Financial planning can already be a daunting task, but for those with disabilities, there are added complexities that need to be taken into consideration. In fact, one in four adults in the United States has some sort of disability, many of which must be extensively planned around. For example, did you know that there are tax breaks for people living with certain disabilities, or that the government may be able to help someone obtain medical equipment that they otherwise can’t afford? Here are just a few things to think about if you are living with or planning around a disability:
You Can Still Hold a Meaningful Job
A common misconception I hear is that because of resource limits, cognitive impairment, or physical disabilities, someone with a disability can’t easily hold a job. Though this can sometimes lead to a limited work schedule or reduced hours, do not automatically assume you aren’t able to pick up employment. In addition to employers having resources available for their employees, non-profits and even Medicare/Medicaid can help you get the technology you need to be successful in a working environment. Additionally, there are special accounts that have been created for those with disabilities, enabling them to put their income into a vehicle that won’t count against monthly income limits. Don’t count yourself out of the workforce just because of a disability – instead, work with your local resources to find a solution that suits you.
An Inheritance Can Be Life-Changing…In a Bad Way
One of the lesser-known consequences of gifting to a loved one with a disability is the impact it can have on any government benefits the individual is currently receiving. Did you know that there is a maximum amount, $2,000 in resources, that someone can have in their bank account if they are receiving Supplemental Security Income (SSI) (a common benefit received by someone with a disability)? This means that the $5,000 a family member wanted to leave to their loved one can disqualify them from receiving SSI until those assets are spent down. This is just one of several government programs that can be affected by an inheritance meant to make a positive impact. If you’re thinking about gifting to someone in your life who has a disability, make sure to work with them so that the assets are transferred in a way that won’t negatively impact their monthly cash flow. Read on for more on this strategy.
You May Eventually Pay the Government Back
When it comes to assets, Special Needs Trusts (SNTs) and Achieving a Better Life Experience (ABLE) accounts are both popular choices utilized within the disabled community. Accounts like these allow individuals who are receiving benefits to hold assets above the resource limit while not being deemed ineligible for their monthly benefits. What many do not know, though, is that these accounts are often used to pay the government back for assets given during someone’s lifetime. For example, a first party SNT can be set up by someone with a disability to supplement (but not replace) their government benefits. Let’s say that when the individual passes away, they have $30,000 left in the account. Medicaid is allowed to see how much in benefits was paid out to that recipient during their lifetime and replenish based on this number. This can sometimes mean an entire SNT is liquidated by the government without family being aware of this “claw back” rule. Special Needs Trusts and ABLE accounts can be immensely powerful planning tools but should always be coordinated with a professional to ensure accurate implementation.
In summary, whether it is you or a loved one who is living with a disability, remaining aware of the financial planning considerations that are unique to the disabled community can help avoid surprises and heartache later. There are advisors, attorneys, accountants, and many other professionals who specialize in planning around your needs just waiting to help you with these questions. If you’re looking to get started, reach out to our team of financial advisors today.
