Individual Development Account Question and Answer Sheet: A Guide for IDA Consumers with Disabilities
formerly of the World Institute on Disability
3075 Adeline Street, Suite 280, Berkeley, CA 94703
Questions and Answers
Q1. What is an Individual Development Account (IDA)?
A1. Individual Development Accounts, also known as “IDAs”, are 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 one to four 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.
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. At a minimum 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. Generally speaking, you must be within the income guideline of “200% of poverty”. This means, for example, that an individual could not earn more than $17,720 and the head of a family of four could not earn more than $36,200. 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 more liberal 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 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. Unfortunately, there is no national directory of IDA programs. However, you can still find a list of programs in your state. To find out if there is a program near you, go to www.idanetwork.org, click on "State Pages" on the main (left) navigation bar, select your state from the drop down menu, and then select "IDA Programs”. Contact information for all IDA programs in your state will be listed. You may also want to look in your local Yellow Pages, where there may also be listings.
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 effect 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, and therefore assets, 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” or under “Temporary Assistance for Needy Families” 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”).
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.
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 earn a net income in the range of $14,100 - $39,228 (depending on what state you live in), 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.
You can find more information about PASS plans at the Social Security Administration web site: http://www.ssa.gov/pubs/11017.html
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). In 2002, the earnings threshold for self-employment for an individual is $780 per month and $1,300 for blind individuals.
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 is developing a database of people with disabilities who have either gone through an IDA program or who are currently enrolled. If you would like to be a part of this database so that you can speak with other IDA participants with disabilities and to share your own story please forward your name and contact information to the Access to Assets program.
Q14. Where can I learn more about IDA programs and issues relating to persons with disabilities?
IDAs and Disability
General Information about IDAs
Self-Employment and Persons with Disabilities
Housing and Disability
Education and Disability