The Person with Unearned Income Only

This is probably the simplest PASS plan to write because unearned income (i.e., SSDI in an amount over $657 in 2008) is readily available for PASS expenses, and exclusion of the unearned income establishes SSI and Medicaid eligibility. The average SSDI check is $1004/month. We will use that figure in the example of calculations below.

At first glance, a person may wonder how this will benefit him/her. After all, it looks as if he/she will take a real loss in his/her ability to pay for living expenses ($637/month as opposed to $1004). One trick is to incorporate necessary expenses into the PASS as much as possible. For example: vehicle payments, insurance, and upkeep may be paid by the PASS; business telephone expenses; work clothing; if there is to be a home office, a portion of the rent. If the person is currently paying for medication or health care out of his/her SSDI check, Medicaid eligibility will drastically lower those expenses. Often the person has more cash after PASS authorization than before. Plus he/she is using the $955 per month to pay for services and equipment to increase self-sufficiency. Over a period of 36 months, that adds up to $35,424 to put toward an employment objective.

For Example:
Larry gets $700 in SSDI. He wants to start his own truck farm business. His PASS plan allows him to set aside his SSDI benefits for business related expenses (such as his truck) and makes him eligible for $637 from SSI, plus Medicaid.

Note: This example illustrates what occurs if the entire SSDI check amount is set aside for the PASS items. The amount of SSDI to be put into a PASS is negotiable, however before this person is eligible for SSI/Medicaid, he must put at least $368 of his $1004 SSDI check into the PASS. $1004 - $20 - $348 = $636. $636 is below the 2008 FBR rate ($637), so there is eligibility for SSI/Medicaid.

Another source of funds to be put aside for PASS plans is an SSDAC benefit (SSDI that someone receives as a "Disabled Adult Child"). In the example on page 6, the scenario of a person with a $320 SSDAC check, and a $337 SSI check was mentioned. In this case, the entire $320 - $20 (General Income Exclusion) is unearned income available for PASS utilization. $300 x 36 months is $10,800 toward PASS expenses.

Interestingly, when all but $20 of the SSDAC benefit is sheltered in a PASS (and is zeroed out), the SSI check goes up to the FBR or $637 per month! The person loses no money because of the PASS expense, and still has a total of $657/month to live on.

Person With Both Earned & Unearned Income

This person has gross monthly earnings of $285 at his job. He also receives $825 per month SSDI. Calculation of his maximum PASS amount available is below.

At this point, because he is spending all of his countable earned and unearned income in the PASS, he is eligible for SSI and begins receiving an SSI check of $637 per month, plus Medicaid. And he has $32,940 over 36 months to pay for PASS expenses.

In most instances, PASS plans using unearned income (SSDI, DAC) produce excellent outcomes for people who wish to work or start a business. Title II funding can be quite adequate for initial start-up or for leveraging other funding sources.

When a person uses Title II benefits to fund a PASS, he/she will also need to show SSA how SSI benefits of $637/month (2008) will cover bills previously paid by the Title II check ($740 in the example of Marge, below). Living on less monthly income may be possible because: Medicaid benefits that come with SSI result in immediate savings in medical costs; SSI usually results in eligibility for more Food Stamps to help cover food costs; and anyone living in government-subsidized housing will have his/her share of the rent reduced due to lower monthly income. Finally, explore whether any regular monthly expenses can be paid in the PASS.

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