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A PASS Plan is a plan that is supposed to be used to help people reenter the workforce and become self-supporting. For example, money in a PASS Plan could be used to open a restaurant. Under PASS, money or assets in a PASS account are not counted for Social Security purposes. PASS plans work for any job or education goals you can reach within four years.

There are many advantages to having a PASS plan. For example, in addition to saving for a goal, it can make you eligible for Medicaid.

A bank account set up to secure a credit card can qualify as a PASS account and also provide money to live on.

If you have Medicaid and are considering returning to work, Medicaid may be cut off if you earn too much. However, a PASS account can be combined with Section 1619 to permit Medicaid while working. For example, if you have earnings that would make you "too rich" for SSI and Medicaid, and you get a PASS account. You can request approval for a PASS amount that is large enough that you would become eligible for regular SSI and Medicaid. 

The application process requires details about your plan, including a business plan.

Once a PASS Plan is apprpoved, if you don't follow the rules the Plan will be cancelled, you may be required to return money, and your Medicaid could be cancelled.

For more information, see:

Description and Example Of How A PASS Plan Works

In essence, having a PASS allows you to get a designated part of your income or assets disregarded in determining whether you're eligible for, and how much you get from, Supplemental Security Income (SSI). For example, let's say that in 2007 you already received $700 monthly from Social Security Disability Income (SSDI), plus another $300 from an employer disability pension. That would be too much for both SSI and Medicaid in most states. If you had a PASS account, any income or assets you designate would need to be disregarded for SSI purposes.

Let's say your plan called for saving $1,000 out of your $3,000 savings account, plus $600 a month out of your $700 SSDI check toward a $27,000 purchase price of a large professional-size van you need to set up your own private on-call taxi service for the handicapped. You can reach your goal within four years.

The $1,000 savings you set aside toward the purchase price would no longer make you "too rich" under the $2,000 SSI asset limit rule. Similarly, the $600 you saved monthly out of your SSDI and pension income would reduce your "countable" income, for SSI purposes, to $400 ($300 pension + the remaining $100 of SSDI). Since you're allowed up to $2,000 in ordinary savings, and, in 2007, up to $623 (in most but not all states) in countable income for SSI, you would qualify! You'd get a small SSI check monthly ($223 in this example), plus a Medicaid card.

Advantages To Having A PASS Plan

  • You get to save money for a goal of being self supporting, while continuing to receive Supplemental Security Income (SSI) and receive Medicaid.
  • Having a PASS can save you rent and food money and increase your other benefits. The artificially reduced PASS income - and not your higher actual income - is what other help programs such as Section 8, subsidized apartments, public housing, home energy assistance, food stamps, school lunches, Housing Opportunities For Persons With AIDS (HOPWA), WIC (the supplemental nutrition program for women, infants and children) and TANF (Temporary Assistance For Needy Families) must count by federal law if you submit documentation to them.
  • Some states are allowed, but not required, to count the lesser PASS income, rather than the higher, total income for their ADAP, Ryan White and other assistance programs.

How To Apply For A PASS Plan

The application for PASS Plans is complicated and the chances of getting a plan to get approved by Social Security are slim, but if you have an idea, it's worth checking into. You can find a booklet that Social Security has published about PASS plans by clicking on: Read the booklet and print out the 14 page application. You can find the application (Social Security Form SSA-545-BK) at: offsite link.

You will see that Social Security leaves nothing to chance in this process.

  • Keep in mind that when you apply for a PASS plan, Social Security will review your background to see if your proposed occupation is reasonable. It probably will come as no surprise that Social Security did not accept Brent's proposal for a PASS plan to pay for guitar lessons so he could become a rock star when he'd never performed in his 48 year life.
  • The form asks for a very specific budget to know just how the money will be used.
  • Your goal must be achievable within 18 months, extendable up to 48 months or even longer if approved by Social Security.
  • Your plan must be endorsed in writing by a public or private social service, vocational rehabilitation or disability group or agency.

The objective is for Social Security to make sure that you have done enough research to believe that the plan can succeed and make you self-sufficient.

It helps before submitting an application for a PASS Plan to have a public or private social service, Vocational Rehabilitation or disability group or agency endorse your plan in writing. According to James Sheldon, Jr, Neighborhood Legal Services, Inc, Buffalo, NY: Social Security will assume the appropriateness of a goal that is supported by such an agency.

If you're not already receiving SSI benefits, consider applying for SSI when you present your PASS Plan for approval. See Supplemental Security Income for the eligibility requirements you'll have to meet to qualify for SSI benefits. Keep in mind that once you get SSI, you will probably receive Medicaid as well. If you're receiving Medicare as part of your SSDI benefits, Medicaid will pick up what Medicare doesn't cover. Medicaid will also pay your Medicare Part B premium. See Medicare: Financial Assistance.

If you're going to apply for a PASS, get expert assistance before you complete the PASS application. Many disease specific non-profit organizations and vocational rehabilitation agencies have people experienced in PASS Plans who can help you with the application process. If you are unable to find other assistance, most Social Security offices have a person who handles PASS Plans. Although the quality of help will vary from office to office, you should make an appointment to meet with that person before completing your application to review your general plans to see if it seems feasible, and to get tips on how to best present it in the application.

How To Have A PASS And Still Have Enough Money To Live

How can you keep money in a bank account that Social Security is going to monitor, yet have use of that money to live on? According to Thomas McCormack, Author of AIDS Benefit Handbook (Yale University Press):

Use a secured credit card. To obtain a secured credit card, you deposit money into a a designated bank account. The secured credit card is issued with limits at least equal to the amount you deposit, and possibly up to twice as much. You aren't allowed to withdraw money from the account while you have an oustanding credit balance. Secured credit cards are intended for people with poor credit or no credit

Using money in a bank account to secure a secured credit card qualifies for a PASS under Social Security's rules.

You can live on credit card charges or cash advances, yet keep an account open to satisfy PASS! To keep this solution viable, you'll have to be sure to meet minimum monthly payments to the credit card firm. That should be particularly easy. With each month's deposit of the money your PASS plan requires you to put in the bank, the credit card company will helpfully increase your credit limit by that much!

Better yet, if you're fortunate enough to use firms that give you a "double" credit line, you can actually have access to more money than you deposited.

For icing on the cake, there's one other detail you can arrange: when you take out the card, consider taking the small-fee life, disability and unemployment insurance that's offered to cardholders. This insurance will make your monthly payment if you invoke its disability or unemployment clause, and will pay off your balance when you die. This kind of insurance is almost never meaningfully "medically underwritten" so your health condition is not relevant.

A word to the wise: don't claim disability or unemployment while you expect to continue using the card, the PASS, or the secured account. Your card may be canceled for future charges, and your account balance may well be debited by the credit card company's insurer. This would be disastrous if you need to keep the bank account untouched in order to meet PASS rules, and therefore to keep your Medicaid and other benefits available.

If you have literally no assets to leave anyone, it may not be worthwhile to choose to pay a credit card balance life insurance premium. Its only function is to pay off the credit card bill after you die and thus prevent the credit card firm from going after any assets you hope to leave to loved ones.

Secured credit cards are often offered via late-night ads. To find out which banks offer "secure" credit cards and which ones have the best terms (interest rates, insurance options, "double-your-money" credit limits), call the non-profit Bankcard Holders of America at 540.389.5445. For a very nominal fee, they'll send you the most current list.

Living With A PASS Plan

You must put the income or assets you are "setting aside," and which therefore won't be counted in determining your Supplemental Security Income (SSI) and Medicaid eligibility, in a separate bank account which Social Security will monitor for both deposits and balance.

If you don't deposit the money in this account, or if you withdraw it prematurely for non-Plan purposes, Social Security, it is likely that Social Security will quickly uncover what you've done. Social Security requires participants to provide details on Plan accounts and to submit data on account balances and activity as a condition of the program.

If you don't follow the rules, your Plan would be canceled immediately. You might be required to pay back money you received from SSI or Medicaid if you had made a disallowed withdrawal or did not deposit disregarded money and spent it instead. The official moral here is that your PASS should reflect a genuine future job goal that you're really saving for.