Wealth Building for Persons with Disabilities

1. Wealth Building for Persons with Disabilities Understanding Asset Development For Persons with Disabilities Abby Cooper

2. Bases of Asset Building “Few people have ever spent their way out of poverty. Those who escape do so through saving and investing for the long-term.” Michael Sherraden Center for Social Development

3. What is asset development • Strictly speaking, assets are a stock of capital, including savings, financial securities, owning a business or property. Other less tangible forms of assets include educational achievement, job skills,training and access to credit. • Welfare policy for the poor and disabled has tended to focus nearly exclusively on income support. • Sometimes even discouraging assets -Supplemental Society Income (SSI)-prevents an individual having more than $2000 in resources • Tax codes created the middle class -Asset Development programs are trying to help individuals leave poverty

4. Federal Asset –Building

5. Proposed Federal Policies Savings for Working Families Act, S 871 & HR 1514 If enacted, would create 900,000 matched savings accounts – at 6,000 per state Financial institutions would be reimbursed for matching funds($2,000) plus limited amount for administrative costs incurred ($50 per year per account) $20 million would be available for financial education. Bill is low cost of $1.35 billion over ten years

6. Proposed Federal Policies Enact Children’s Saving Account Policy ASPRIE Act- Kids accounts for all at birth Young Saver Accounts – Roth IRA for kids 401 Kids-converts Coverdell ESA into “401 kids saving Accounts Baby Bonds PLUS Accounts – retirement-only savings account for all at birth How does this cause us to think about disability policy differently?

7. Overview of the AFI Family Support 360 • People with developmental disabilities are frequently the poorest of the poor • Concern that people with disabilities are not accessing and using IDAs • President’s Committee on People with Intellectual Disabilities • Partnership between two offices within the Administration for Children and Families (ACF) • Office of Community Services (AFI) • Administration on Developmental Disabilities (FS 360s)

8. Goals of the Partnership • Increase availability of AFI IDAs for people with disabilities • Demonstrate new strategies for making IDAs more accessible to people with disabilities • Ensure that all interested AFI grantees have access to training, technical assistance and information on this topic

9. Pilots • AFI grantees and FS 360 grantees serve as key collaborators for Pilots • Four sites Denver, Colorado Salem, Oregon Detroit, Michigan Salt Lake City, Utah

10. Oregon’s IDA Program The IDA in a Nutshell: Purpose –Build economic self sufficiency through positive financial behavior including, fiscal goal setting, financial planning and personal saving regimens Private, State , and Federal funds support matched savings accounts for low-income individuals Low Income – defined as 80% or below of ”Area Median Income” (AMI) – by county of residence Household net worth less than $20,000 (Excluding primary home and one vehicle) Household must have earned income Participant must be 12 or older and Oregon resident

11. AFI & State Two programs Federal funded program – Asset for Independence (AFI) • Tied to saving for a major life goal: * Such as a college degree, * A first home, * Own business State funded program • Expands what a person can save for • Assistive Technology, home modification • Specialized training such as job coaching

12. Rules of IDAs Participants must save each month Participants attend goal-specific training Financial literacy classes – tailored to particular constituencies. Monthly deposits into a custodial account are matched 3:1 starting after six months and for up to thirty six months. State program cap is $3,000 in match per 12 month saving period IDAs are not for everyone

13. What do IDA Provider Do • Determine people eligible • Provide one on one counseling • Assist in developing a asset development plans • Provide financial literacy training • Monitor saving accounts • Disbursal of Match Funds • Provide follow-up

14. Things the Disability System needs to Change • People traditionally have lack control over economic resources and for some individuals they never had control ● Asset development has not include most individuals with disability. ● Traditional social welfare approaches “alleviate” conditions. • Traditionally have not view money as the primary driver in obtaining employment.

15. Poverty • We rarely view our services as setting someone up to live in poverty or being part of the working poor with no way out. That is what frequently occurs. • There are limited conversations on how to move forward with all the benefits people are dependent on.

16. Poverty in a Problem • People with disabilities are considerably more likely to experience poverty relative to those without disabilities; annual poverty rates are two to five times higher among working-age people with disabilities. • We need to consider poverty a major problem.

17. Poverty • 4.1 million adults receive SSI; the maximum benefit of $623/month is only 73% of the federal poverty level for a family of one. • 6.5 million adults receive Social Security Disability Insurance benefits. The average monthly SSDI payment is $979 (2007) – only 115% of the federal poverty level for a family of one.

18. Interesting Conflict • We in the disability business rarely provide counseling and guidance on the amount of money people needs to make to be economically independent, or how to use their benefits strategically to become economically independent. • Rarely talk about a person using their own money. • Until very recently the complexity of benefit structures has scared people away from working with people with disabilities on the issues of asset development

19. Changing the Information • There is a lot of misinformation being reinforced daily on public benefits and working. • Public benefits and resource limits • Many people with disabilities and frequently their families try to keep people from working in fear of losing benefits • IDAs are not for everyone but asset building can be.

20. Changing the Information & Stories • People need to know how this makes sense to their life. • People wants us to be able to help them figure out how they will be better off by working. Asset building is one way they can be.

21. Asset Building Research • Stronger, healthier families • Long-term thinking and planning • Enhanced self-esteem • Sense of pride • More community involvement • Hope for the future

22. Social Security Disability Insurance(SSDI) and Supplement Security Income (SSI) • SSI and SSDI are separate and very different programs • The programs only share is a common disability requirement. • They have a different purpose, eligibility requirements, and treatment of work, earnings, and resources. • Need to think of them separately

23. Social Security Disability Insurance • The Title II Disability Benefit Program (SSDI) began in 1956 as an early retirement program for older workers whose disabling condition prevented them from working until pension age. It is a wage-replacement insurance program • Supplements income of workers / family when earnings lost • Entitlement or insurance program – not means tested! • Monthly cash benefit and Medicare

24. SSDI/SSDAC • SSDI– Social Security Disability Insurance– This is an insurance program. To be eligible you need to have worked and paid into the Social Security Disability Insurance system • Social Security Disabled Adult Child/SSDAC You are eligible for SSDAC based on your parent’s work quarters if your parent is a disabled, retired or deceased parent. After a 2 year wait period, you will get Medicare. It is possible that you will get SSDI before you are aged 18, and then your benefits could change to SSDAC when you are 18.

25. Trial Work Period • Title II best work incentive is the Trial Work Period • Trial Work Period (TWP) is a nine month period with three additional months called the cessation and grace period. • Any month you earn over $670 in a sixty “rolling month time frame” counts as a trial work month. • During the Trial work period you can earn as much money as you want and still receive your full Social Security check. • TWP is an excellent time to help the individual develop saving goals and to increase that amount saved in an IDA • Person is usually eligible one trial work period. • and Extended Period of Eligibility, allow for beneficiaries to keep their monthly cash benefits for a period of time when they begin work.

26. Extended Period of Eligibility (EPE) • EPE starts when you have used up your TWP • The three year period immediately following your Trial Work Period where you are still eligible for your cash benefit if your earnings are under Substantial Gainful Activity (SGA). • SGA in 2008 is $940 a month ( Blind individuals $1,570) • Work Incentives (Subsidies and IRWE’s ) can decrease countable earnings so you can keep SSDI if your earnings over SGA.

27. IDAs & SSDI • Title II Disability Benefits are not based on economic need and there has never been any restriction on savings, investment or asset accumulation. • Participating in an IDA has no negative impact for Title II beneficiaries! • Need to think about when is the best time for a person to plan for saving.

28. Thinking Strategically • Whether you are an IDA provider or from the disability field, helping a person think strategically about using their TWP is one of the first steps in laying the foundation for wealth building. • Frames the issue differently. It is just important to customize a financial plan for a person as it is a job. Remember people are scared to have these conversations

29. CWICs • When ever possible partner with a Community Work Incentive Coordinator to figure out how to Use work incentive strategically • Online resourceshttp://www.acf.hhs.gov/assetbuilding/AFI360.html

30. Supplemental Security Income (SSI) • This is an income and resource based program for individuals with disabilities. • You do not have enough of a work history to receive SSDI. • If the person is under 18 Social Security will look at parent’s income, which could make you ineligible. • If you get SSI, you will also get Medicaid.

31. SSI & Work • General and Earned Income Exclusions:SSI isbased on your income. The amount you receive is determined by other income you have, such as earnings. SSI will not look at the first $20, which is considered the general income exclusion. • Earned Income ExclusionSSA does not look at the first $65 of your earned income. • ½ income disregard– After the general income exclusionand earned income exclusion are deducted from your income, ½ of your remaining countable earned income is then deducted as well. The result is your total countable income. Your countable income is subtract from the Federal Benefit Rate which for 2008 is $637. The remain amount is your cash benefit from SSA. • Cash benefits stop at the Breakeven point $1,359 (2008)

32. Work Incentive 1619B • In Oregon an individual on SSI can earn up to $29,638 (2008) and still have keep Medicaid. This is due to the work incentive 1619 B. • Think about the impact that work incentive could have on asset development.

33. SSI & IDAs • While asset accumulation is severely limited in the SSI program, the “good news” is that funds set aside in an AFI IDA are NOT counted as either income or resources.(POM SI 60030.020 IDA Exclusions Waiver) • State IDAs are a little trickier. • The person can not have access to the funds in the saving account. This way the account does not meet the SSI program's definition of a resource.  • Matching deposits to the account are not income, again because the individual cannot access them.  • When the funds are used to pay for the asset, if they are paid directly to the vendor, lender, school, etc., they are considered to be payment of a bill by a third party, which is not income to the individual.

34. SSI & IDAs • The payment to a vendor is not itself income, any food or shelter received as a result of it would be considered in-kind support and maintenance in the month received. • SSI cannot deduct the countable earned income ( as they do in a AFI IDA) from any earnings the individual deposits to the State IDA.  • A person does not get as good a deal with a State IDA as they do with a Federal IDA but they can save for more assets.

35. How To Tell If a Person is on SSI Or SSDI Receive two checks from the SSA? • If yes, probably entitled to both SSI and SSDI. Receive SS benefits at or below the FederalBenefit Rate (FBR)? $637 – SSI, Greater than $637 - SSDI Are your benefit amounts rounded to the nearest dollar? • SSDI benefit amounts are rounded down to the nearest dollar. If your customer states an amount that includes cents, they are receiving SSI, or could be receiving both SSI and SSDI.

36. SSI or SSDI? Worked before becoming eligible for SS benefits? • If the person worked 5 out of the last 10 years before his or her disability began and there was not a large gap of time, probably on SSDI. If a current direct deposit bank statement: • States “SSA” - are receiving SSDI . • State “SSI - are receiving SSI .

37. Student Earn Income Exclusion • The Earned Income Exclusion is for students who are under 22 Regularly attending school • Grades 7-12 –12 hours per week ,College 8 hours per week • $1,550 a month up to $6,240.00 annually of earned income does not impact their cash SSI payment • A student with an State or AFIA IDA could put his or her earned income in an IDA account and still receive their full SSI check

38. PASS & IDAs • PASS is an employment support program that may compliment IDA participation for select beneficiaries. • PASS is one of the more complex, time and effort intensive work incentives. • Not all SSA beneficiaries need, want, or will benefit from a PASS. • Only 1,582 beneficiaries using PASS nationally (SSI Annual Statistical Report, Dec 2005)

39. Understanding PASS • While IDAs focus on promoting self-sufficiency through acquiring assets that grow in value over time, PASS promotes the self-sufficiency of beneficiaries by helping them to be successful in employment. • In some cases this may mean using a PASS to save for and purchase assets needed for work. In other cases, it may mean helping a beneficiary to use their income to pay for services or supports needed to work.

40. How a PASS Works • The income and resources saved under a PASS is used by the beneficiary to pay for items or services needed to reach their career goal. • SSA does not count this income and resources in determining SSI eligibility and payment amount. Less countable income equals a higher SSI cash benefit.

41. When a PASS & IDA Could Work Together • A person is contributing earnings to an IDA for an asset that promotes an employment outcome – specifically post-secondary education or self-employment. The earnings contributed to the IDA can simultaneously be excluded under a PASS, enabling the beneficiary to leverage additional funds (savings) through their SSI benefit.

42. IDAs & PASS • A person is contributing earnings to an IDA, and has additional unearned income. While the unearned income can not be used as contribution to the AFI IDA, it can be used in a PASS or a state IDA. If the IDA is for education or self-employment, the unearned income can be set aside in the PASS to enable the person to reach their goal more quickly.

43. IDAs & PASS • person has other items or services they need in order to meet their work goal that are not permissible AFI IDA savings goals (e.g. assistive technology, personal assistance services, transportation). Additional income beyond the earnings being contributed to the IDA would be needed for the items / services being purchased via the PASS.

44. IDAs & PASS • A person is participating in a state IDA sets up a PASS to exclude the earned income the put in the IDA. • According to SSA it is possible to have the PASS account and the IDA account the same account if it meets all of SSA rules for a PASS account

45. Cautions • Unused cash reclaimed when IDA ends counts as income in first month, and toward resource limit in future months. • Options: roll over into new IDA, PASS, purchase other resource(s) that are excluded under SSI rules

46. Financial Literacy • Benefits literacy is focused on helping participants understand how their benefits work, and how they are affected by employment and IDA participation. • Enables participants to direct the course of their benefits to better meet their needs and goals. • Opportunities to include benefits literacy as a component of financial literacy should be explored.

47. Other Asset Steps • Connecting with a community work incentive coordinator to understand the impact earnings have on your benefits and what work incentives make sense for you. • Helping someone take a financial literacy class • Working with the person and their supports to design what piece of his or her financial life s/he can control • Helping the person establish a budget and live by it

48. Other Asset Steps • Deciding to start saving a small amount of money each month. • Putting your credit cards in a container full of water and freezing them so you only use them when you really need them • Working on repairing your credit. • Using the Targeted Earned Income Tax Credit.

49. Need to Change Conversations • Asset Building Community can help the Disability Communitywith how one talks about money • Disability staff could take a financial literacy training • Disability Community can help the Asset Building Community understand SSA benefits and the mind set connect with entitlement • Together can build a foundation

50. How Can the disability Community Incorporate Asset Building Different Conversations • Conversations about finances with individuals and their families. • Need to ask what sweat equity are you willing to put into the plan • Realistic planning about how much you can earn today • How much you can earn in the future with supports • What are you willing to give up for tomorrow investments Different Supports • Fiscal Training • Opportunity to control their money – stored valued Card, Electronic Transfers • Individual budgets