Questions and Answers

Q1. What is an Individual Development Account (IDA)?

A1. An Individual Development Account, also known as an “IDA”, is a savings account. What makes it special is you receive an additional deposit each time you add to your savings. It is called a match and is usually 1 to 4 times the size of each deposit you make. For example, if you receive a 2:1 match, each time you deposit $25, you will get an additional $50 toward your savings goal.

IDAs are a tool typically offered by non-profit organizations, such as community development corporations, housing organizations, microenterprise organizations, and credit unions.

Q2. What can I use an IDA account for?

A2. Each IDA program may differ slightly and may have their own guidelines for how the savings can be used. However, in most cases, IDAs are used specifically for three purposes: 1) starting a business, 2) buying a home, 3) or, for going back to school.

Q3. What is financial literacy training?

A3. Each participant in an IDA program must take free financial literacy training. Each IDA program has its own way of providing this type of training. You will learn how to reduce your debt, develop a savings plan and prepare for your savings goal. You may also learn about your credit history, banking, investing and money management. The training can take many forms. You may receive one-on-one counseling, classroom training or peer support.

Q4. Can I participate in an IDA?

A4. Each IDA program may have slightly different requirements to participate. Usually, you must be within the income guideline of “200% of poverty”.

This means, for example, that an individual could not earn more than $ 19,600 and the head of a family of four could not earn more than $40,000¹.

In addition to income guidelines, you must also have a job. IDA programs often refer to it as an “earned income” requirement.

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 different guidelines.

Q5. How does an IDA program work?

A5. As mentioned before, each IDA program is unique. However there are some common approaches that are used. You first attend an orientation meeting. Your eligibility to participate would probably be determined at this first meeting. You will fill out a number of forms that ask about your financial history and your personal history. This information is collected so that the organization can keep records on the demographics of their participants. Once accepted into the program you open a savings account at a bank or credit union that is tied to the IDA organization. You will likely sign a contract that lays out how much money you plan to deposit each month. At some point, either before or after opening the savings account, you will take financial literacy training. You will also likely have regular meetings with the other participants in the IDA program who will offer peer support. Once you reach your savings goal, your IDA caseworker will confirm the purchase (or investment) and your savings will be released.

Q6. How much money can I save?

A6. Many IDA programs last about two to three years. How much you save in the end depends on how much you deposit and how much of a match is offered. For example, if you deposit $25 every month for two years you save $600 on your own. If the IDA organization offers a 3:1 match, you will receive an additional $1,800 toward your savings goal. In two years you save $2,400.

Q7. Where is the program nearest to where I live?

A7. The most comprehensive directory of IDA programs can be found on the CFED website, where you will find the IDA Directory: http://www.cfed.org/focus.m?parentid=31&siteid=374&id=599

There, you can search for programs by name, state, type of organization, funding sources, financial institution, or targeted populations.

In 2006, 62 organizations claimed to target people with disabilities, compared to only 3 in 2003.

If you are unable to find a program near you, contact Megan O’Neil, megan@wid.org or 1-866-723-1201 to explore further options.

Q8. Will the program provide special services for my disability?

A8. IDA programs want participants to succeed. IDA program staff want to make you feel welcome and want to give you every chance to meet your savings goal. You may be asked if you have a disability or if you need any special services called “accommodations”. Any questions regarding disability are completely confidential and in no way affect your eligibility to participate or stay in the program. To make sure that you receive the accommodations you need, you should bring up any concerns you have with your IDA caseworker. Some commonly requested accommodations include, large print or audiotaped financial literacy materials, special seating arrangements in the classroom, an accessible bathroom, class notes and meeting reminders. You can learn more about different types of accommodations by going to the Job Accommodation Network (JAN) at http://www.jan.wvu.edu/media/ideas.html

Q9. Will I lose my Supplemental Security Income (SSI) if I participate?

A9. Not all IDA programs allow people who receive SSI to participate. Typically, if you receive SSI you're not allowed to have more than $2,000 in assets as an individual or $3,000 as a married couple. Assets include any readily available cash, like that in a savings account. However, there are some IDA programs that do allow you to have an IDA account, without losing your benefits.

It is very important to get into one of these specifically designated IDA programs. Only federally funded IDA programs under the “Assets for Independence Act (AFIA)” or under “Temporary Assistance for Needy Families (TANF)” allow people who receive SSI to participate in IDA programs without losing benefits. Before entering an IDA program, it is VERY important to ask if it is funded by one of these federal programs. Documentation that you can participate in these particular IDA programs can be found at the Social Security Administration web site in their “POMS” manual (“Exclusions Under Other Federal Statutes”):

http://policy.ssa.gov/poms.nsf/36f3b2ee954f0075852568c100630558/5869d380ed678d8385256a5f000b5cd4?OpenDocument

You should ask your IDA caseworker to write a letter on their program letterhead stating that you can participate in the IDA program without losing your SSI benefits. The letter should specifically mention the “Exclusions Under Other Federal Statutes” clause that is mentioned above. You should take that letter to your SSA caseworker for documentation and keep a copy of it for yourself. A sample letter produced by CFED can be downloaded at:

CFED Letter for IDA Providers
http://www.wid.org/publications/?page=equity&sub=200403&topic=fa

If you have difficulty downloading the letter, contact Megan O’Neil, megan@wid.org or 1-866-723-1201

Once you are in the program, especially if you are starting a business, you will need to monitor your earnings. As you increase your earnings, your benefit will decrease. However, you can still earn some income without losing your benefits or Medicaid. It is a very complicated system to navigate. We strongly recommend that you meet regularly with an SSI benefit counselor both during and following your IDA program and as long as you receive SSI.

Q10. Can I use apply an IDA to a Plan for Achieving Self-Sufficiency (PASS)?

A10. A PASS is a special program for people who receive SSI that allows them to accrue savings to start a business without reducing their SSI benefit. An IDA can be a part of a PASS program. In fact, this is the only way a non-federally funded (AFIA or TANF) IDA is allowed under SSI rules.

You can find more information about PASS plans at:
http://www.wid.org/publications/?page=equity&sub=200411&topic=responds

Q11. Will I lose my Social Security Disability Insurance (SSDI) if I participate?

A11. There are no restrictions for SSDI recipients who want to participate in IDA program. Therefore, if you only receive SSDI, you can participate in any IDA program nationwide. However, especially if your savings goal is to start a business, you will need to pay special attention to your income level so that you do not jeopardize your benefits. Once you earn over a certain amount, you will no longer receive your SSDI benefits. The guidelines for how much you can earn is called the “earnings threshold” and it is fixed nationally (not by state).

Q12. Will the IDA program provide SSI or SSDI benefits counseling?

A12. Most IDA providers will not know about disability related public benefits. You should strike up a good relationship with your local Independent Living Center (ILC). ILCs, located across the nation and in every community, offer a broad spectrum of free disability services that include disability benefit counseling. You should meet regularly with an ILC benefit counselor as you go through your IDA program. You can find the ILC nearest you by either looking in your local Yellow Pages, or by going to the National Directory of Independent Living Center's web site: http://www.virtualcil.net/cils/

Q13. Can I speak with an IDA participant who has a disability?

A13. The World Institute a Disability has written a number of profiles of people with disabilities who have either gone through an IDA program or who are currently enrolled. They have been compiled in our newsletter- EQUITY, which can be found online at: http://www.wid.org/publications/?page=equity

If you would like to be profiled in our newsletter to share your own story please forward your name and contact information to Megan O’Neil megan@wid.org or call 1-877-723-1201.

Q14. Where can I learn more about IDA programs and issues relating to persons with disabilities?

The World Institute on Disability’s Access to Assets project has a monthly online newsletter- EQUITY. To subscribe, send an email to equity@wid.org.

EQUITY provides the connection between the disability and asset building communities. If you are unfamiliar with asset building, EQUITY brings you articles that educate and inspire. For the seasoned asset building community member, EQUITY advises on how to better serve participants with disabilities.

Each month, articles from leaders in the field, program administrators, and actual participants with disabilities challenge us to narrow the divide, mutually benefiting both communities. Also included: helpful tips, answers to your questions about disability issues, periodic federal policy updates, and valuable resources.

Notes

1. 2006 HHS Federal Poverty Guidelines. Federal Register, Vol. 71, No. 15, January 24, 2006, pp. 3848-3849

For more information contact:

Megan O’Neil
World Institute on Disability
510 16th Street, Suite 100
Oakland, CA 94612
Voice: 510-251-4341
TTY: 510-208-9493
FAX: 510-763-4109
E-mail: megan@wid.org
Toll-Free: 1-866-723-1201