Individuals with disabilities often rely on federal and state benefits such as Medicaid, Supplemental Security Income (SSI), and Social Security Disability Income (SSDI) to meet their financial needs. These federal entitlement programs have specific income eligibility and asset limitation requirements.

For example, to be eligible for SSI, individuals must (a) meet disability criteria, (b) not exceed the SSI monthly income criteria for their state, and (c) have no more than $2,000 in non-exempt resources. If an individual does not meet all of these criteria, say countable income is over the allowable limit, that individual cannot receive SSI benefits.

Fear of losing federal benefits can be a major deterrent to working or saving. This built-in work and savings disincentive results in many individuals with disabilities living in poverty. So, are poverty and disability inevitable? With current asset development strategies, the answer is a resounding "NO." Whether individuals have assets that they want to keep or they want to build assets while trying to maintain benefit eligibility, the following are just a few asset-development strategies that can help build independence and financial self-sufficiency.

Individual Development Account (IDA)

An Individual Development Account, also known as an IDA, is a savings account that can be used for continuing education and/or training, purchasing a home, or starting a business. What makes this type of savings account special? With an IDA, each individual's deposit is matched with an additional amount provided by an organization or institution. Designed as an incentive to save, the additional deposit is usually one to four times the size of the individual's original deposit. For example, with a 2:1 match, each deposit of $25 is matched with an additional $50 deposit to the individual's savings account. An IDA is typically offered by non-profit organizations, such as housing organizations and credit unions.

While each IDA program may have slightly different requirements, all participants must take free financial literacy training offered by the program. In addition, an individual usually must be within the income guideline of "200 percent of poverty" to participate. For example, in 2007 an IDA participant could not earn more than $20,420, and the head of a family of four could not earn more than $41,300. The third requirement is that participants must be employed.

Typically, an IDA can be maintained for two to three years. The overall amount of savings depends on the amount deposited and how much of a match is offered. For example, without an IDA, $25 deposited every month for two years would result in $600 of savings. With an IDA in an organization that offers a 3:1 match, an additional $1,800 would be added to the participant's $600 savings. So, in two years, $2,400 would be saved.

IDAs are not available in all areas. A comprehensive list of existing IDA program locations can be found at: http://www.cfed.org/focus.m?parentid=31&siteid=374&id=599.

Plan for Achieving Self-Support (PASS)

A Plan for Achieving Self-Support (PASS) is a second asset-building strategy. It allows individuals to save money in order to achieve a specific work or vocational goal (e.g., starting a business) without affecting federal and state benefits. The purpose of a PASS is to assist individuals who receive Supplemental Security Income (SSI) to obtain items, services, or skills for employment needs. A PASS must contain (a) a written plan, (b) a vocational goal, (c) a reasonable time frame for meeting the goal, and (d) an explanation of the necessary expenses.

The Social Security Administration has a group of employees called the PASS Cadre who can provide PASS information and assist in writing a plan. In addition, the regional PASS Cadre must approve the plan. Regional Pass Cadres can be located at http://www.socialsecurity.gov/disabilityresearch/wi/passcadre.htm.

Under an approved plan, money from sources other than SSI can be saved to pay for the items needed to reach the work goal. These sources include, but are not limited by, job wages, family contributions, and SSDI. The money saved into a PASS is not counted as income, so a person may work and still receive SSI.

Illustrating the Power of IDAs and PASS

Jane is a young woman with a developmental disability. She loves growing fruits and vegetables and has started selling her produce at area farmers' markets. However, to continue growing her business, she needs a van to travel and to transport her goods to more markets. In order to do this, Jane starts an IDA and writes a PASS. Jane's monthly income and expenses are shown below:

Note that Jane has $488 left after subtracting her expenses from her income. Jane enrolls in a federally funded IDA to purchase a van to expand her business. Her total monthly personal contribution is $275-her earnings from her business. She receives a 2:1 match from the program so that in 24 months she will have $12,600. The IDA program caps the amount of match money Jane can receive at $6,000.

In order to receive the maximum SSI amount and maintain her SSDI amount, Jane also writes a PASS to continuing saving for her van. Remember that Jane had $488 in "disposable income," $275 was deposited in the IDA, leaving $213 of her SSDI to save in the PASS account. In 24 months, Jane saved $5,112 in her PASS.

In 24 months, Jane will have saved $17,712, all without losing federal/state benefits, having to change her lifestyle, or sacrificing any of the things she loves to do.

Special Needs Trust

A special needs trust (also known as a Supplemental Needs Trust) is a third, and very different, asset-building strategy. A special needs trust enables an individual with a disability (the beneficiary) to have unrestricted assets without disqualification from federal/state benefits as long as the assets are held in the trust. In other words, a special needs trust is basically an arrangement where funds can be invested for a recipient of federal/ state benefits such as SSI without losing eligibility for benefits. The purpose of the trust is to supplement the services provided by federal and state government. The special needs trust cannot give cash directly to the beneficiary, but can pay for services and certain exempt resources that support the beneficiary without causing a loss of benefits eligibility. The special needs trust does not belong to the person with a disability. The trust is established and administered by someone else-the trustee. The individual with a disability is nominated as a beneficiary of the trust and is usually the only one who receives the benefits.

There are three types of special needs trust: (a) Family-Type Special Needs Trust, (b) Court-Ordered Special Needs Trust, and (c) Pooled Special Needs Trust. Information about these trusts can be found at: http://www.wid.org/programs/access-toassets/ fact-sheets/special-needs-or-supplemental-needstrusts/ ?searchterm=special%20needs%20trusts.

Not Easy, But Worth It

Whether it is protecting assets that have taken a life to build or helping individuals develop assets of their own, poverty and disability do not have to go hand-in-hand. However, this is obviously not as easy as it should be. In setting up a special needs trust, individuals and families should consult an experienced attorney specializing in these types of trusts. When building assets with strategies such as an IDA and PASS, consult with a knowledgeable benefits planner (see Resources). Not all of the strategies described here will work for every individual or family. And there are other asset-development strategies to consider. We have provided only a glimpse into the realm of possibilities that exist to assist individuals with disabilities to gain independence and financial sufficiency.

Asset development is a new, exciting area for individuals with disabilities and their families. These opportunities provide an entirely different future for them, one full of hope and promise.

Megan O'Neil is an independent asset development consultant and a Ph.D. candidate in Community Economic Development at Southern New Hampshire University. Martha Blue-Banning is a research associate at the Beach Center on Disability. Affiliated with the Life Span Institute and the Department of Special Education at the University of Kansas, the Beach Center is supported through multiple sources including (a) the Research and Training Centers on Policies Affecting Families of Children with Disabilities (H133B031133-03) funded by the National Institute for Disability and Rehabilitative Research; and (b) the Beach Endowment, created by Ross and Marianna Beach, at the KU Endowment Association, University of Kansas.

By Megan O'Neil and Martha Blue-Banning, Ph.D.

Resources

Asset Development

World Institute on Disability http://www.wid.org/topics/asset-building

Finding IDA Programs

The Office of Community Services Assets for Independence (AFIA) website contains a directory of all federally funded IDA programs. You can locate programs by state here: http://www.acf.hhs.gov/assetbuilding/states.html

PASS Resources

Cornell University PASS http://www.passonline.org/

Social Security Administration: A Guide to Plans for Achieving Self-Support http://www.ssa.gov/pubs/11017.html

University of Montana Rural Institute PASS Online http://www.passplan.org/

Special Needs Trusts

Academy of Special Needs Planners http://specialneedsanswers.com/resources/article.asp?id=5370&gclid= CMGxwYfs2o4CFQEcHgodln3Y8g

National Information Center for Children and Youth with Disabilities (NICHCY) Special Needs Trusts http://www.kidsource.com/kidsource/content4/estate.dis.all.3.3.htm

Jane's Income (monthly)

SSI                 $623
SSDI                 407
Business Income      275
Housing Voucher      511
Total "Income"    $1,816

Jane's Expenses (monthly)

Rent                $669
Utilities/Cable      205
Food                 215
Clothing              35
Cleaning              54
Transportation        50
Fun                  100
Total Expenses    $1,328