Transcript Wealth Building

Wealth Building for
Persons with Disabilities
Understanding Asset Development
For Persons with Disabilities
Abby Cooper
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 longterm.”
Michael Sherraden
Center for Social Development
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
Federal Asset –Building
Federal asset-building subsides
– highly skewed to upperincome
$367 billion a year 2
More than 45% of the benefits went to
households whose average income exceeds
one million dollars
Top fifth (household incomes greater the
$80,000) receive 88.7 % of the asset building
benefits
Less then one percent of $
the population x
,
x
x
x
The rest of the population shared 11.6% of
tax benefits
Households with less than $20,000 receive
$3.00 or less in average of these incentives
0
0
0
The lowest 60% of x
households got less 3% x
or less in the average of x
these incentives
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
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?
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)
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
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
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
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
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
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
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.
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.
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.
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.
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
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.
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.
Asset Building Research
• Stronger, healthier families
• Long-term thinking and planning
• Enhanced self-esteem
• Sense of pride
• More community involvement
• Hope for the future
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
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 wagereplacement insurance program
• Supplements income of workers / family when earnings lost
• Entitlement or insurance program – not means tested!
• Monthly cash benefit and Medicare
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.
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.
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.
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.
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
CWICs
• When ever possible partner with a
Community Work Incentive Coordinator to
figure out how to Use work incentive
strategically
• Online resources
http://www.acf.hhs.gov/assetbuilding/AFI360.
html
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.
SSI & Work
• General and Earned Income Exclusions: SSI is
based 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 Exclusion SSA does not look at the first
$65 of your earned income.
• ½ income disregard – After the general income exclusion and
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)
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.
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.
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.
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 Federal Benefit 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.
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 .
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
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)
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.
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.
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.
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 selfemployment, the unearned income can be
set aside in the PASS to enable the person to
reach their goal more quickly.
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.
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
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
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.
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
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.
Need to Change Conversations
• Asset Building Community can help the Disability
Community with 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
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