSA recently proposed to modify its rules to totally exclude the value of one automobile if it is used for transportation for an SSI recipient or a member of the individual's household. This also should help to eliminate some of the confusion across programs on the treatment of a vehicle. (In its preface, SSA indicated that its studies show that about 98 percent of first vehicles already are being disregarded in SSI - if made final, the proposed change will eliminate some of the intrusive questions that SSA now has to ask about car ownership and value.)14

Conclusion

The rules governing benefit programs and retaining and building assets can be incredibly complex. However, as the information in this article reflects, there are some important opportunities to build assets now, so long as one is very careful to understand the rules and comply with them. A recent publication addresses the rules of Individual Development Accounts and should be a useful resource for people with disabilities and advocates on the broader range of resource rules as well. The 2002 Federal IDA Briefing Book: How IDAs Affect Eligibility for Federal Programs, by the Corporation for Enterprise Development (CFED) and the Center on Budget and Policy Priorities (CBPP) is available at http://www.cbpp.org/10-29-02wel.pdf.

Meanwhile, there is far more to be done to improve the asset rules in public benefit programs that serve people with disabilities. Read the specific policy recommendations for SSI.

1 The author is a Senior Fellow at the Center on Budget and Policy Priorities, and can be reached at sweeney@cbpp.org. Zoe Neuberger, a Policy Analyst at the Center on Budget and Policy Priorities, assisted with the discussion of Individual Development Accounts and can be reached at neuberger@cbpp.org.

2 See, for example, 20 CFR §416.1239, disregarding relocation assistance provided by a state or local government.

3 Section 431, Public Law 108-203, formerly HR 743, the "Social Security Protection Act of 2003," signed by the President on March 3, 2004, amending 42 U.S.C. §§1382b(a)(7) and 1382b(a)(11). This provision took effect on enactment and applies to tax refunds and payments received on or after March 3, 2004.

4 Section 435, Public Law 108-203, amending 42 U.S.C. §1382a(b)(7) [income exclusion] and §1382b(a)(15) [resource exclusion].

5 Section 435(c), "The amendments made by this section shall apply to benefits payable for months that begin more than 90 days after the date of enactment of this Act."

6 An IDA is a matched savings account designed to help low-income individuals save for higher education, buying a home, starting a business, or another designated purpose.

7 Participants will need to inquire about the IDA funding source because some IDAs are supported by other funds.

8 See 42 U.S.C. §604(h)(4) and 42 U.S.C. §604 note.

9 And, PASS accounts are only available to people under age 65. There is no such age restriction in the TANF- and AFIA-funded IDAs. As a result, these IDAs provide an opportunity for SSI recipients who are over age 65 to save for a specific purpose as well, if they have earnings to place in the accounts.

10 See the SSA Program Operations Manual System (POMS) SI 00830.665.C.1 (TANF IDAs) and SI 00830.670.C.1 (AFIA IDAs). The POMS is available on the web at http://policy.ssa.gov/poms.nsf/.

11 USDA has not yet promulgated regulations pursuant to this change in law, but preliminary guidance makes clear that states have the discretion to apply this new provision to IDAs. For more information about how states can make these choices, see Stacy Dean and Dorothy Rosenbaum, Implementing New Changes to the Food Stamp Program: A Provision by Provision Analysis of the Farm Bill, Center on Budget and Policy Priorities, January 2003, page 34, http://www.cbpp.org/8-27-02fa.pdf.

12 For list of states, see USDA website, http://fns.usda.gov/fsp/rules/Legislation/2002_farm_bill/conformance_options.htm.

13 See States' Vehicle Asset Policies in the Food Stamp Program, Center on Budget and Policy Priorities, January 2004, http://www.cbpp.org/7-30-01fa.htm.

14 The notice of proposed rulemaking appears at 69 Federal Register 554-558 (January 6, 2004).