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Get REAL: Individual Development Accounts

December 17, 2009

Tobey Partch-Davies

Welcome to Real Economic Impact’s Get REAL (Reliable Experts, Answers & Lessons) series: reliable advice re: your economic concerns from leading money, legal, and financial experts from around the country.

This week’s Get REAL expert is Tobey Partch-Davies, Project Director, Poverty and Disability Research at the University of New Hampshire.

Q: Why is it important for individuals with disabilities, parents and family members, teachers, support coordinators, and rehabilitation counselors to know more about Individual Development Accounts?

A: A key focal point for transition-age youth and adults is securing gainful and satisfying employment.  However, even when employed, many people with disabilities have difficulty paying for goods and services needed for actively participating in the community and for getting ahead. Individual Development Accounts (IDAs) can help.

Individual Development Accounts are temporary matched savings accounts for saving money for “assets,” including — but not limited to — move down first time home ownership, college, and small business development. For each dollar a qualified worker saves in an IDA, they are provided with “matching” dollars to support their savings goal.

There are two types of IDAs: 1) IDAs authorized by the Assets for Independence Act (AFIA) and 2) “private” (non-AFIA) IDAs. To qualify for an AFIA IDA, households must either earn at or below 200% of federal poverty guidelines, qualify for Temporary Assistance to Needy Families (TANF) or qualify for the Earned Income Tax Credit (EITC). 

There are a variety of private IDAs available, some of which fund other types of savings goals, such as assistive technology, home repair, car ownership, etc. However, AFIA IDAs are the only kind of IDAs specifically excluded from means tests for Supplemental Security Income and Medicaid. Therefore, if you or your child qualifies for these benefits, make certain that the IDA you are applying for is an AFIA IDA.

Individuals who qualify for an IDA are also expected to take part in financial education workshops and asset training. Although the specific hours of education required vary by program, the purpose of the education is to help IDA account holders develop positive financial habits, including maintaining a budget, developing personal savings habits, building a positive credit history, and preserving the asset once obtained.  Account holders saving toward home ownership take part in education unique to the home buying and maintenance process, whereas business savers take workshops that teach small business development strategies.

IDAs are an excellent savings strategy that can be used in combination with a wide variety of resources, including — but not limited to — individual services budgets, Vocational Rehabilitation services, Social Security and Medicaid Work Incentives, and tax credits. By leveraging these resources in combination, you will get closer to meeting your savings goal. If you are interested in accessing an IDA, be certain to communicate this to the people in your life that have a hand in coordinating access to services and supports. IDA programs are not always familiar with the way benefits from the Social Security Administration (SSA) and Medicaid work, and SSA and Medicaid benefit technicians are not always familiar with IDAs, so talk with a SSA Community Work Incentives Coordinator in your area so that you can plan the use of these resources effectively.

Our Get REAL blog series welcomes your questions. Simply e-mail us at GetREAL@RealEconomicImpact.org.

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2 Comments leave one →
  1. December 17, 2009 3:20 pm

    Hi Tobey,

    Thanks for writing about the underappreciated IDA field. We’ve recently launched a website that is profiling IDA savers across the country (http://www.savetogether.org).

    We hope to raise the public’s awaremess about the important work you and others are doing in the matched savings field. As we inspire more and more individuals to participate in the field, we are plan to expand our list of IDA partners.

    You may be particularly interested in the wonderful story of Vicci who, after successfully completed her IDA program, has embarked on the mission to help others focus on the possibilities—not the limitations—of disability. (http://www.savetogether.org/savers/80)

    Thanks,
    Dylan
    http://www.twitter.com/savetogether

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