SSI’s PASS: A Tool for Loan Applicants with Work Goals

Presenters

Michael Dalto, Executive DirectorMaryland Technology Assistance Program

mdalto@mdtap.org

James R. Sheldon, Jr., Supervising AttorneyNational AT Advocacy Project

Neighborhood Legal Services, Inc.jsheldon@nls.org

The initial template was created by Cornell University’sEmployment and Disability Institute and is used with permission.

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Plan for Achieving Self Support

The purpose of the PASS work incentive is to increase a persons ability to work and earn a living, and as a result, reduce their reliance on government benefit support in the long term. A PASS is meant to assist a person in obtaining the items or services needed in order to compete in the job market.

PASS is just the means to acquire the services and items

needed for starting work, not the means to make income or resources available for ongoing costs.

What is a Plan for Achieving Self-Support?

What is the purpose of a PASS?

PASS is an SSI work incentive under which persons with disabilities can set aside additional income and/or resources to be used to achieve specific work goals.

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AK

WA

OR ID

Seattle, WA

NV

AZ

CASan Francisco, CA

San Diego, CA

Anaheim, CA

Chico, CA

Carmichael, CA

HI

UT CO

MT

WY

ND

SD

Denver, CO

NE

KS

IA

MO

Kansas City, KS

NM

TX

OK AR

LA

Ft. Worth, TX

ME

VT

NH

CT RI

MA

Boston, MA

PA

VAWV

MD

DE

DC

Towson, MD

MI

Cincinnati, OH

MN

WI

St. Paul, MN

NY

New York, NY

Cheektowaga, NY

NJ

OH

Lakewood, OH

Locations of PASS CadresSocial Security Administration

INIL

Chicago, IL

KY

TN

MS AL

GA

SC

NC

FL

Birmingham, AL

Miami, FL(south FL)

Raleigh, NC

www.ssa.gov/disabilityresearch/wi/passcadre.htm

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Who can have a PASS?• Any person who is blind or disabled who gets

Supplemental Security Income (SSI), or can qualify for SSI, can have a PASS.

• The individual must:have income other than SSI

or a resource to set aside;have a feasible work goal;have a specific savings/spending plan; andmust provide for a clearly identifiable accounting for

the funds which are set aside.

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How does it work?• The income and/or resources set aside in a PASS are not counted in determining

eligibility for SSI or in calculating the amount of the SSI benefit that individuals will receive.

EXAMPLE:

Geri is attending engineering school. All school expenses are being paid by PELL and her VR agency. However, she will need a van when she begins to work because she is a wheelchair user and no public transportation is available. Geri receives $520.00 SSDI and $123.00 SSI per month. She wants to put the countable SSDI in a PASS account to buy a van.

With a PASS

$ 500.00 to PASS Account$ 623.00 SSI 20.00 disregarded SSDI$1143.00 Total income with an approved PASS

Without a PASS

$520.00 SSDI $ 623.00 2007 SSI Rate* 20.00 disregard - 500.00 countable SSDI

$500.00 countable SSDI $ 123.00 SSI payable + 520.00 SSDI $ 643.00 Total income without a PASS *Federal benefit rate for 2007

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How does it work?Geri receives $720.00 per month SSDI. She is not eligible for SSI becauseher SSDI benefit is too high. Geri proposes a PASS to set aside $500.00 per month to purchase a vanwhen she is ready to begin working.

Without a PASS $ 720.00 SSDI - 20.00 disregard$ 700.00 countable SSDI

Since the 2007 SSI federal benefit rate is $623.00, Geri is not eligible for SSI without a PASS. Her total income would be her $720.00 monthly SSDI benefit.

With a PASS

$ 720.00 SSDI $ 500.00 PASS savings- 20.00 disregard 220.00 SSDI $ 700.00 423.00 SSI- 500.00 PASS savings $1143.00 Total income $ 200.00 SSI countable income with an approved PASS$ 623.00 SSI rate - 200.00 SSI countable income$ 423.00 SSI payment

Geri would have $643.00 for living expenses -- $220.00 from her SSDI benefit and the $423.00 SSI payment.

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Geri and Usable Income

Geri receives $1,020.00 per month SSDI. She is not eligible for SSI because her SSDI benefit is too high.

Without a PASS $ 1,020 SSDI - 20 disregard$ 1,000 countable SSDI

Since the 2007 SSI federal benefit rate is $623.00, Geri is not eligible for SSI without a PASS. Her total income would be her $1,020.00 monthly SSDI benefit, which is available for living expenses..

With a PASS

$1020 SSDI $ 500 PASS savings

- 20 disregard 520 SSDI

$1000 123 SSI

- 500 PASS savings $1143.00 Total income

$ 500 SSI countable income with an approved

PASS

$ 623 SSI rate

- 500 SSI countable income

$ 123 SSI payment

Geri would have $643 for living expenses -- $520 from her SSDI benefit and the $123 SSI payment.

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The PASS and ResourcesResources can be anything that is owned, including bank accounts, real estate, or personal property. A resource that would exceed the allowed SSI limit ($2000.00 for an individual) can be set aside in a PASS.A resource exclusion is frequently applied to a PASS Account.

Without a PASS, as soon as Geri accumulatedover $2000.00 in her bank account, her SSI payments would be suspended due to “excess resources.”

With an approved PASS, the account she uses to save money for PASS approved expenses does not count towards her SSI resource limit.

In January 2007, Geri inherits $2500.00, giving her $3,000 in countable resources. Without a PASS, her SSI payments would be suspended effective February 2007, until she verifies that her resources are again below the $2000.00 resource limit.

If Geri adds $2000.00 of the inherited funds to her PASS account, the excess resource suspension would not apply.

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For a PASS to be approved several requirements must be met:

The plan must be in writing;

The plan must contain a feasible occupational (work) goal;

The plan must be viable; and

The plan must contain a savings/spending plan.

Plan Requirements

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A PASS must be submitted in writing…

A PASS must be submitted in writing, preferably on form SSA-545-BK, signed by the individual and, if applicable, the representative payee.

• You can obtain a copy of the form from your local SSA office.

• You can obtain a copy in PDF format from SSA’s website at: http://www.ssa.gov/online/ssa-545.pdf

• You can complete a PASS application online with tutorial assistance at Cornell’s website: www.passonline.org

• You can call your servicing PASS Cadre. (see Slide #2) http://www.ssa.gov/disabililityresearch/wi/passcadre.htm

• You can get help completing a PASS application from a WIPA (Work Incentives Planning and Assistance) agency. http://www.ssa.gov/work/ServiceProviders/WIPADirectory.html

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Occupational Goal

A PASS must show one specific work goal

CHEF

ELEMENTARY SCHOOL TEACHER

REGISTERED NURSE

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Occupational Goal

Feasible means that the person must have a reasonable chance of being able to perform the work, considering:

–Nature of the disability

–Limitations

–Strengths and abilities.

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Expected to generate at least enough earnings to:

• Substantially reduce the SSI payment for those eligible for SSI without a PASS.

• Eliminate the SSDI cash benefits for those not eligible for SSI without a PASS. (Earnings must be expected to be above the SGA limit - $900 per month in 2007.)

• An earnings level should be sought that would be

sufficient to replace the benefits of the individual---

and any auxiliaries, residing with the individual,

whose benefits eventually could be affected by

the individual’s work.

Occupational GoalGeneral Rules

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The Case of Thomas• Thomas receives $1,000 a month in SSDI benefits based on his

work record.

• His wife and children, who live with him, receive an additional $500 a month in auxiliary benefits combined, for a family total of $1,500.

• Without a PASS, Thomas and his family have $1,500 per month in combined Social Security income ($1,000 for Thomas, $500 for his wife and children).

• Thomas must have a goal that he will earn more than $900 per month when his PASS ends.

• His goal is to make $1,500 per month.

• When he reaches his goal, Thomas and his family will lose their Social Security checks because he is performing substantial gainful activity.

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The Plan must be viable

The PASS must be realistic taking into account:

the individual’s education and training needs;

any assistive technology required;

the milestones (and corresponding time frame to complete each step) necessary to reach the work goal;

whether the person will have sufficient means to cover PASS expenses, living expenses, and other necessary expenses.

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Significant, visible steps or events necessary to achieve the occupational goal

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Milestones (steps)BEGIN DATE- earliest date the individual began to pursue the goal.

END DATE-the date the individual expects to be working in the chosen occupational goal.

Show all of the steps needed to achieve the chosen work goal. Show the expected beginning date and completion date for each step.

18Milestone (Step) Begin CompleteComplete VR agency vocational evaluation - 12/06 03/07 Apply for admission to college - 03/07 03/07

Complete PASS application andapply for financial aid- 03/07 03/07

Receive acceptance, register for classes,purchase computer with adapted keyboard& special software 05/07 06/07

Attend college - 09/07 05/11

Complete resume, purchase van and arrange for modifications, begin applying for teaching jobs - 05/11 contg

Receive college diploma – 06/11 06/11

Take State exam for certification - 07/11 07/11

Receive certification - 09/11 09/11Begin working as elementary school teacher 09/11 09/11

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Expenses

A PASS can be used to pay for a variety of expenses that are necessary to assist the disabled individual to reach the work goal:

Computers & Assistive Devices

Transportation &Modifications

Education & Vocational Training

Tools or other Items needed to start a business

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Although a PASS may be approved, a decision on certain items or services may be deferred until a later date. This can happen if a person needs to successfully complete one or more milestones before an item can be approved.

Example: Purchase of a vehicle would be deferred if the person needs to obtain a driver evaluation or does not currently have a license.

Items and/or services are purchased when needed as outlined in the “milestones.”

Deferred Expenses

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Money is also important!!!

Be very specific about what items and/services you want your PASS to include.

Show the specific reason the item/service is needed-eg. “ I need a computer to do school assignments during college. I need an adapted keyboard because I experience problems with fine motor coordination in my hands.”

Show accurate estimates for the cost of each item/service. Show how you arrived at the estimated cost. Include the documentation with your PASS.

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Funding the PASS

Show how the individual plans to save for the items/services included in the PASS.

Show the type of income and the monthly amount you plan to set aside. Example: I plan to set aside $500.00 of my Social Security Disability Insurance (SSDI) benefit each month.

Show the resource you plan to set aside. Example: bank account, savings bonds, stocks, property. (Send proof with the PASS application.

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PASS and AFP Loans: A Good Fit

• A PASS provides extra money – i.e., money excluded and not counted as income or a resource by SSI - to help offset out-of-pocket costs to reach a work goal.

• It does not usually provide lump sum payments

• A PASS user who needs a $10,000 AT device can’t usually use a PASS to pay for it quickly.

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PASS and AFP Loans: A Good Fit

• If the PASS user is approved for an AFP loan, however, s/he can buy the device right away.

• Income set aside through the PASS will help individual to afford the loan payments.

• The extra income may help the individual obtain loan approval if his/her income would be too low without the PASS.

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Some Considerations for AFP Loans for PASS Users

1. Debt-to-Income Ratio

Debt-to-income ratios often become meaningless when PASSes are involved.

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1. Debt-to-Income Ratio

Example

Jane receives a $820 per month SSDI payment and uses a PASS to pay for college costs ($500/month) and to make AFP loan payments ($300/month).

She pays $400/month rent and has no other debts. Her total monthly debt with the PASS is $700 ($300 AFP loan

payment + $400 rent). Her PASS qualifies Jane for a full SSI payment ($623/month

in most states). Her total income with the PASS is $1,443/month ($820 SSDI + $623 SSI). Her debt-to-income ratio with the PASS is $700/$1,443 = 48.5%.

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1. Debt-to-Income Ratio

Example

However, the debt-to-income ratio does not reflect the fact that Jane must pay $500/month school expenses (in addition to the AFP loan payment) to receive the $623/month SSI income.

The school expenses are required, not optional – if she doesn’t pay for school, she won’t receive the full SSI check.

Yet this very sizable, mandatory cost – equal to nearly 35% of her income – is not counted at all in her debt ratio.

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1. Debt-to-Income Ratio

Possible Solution:

Determine disposable income – rather than debt-to-income ratio – for every AFP applicant who uses a PASS.

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2. Loan Term

An AFP must decide whether the loan term for PASS users may exceed the length of the PASS.

When the PASS ends, the PASS user should either lose the SSI payment or have it substantially reduced. Will s/he have enough income after the PASS ends to continue to make loan payments?

The goal of the PASS may be to secure a good job once the PASS is completed, providing sufficient income to continue payments, but should an AFP count on that when selecting the loan term?

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2. Loan Term

Possible Solutions: Assume higher earnings

1. Assume the PASS user will achieve the goal and receive higher earnings once the PASS has ended. If the projected earnings are high enough to support loan payments without the extra SSI the PASS provides, allow a loan term longer than the length of the PASS.

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2. Loan Term

Possible Solutions: Assume a PASS extension

2. Assume that the PASS user can get the PASS extended once it ends if s/he still needs the extra SSI to afford loan payments, and approve the longer loan term.

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2. Loan Term

Possible Solutions: Shorter loan term

3. Approve a loan term no longer than the length of the PASS. When the PASS ends, so will loan payments. The monthly payments will be higher than if the term were longer, but the borrower should continue receiving extra SSI from the PASS until the last loan payment has been made. If the PASS ends prematurely, consider refinancing the loan for a longer term to provide lower payments.

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3. Ancillary Expenses Related to the AT

Some AT entails significant costs in addition to loan payments. Vehicles must be insured, fueled, maintained and repaired. Computers usually need internet service. For many items, maintenance and upgrade plans are a good idea. PASS users may include some – but not always all - of these ancillary costs in PASSes.

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3. Ancillary Expenses Related to the AT

Solution:

If some ancillary expenses are not included in the PASS, be sure the individual can afford them without the help of the PASS before approving the loan.

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4. Continuing Expenses

A PASS covers start-up costs needed to achieve a work goal. In some cases, it may also be used to help pay for some continuing expenses.

If the user can show that s/he could not afford a continuing expense without the help of the PASS, it may be allowed as a PASS expense for a period.

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4. Continuing Expenses

The individual would need to demonstrate that s/he would not need the PASS to afford the expense indefinitely (e.g., expense will end or be reduced, individual’s income will increase later).

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4. Continuing Expenses

Solution:

Consider continuing expenses when determining whether an applicant can afford a loan.

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5. Medicaid

An individual whose income or resources would ordinarily be too high to receive SSI can often use a PASS to qualify for SSI.

In most states, SSI recipients are automatically entitled to Medicaid as well.

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5. Medicaid

Medicaid can cover a variety of medical expenses that the individual would otherwise need to pay out of pocket.

List of 209(b) states (Medicaid not automatic for SSI recipients): Connecticut, Hawaii, Illinois, Indiana, Minnesota, Missouri, New Hampshire, North Dakota, Ohio, Oklahoma, and Virginia.

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5. Medicaid

By qualifying a person for Medicaid, a PASS can substantially reduce his/her out-of-pocket medical expenses. This may help to make loan payments more affordable.

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6. PASSes for SSDI Beneficiaries

For SSDI beneficiaries – work goal, if achieved, involves earnings high enough to cut off SSDI

Consider potential future impact of SSDI loss and increased earnings when reviewing AFP loan applications

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7. Help Writing A PASS

Work Incentive Planning and Assistance (WIPA) organizations (formerly called Benefits Planning Assistance and Outreach (BPAO’s) are usually the best source of help writing a PASS. There is no fee.

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7. Help Writing A PASS

Social Security’s PASS Cadres can also help write PASSes, but they don’t always have an advocate’s perspective. If you need help with your tax return, who would you rather ask – an accountant or the IRS?

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7. Help Writing A PASS

AFPs should establish good working relationships with both WIPAs and regional PASS Cadres. WIPAs and PASS Cadres can help market AFP’s to potential applicants. WIPAs and PASS Cadres also need to understand AFP loan criteria, and how they interact with PASS rules.

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8. Additional SSI Work Incentive for People Who are Blind

Blind Work Expenses (BWE) may be used by SSI recipients whose primary disability is blindness.

They are used to reduce countable earned income. They include most work-related expenses, not just those

related to blindness. Most notably, they include taxes withheld from pay, meals eaten at work and mandatory pension contributions.

Unlike PASS, they have no time limits.