Example

Jennifer’s Story

Jennifer was working and earning $500 per month at a part-time job. Her only other income came from her monthly Supplemental Security Income (SSI) benefits.

Jennifer called up a Work Incentive Consultant because she wanted to learn more about how her work income impacted her SSI benefits. She also mentioned that she hoped to be able to save up some money to go back to school, but was worried about going above SSI’s asset limit.

Jennifer's Work Incentive Consultant helped explain to her how her SSI benefit was currently being calculated.

Jennifer's SSI Benefit Calculation (before starting an IDA):

Jennifer's Monthly Earned Income	$500.00
Minus the $20 SSI General Income Exclusion	- $20.00
Minus the $65 SSI Earned Income Exclusion	- $65.00
Subtotal
Divide by two	÷ 2
Jennifer's Countable Earned Income
Maximum SSI Benefit	$943.00
Minus Total Countable Income	-
Jennifer's SSI Benefit

So, at the end of each month, Jennifer had the $500 she made at work and the $735.50 she got from SSI.

The Work Incentive Consultant told Jennifer that Individual Development Accounts (IDAs) could help her save up for education, buying a home, or for starting a business. When she saved up some of her earnings, the IDA program would give her matching funds to help her reach her goal. She also learned that if she used a federally funded IDA, her IDA account wouldn’t count toward the SSI asset limit, and the earnings she set aside in the IDA would not be counted when figuring out her SSI benefits amount. In other words, she could keep making the same amount of money at work, but be allowed to save more than SSI’s asset limit, get matching money for free to help pay for her goal, and SSI would also give her more money. That sounded like it was a win-win-win for her!

Jennifer learned more about IDAs and decided that she wanted to go to school and get training that would help her get a job that paid more. Eventually, she found a federally funded IDA program that supported educational goals. So she signed up and began saving $40 per month of her earnings in her IDA. Her IDA program gave a 3:1 match, meaning that for every $40 she saved to pay her school’s tuition, the nonprofit would contribute $120 to her tuition. She thought this was a great deal!

Jennifer told the Social Security Administration (SSA) about her federally funded IDA program to make sure that they wouldn’t count the money she put into her IDA as income and that they wouldn’t count the IDA account as an asset. They noted her IDA in their records, excluded the account from the asset limit, and excluded the $40 per month she put into the IDA when figuring out Jennifer’s earnings. As a result, her SSI benefits amount actually went up by $20, even as she saved up money and got lots of matching funds for her tuition.

Jennifer's SSI Benefit Calculation (AFTER starting an IDA):

Jennifer's Monthly Earned Income	$500.00
Minus Jennifer's IDA Contribution	- $40.00
Minus the $20 SSI General Income Exclusion	- $20.00
Minus the $65 SSI Earned Income Exclusion	- $65.00
Subtotal
Divide by two	÷ 2
Jennifer's Countable Earned Income
Maximum SSI Benefit	$943.00
Minus Total Countable Income	-
Jennifer's SSI Benefit (With IDA)

Each month Jennifer set aside $40 of her earnings in her IDA account. For her monthly expenses, she had $460 left from what she made at work and $755.50 she got from SSI. The $40 she had saved in her IDA would become available to her when it was time for her to pay for her educational expenses. At that point, the IDA program would chip in an additional $120.

By the time she had finished her IDA program a year later, she had saved up $480 of her own money for her school’s tuition and the IDA program also paid $1,440 for her tuition.

The bottom line: By contributing $40 to an IDA, her SSI benefits amount went up by $20 and the IDA program gave her an additional $120. That meant that each month, she actually had a total of an extra $140 thanks to doing the IDA program!