Yes. If you have Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), you may have a savings account. However, there may be limits to the amount you can have, depending on the type of disability benefit you are receiving.
To be eligible for SSDI, you must have a work history and a medical condition that prevents you from working for at least a year or is expected to end in death. There are limits on how much you can earn from work while collecting SSDI payments, but no restrictions on assets. You can have a savings account with as much money as you choose to save.
This is not the case if you collect SSI, which provides financial assistance to elderly, disabled and blind people in need. The Social Security Administration (SSA), which administers the program, sets different (and considerably more complex) income limits for SSI recipients, as well as a cap on financial assets: you can’t own more than $2,000. $ in what the SSA considers “book resources” as an individual or more than $3,000 as a couple.
Some assets are not countable, including the house you live in, a vehicle you or a member of your household use for transportation, and one or more life insurance policies with a total face value of $1,500 or less.
Money in a savings account, however, is an accounting resource. This means that you may not be eligible for SSI if your account contains more than $2,000 ($3,000 for a couple) or if it contains less but the total of your book assets, including savings, exceed these numbers.
Savings options for SSI recipients
The SSA makes exceptions for certain vehicles and savings programs designed for people with disabilities and low incomes. By using them, some recipients may have well over $2,000 in savings and still receive SSI.
Achieving a Better Life Experience (ABLE)
ABLE accounts provide a tax-free savings opportunity for people with disabilities who were diagnosed before reaching the age of 26. The first $100,000 in an ABLE account is not an accounting resource for SSI. Any balance over $100,000 will be considered in determining whether you meet the asset limit.
You can open an account through ABLE programs available in most states. Many allow eligible out-of-state residents to create accounts, but there may be tax advantages to using your own state’s plan. The ABLE National Resource Center allows you to compare state programs.
Planning for Self-Sufficiency (PASS)
This is a written plan that you submit to Social Security outlining a work-related goal that can help you become financially independent and reduce or eliminate your need for disability benefits. With a PASS, you can set aside money for items needed to achieve this goal, such as education, childcare, or assistive technology. This money is not considered an accounting resource for SSI.
To apply for a PASS, complete Form SSA-545-BK and submit it to your local Social Security office. The SSA can refer you to a professional advisor or PASS specialist in your area to help you write your proposal. Call the SSA at 800-772-1213 or see its PASS brochure for more information.
Individual Development Accounts (IDAs)
CIDs serve as vehicles for low-income people to save money on their income for education, buying a first home, or the costs associated with starting a business.
To open an IDA, in most cases, you must be working and receiving Temporary Assistance for Needy Families (TANF) benefits. Your contributions to the account may be offset by funds from state and federal assistance programs, and none of these funds are considered when determining your eligibility for SSI. Contact your state TANF agency for more information.
Trusts are legal agreements in which one party holds and manages financial resources such as cash and property for the benefit of another. Certain types of trusts can be used to hold money without jeopardizing your SSI benefits.
Whether this is the case will depend on the type of trust, who controls it and how its contents are used. For example, money paid to you directly from a trust, or used to provide you with food and housing, may be considered income and deducted from your SSI benefit. You can read more in the SSA Spotlight on Trusts online article.