Planning Ahead: Financial Tips for Disabled Individuals — By Patrick Young.
Patrick Young is an educator and activist. He believes people with disabilities must live within a unique set of circumstances–the outside world often either underestimates them or ignores their needs altogether. He created AbleUSA.info to offer helpful resources to people with disabilities and to provide advice on navigating various aspects of life as a person with disabilities.
This is the 3rd guest post by Patrick Young on this blog.
Planning Ahead: Financial Tips for Disabled Individuals
Disabled individuals comprise America’s largest minority group — just under 20 percent of the population, according to the National Disability Institute. Unfortunately, those people face significant obstacles, including (but not limited to) financial stability. Stable employment is often a problem for the disabled, as well, and they may accrue living expenses and often-fragile health circumstances that non-disabled people don’t face.
Financial assistance through public benefits such as Medicaid and Social Security may be affected when disabled individuals have too much in savings or other assets. It’s important to discuss your financial options with a financial planner or someone who understands the options that are available to you. Here are some things to keep in mind.
Savings, Tax Breaks, and More
A personal savings account is one of the best ways to provide for your future. Set aside a certain amount every month, have it automatically deducted and placed in an interest-bearing savings account, though it’s important to set aside a manageable amount. Take advantage of tax credits and benefits and use them to boost your savings, and don’t undervalue the many discounts available to disabled individuals from a number of organizations and businesses.
ABLE (Achieving a Better Life Experience) are accounts to which anyone may contribute up to a certain amount ($15,000) and can be set up by or on behalf of disabled individuals (as long as they became disabled before age 26). ABLE accounts don’t impact your eligibility for Medicaid or Supplemental Security Income, and taxes aren’t taken out of distributions provided the money
is used for qualified disability expenses involving housing, transportation, education, health care expenses, assistive technologies, or financial management.
If you’re receiving Supplemental Security Income or Social Security Disability Income and wish to save for a work-related objective, you may be eligible for funding through PASS (Plan to Achieve Self-Support). PASS allows you to save money if you’re working toward a degree, want job training, or wish to launch a new business. Note, however, that work-related goals include income that may reduce your Supplemental Security Income or SSDI benefits.
Special Needs Trust
A special needs trust offers a way to manage resources for disabled people without putting their government benefits at risk. Trust distributions have to be in the individual’s best interests and be solely for the beneficiary, who must have no other available resources.
Individual development accounts (IDA) are good options for disabled persons because they can earn two-to-one matches toward their savings objectives. Another benefit is that a funded IDA account allows a disabled individual to save money without worrying about losing Supplemental Security income benefits as a result.
It’s important to plan ahead and try to foresee health needs as you grow older. Medicare is a valuable resource for seniors but there are important needs/coverage gaps that can be a problem for older individuals. Supplemental coverage can help you cover expenses such as prescription medications with a Medicare Advantage plan or Medicare Supplement insurance. Medicare Advantage plans help cover vision and dental benefits along with prescription costs.
Medicare Supplement insurance helps cover Medicare Part A and B copayments, deductibles, and certain out-of-pocket costs. Medicare Advantage and Medicare Supplement plans are sold by private companies, but you can’t have a Medicare Supplement and Advantage plan concurrently.
Establishing financial stability is a lifelong endeavor, so the sooner you can get started planning and saving, the better for you and your loved ones. There are many ways for disabled individuals to save money, but it’s important to understand how different plans work and how they impact government benefits. If you’re not sure how it works, take the time to talk with a financial planner to make sure you get the most out of savings programs.