Social Security Program May be Too Good to PASS Up
Are you planning to go back to school? Want to start a small business? Preparing to return to work? Social Security's PASS Program is an opportunity knocking, with very few responses.
Anyone on Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) or both is eligible for participating in the PASS programs, which stands for a. Although the program works differently for each benefit, in each PASS is a wildly under-utilized resource to finance a variety of educational and business activities.
Earn an Education
PASS plans can extend for three and even four years. PASS can fund college degree programs, technical training, equipment purchases, or starting or equipping small businesses.
PASS plans must be submitted in writing to Social Security, and must include "reasonable" and "feasible" vocational goals. A PASS plan to train you to be an astronaut, for example, probably would not be approved. But PASS could easily finance a degree in business or computer science, or be used to set up a small franchise.
For people on SSI, PASS is pretty straightforward. SSI recipients in California generally get $676 per month in benefits. SSI, however, entails some pretty strict financial criteria. You cannot receive SSI if you have more than $2,000 in the bank or any kind of retirement or savings account, and any income you receive, gift or wages, will be deducted from your benefits.
PASS lets SSI recipients "protect" their benefit (keep the full $676) as long as they use any other income to pay for school or start a business. In other words, if you wanted to go to school, and work part-time, your wages would reduce your benefit. PASS protects your benefits from deductions as long as you are using the extra income to pay for your education.
A PASS plan also protects your benefit from gift income. For instance, if your parents gave you $4,000 for college, you would lose your SSI. But with a PASS plan you would keep your benefit, and could use the gift income for school.
PASS also protects your monthly SSI even if you start a business and start earning money. However, you must use those profits to help the business grow to the point where its self-sustaining.
For people on SSDI, PASS does more than just protect your benefit. It also provides "income replacement" so you don't have to work for extra money.
Weighing the Benefits
How does PASS work?
If your income from SSDI is $700 a month, and you want to use that money to go back to school, PASS allows you to "set aside" the benefit for tuition, fees, etc. That's $8,400 per year. Once Social Security agrees to the "set aside," they will then replace your income with SSI up to $676 per month, as long as you are eligible for SSI (no more than $2,000 in assets, and the ability to live on SSI income).
For people on SSDI in the right income range, PASS is a gold mine. You trade your benefit for SSI, and finance your education or business with your SSDI income. You can also "slide" some of your normal expense (for example, transportation, meals eaten away from home and incidentals) into your PASS plan. Although PASS can work at even very high levels of SSDI (for instance $1,200 a month), at some point trading your monthly benefit and living on SSI income becomes difficult if not impossible.
A Roadmap to Your Goals
The lengthy, but fairly straightforward PASS application amounts to a simplified business plan.
Application forms are available from Social Security or through AIDS Project Los Angeles' Work Services and Benefits Departments. In the application, you must outline your goals, steps and expenses along the way.
PASS plans must be submitted through local offices, but very few local Social Security personnel understand PASS. Instead, completed PASS plans are forwarded to a special unit in Anaheim. The PASS unit evaluates the plans, can request modifications, and ultimately monitors your progress on your plan.
Years ago, PASS plans were approved with little or no supervision.
For a time in 1996, Social Security all but closed off approval of the plans. In the last couple of years, the special PASS unit has increased approvals, and has shown a willingness to work with PASS applicants.
PASS plans can be altered if your goals change, or suspended if your health prevents you from completing your program. When you complete your PASS plan, Social Security expects you to begin the process of entering the work force.
For more information about PASS plans and whether one would work for you, contact Work Services at (323) 993-1616 or (323) 993-1659.
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Phil Curtis coordinates AIDS Project Los Angeles' Work Services Program. He can be reached by calling (323) 993-1659 of by e-mail at email@example.com.