IDAs and Other Programs

Supplemental Security Income (SSI) and Medical Assistance (MA)

If you are getting Supplemental Security Income (SSI) or Medical Assistance (MA) and plan to enroll in an Individual Development Account (IDA), it is very important that you find out who funds that IDA program.

If you are on SSI or MA, it is highly recommended that you enroll in a federally funded IDA rather than an IDA funded by some other source. The 2 federal programs that fund IDAs are Temporary Assistance for Needy Families (TANF) and the Assets for Independence Act (AFIA). You do not need to be enrolled in those programs to have an IDA funded by them.

If you choose an IDA program that is federally funded, federal law clearly states your SSI and MA will not be affected by the assets you save in your IDA account. Additionally, any earned income you set aside in a federally funded IDA account is not counted as income when your SSI benefits amount is figured out.

If the IDA program you choose is not federally funded, you may become ineligible for your SSI or disability-based MA benefits because your IDA account could cause you to go over their assets limits. There are only a couple of exceptions:

  • It is possible to have a nonfederally funded IDA if you do it as part of a Plan to Achieve Self-Support (PASS) (explained below).
  • If you are planning to use a nonfederally funded IDA without doing a PASS, Chat with a Hub expert to find out about an additional strategy that may be used so nonfederally funded IDAs are not counted as assets for SSI or MA.

Note: Not all people who get MA have asset limits for their MA coverage. People who get MA based on having a disability do have an asset limit. However, some people with disabilities get MA coverage due to having income below 138% of the Federal Poverty Guidelines (FPG), and people who get MA for this reason do not have an asset limit. If you are not sure whether there is an asset limit for your MA coverage, Chat with a Hub expert.

Documenting your federally funded IDA for SSI and MA

When you enroll in a TANF- or AFIA-funded IDA, be sure to ask your IDA caseworker to write a letter on their program letterhead stating that you are participating in an IDA program that is federally funded. The letter should specifically mention the “Exclusions under Other Federal Statutes” clause. Give a copy of that letter to the Social Security Administration (SSA) and your local county human services agency for documentation and keep a copy of it for yourself. If you are working with a benefits planner, they may find it helpful to also get a copy of the letter for your file as a backup reference.

Plans to Achieve Self-Support (PASS)

A Plan to Achieve Self-Support (PASS) is an SSI program that allows you to save up money for a specified period of time and for a specific work goal. Your goal may be to start a new business, get a job, or boost how many hours you work. The goal must help you significantly reduce your need for SSI benefits or end your need for Social Security Disability Insurance (SSDI) benefits. The money you save in a PASS does not count against SSI's income and asset limits. If SSA approves your PASS, they will not count the money you spend on your PASS goal (such as business equipment or education expenses) when they figure out if you qualify for SSI benefits. If you are already eligible for SSI benefits, you will get a higher SSI benefits amount, which will replace all of the money you spend on your PASS.

This means that you can save money towards a career goal in a PASS and continue to use SSI benefits for basics like food and rent.

An IDA can be a part of your PASS plan. To do this, your goal must be the same for both programs. One of the benefits of using the programs together is that it allows you to set up a nonfederally funded IDA without threatening your SSI or MA benefits. As long as the money you save in your IDA is part of a PASS plan, it will not be counted by SSI or MA and you won’t lose those benefits.

IDAs and Social Security Disability Insurance (SSDI)

If you get SSDI benefits, you can enroll in any IDA program that you choose. There are no restrictions.

The Earned Income Tax Credit (EITC)

The Earned Income Tax Credit (EITC) is a federal tax program that reduces the amount of income tax owed by low- to moderate-income workers and families. If you get the EITC, you can deposit that money into your IDA and your money will get matched, helping you reach your goal more quickly.

Another Way to Save: An ABLE Account

If your disability began before you turned 26, you can open an ABLE account where over time you can save up to $100,000 in assets and not have them counted by SSI and most other programs with asset limits. The money in an ABLE account gets tax advantages similar to the way retirement accounts work, but can only be spent on approved disability expenses, such as education, housing, or transportation. To learn more, read DB101's article on ABLE Accounts.