Disability Autonomy and the slippery slope of services supports and benefits

Seduction! It is so tempting to get consumed with hunting for, qualifying for, and keeping disability services and benefits that we can lose track of whether these supports are worth their price.

Perhaps we need to question the costs to our autonomy.

(This is article was inspired by one of you – M__ K. – who has graciously shared some of their experiences as a “beneficiary” in the US disability system.)

So many strings attached

My previous disability financial strategy articles have focused on maximizing financial resources and legally protecting your financial assets from the government.

To make this work, the trade-off for some of these strategies is that the disabled beneficiary loses control of these financial assets:

Assets typically become owned by a trust for the benefit of the disabled individual and not actually owned and under the control of the disabled individual.

So, yes, we’ve found a way to circumvent the cruel complications of the US disability system, but there has been a cost… and this cost would (and does) impose a real burden.

I wouldn’t find it acceptable (and I’m guessing you wouldn’t if you had a choice)– why should a disabled person?

Disability Services and Benefits from an Autonomy Lens

This is my current best understanding of where things are at for the major disability programs in the US. Corrections, clarifications, and comments on experiences welcome to make this a better resource.

State Disability Services – require residence in the state (not unreasonable) and in most cases that the services are provided in state by state providers (NOTE – I am not certain about the limitations on Self-Determination Services). All of this is highly variable by state. There do not typically seem to be restrictions on income or assets (if you know of any, please let me know!).

Inherited IRAs and Roth IRAs – a (qualified) disabled person can inherit an IRA or Roth IRA and keep it as if it were their own (I just found out about this!). Parents with disabled children should check into this as this may be an excellent investment strategy. However, this will certainly count as a resource for other benefits such as Medicaid and SSI (see below). If those services are desired or necessary, the disabled individual (or more likely their family) would need to have the IRA assets distributed to a Special Needs Trust or ABLE Account.

Disabled Adult Child Social Security Benefits – these benefits are based on the contributions and retirement status (or death) of the disabled person’s parents. The main restrictions are limits to wage income (W2 salary) and no marriage to a non-fellow Disabled Adult Child. Other income is permitted (passive income, dividends) and there are no resource limitations. There are no geographic limitations (any state or even residency outside of the US is OK).

ABLE Accounts – funds can be spent for “qualified disability expenses”. Annual deposits currently at $20,000 with an additional amount for “ABLE at Work” disabled employees (Cautionary Note – ABLE account assets count as resources for Medicaid – for accounts over $250,000 – and for SSI – for accounts over $100,000). Total accounts max out at $500,000. Earnings on funds are tax free like a Roth Account (for comparison, see Inherited IRA and Roth IRA accounts, above). Caution – “qualified disability expenses” may actually be “easily audited qualified disability expenses” as transfers to another bank for a mortgage or funds that “might be construed as non-qualified” may run into difficulties on withdrawal.

Special Needs Trusts – can hold any amount of funds or other assets. However, expenditures cannot be for anything that can be covered by a government benefit (food or rent for example). The sole exception is that a special needs trust can hold the house where the disabled individual lives without penalty. Special Needs Trusts can be set up to transfer funds to an ABLE account allowing those funds to be used for qualified disability expenses (subject to the annual deposit limits for ABLE accounts).

Medicare – available for Disabled Adult Children two years after they enter the DAC program. No restrictions beyond those of standard Medicare and DAC. Travel coverage is similar to standard US insurance programs (emergencies typically covered… your mileage may vary).

Medicaid – limitations on income and assets that vary by state. Ownership of the house where the disabled individual lives allowed (value of house may be limited also by state). Marriage to a non-disabled adult or disabled adult that does not also qualify for the program may result in loss of eligibility. Coverage during out-of-state travel may not be available. International coverage is not available.

Social Security Disability Income – qualify, restrictions on income. No restrictions on assets or marriage. No travel restrictions.

Supplemental Security Income – qualify, restrictions on income and assets. No travel for more than 30 consecutive days outside the US. Marriage may result in loss of eligibility.

Supplemental Nutrition Assistance Program (SNAP) – disability eligibility based on getting services through SSI (and maybe SSDI?).

Implications

So… our US disability systems are pretty messed up today.

What should we do about it?

In the long term, we could work together to change how are disability systems work… move towards Universal Elderly and Disability Services Insurance and rethink other services to ensure they respect disabled people and preserve their autonomy…

In the mean time, disabled people and their families and caregivers may want to (re)consider where and how they use these programs – balancing disability autonomy and flexibility instead of simply maximizing benefits and services. (We are looking at the implications of inheriting IRAs as an alternative path for financial planning for our son).

The elephant in the room is Medicaid (and to a lesser extent SSI)… and considering leaving the US as an alternative healthcare and support strategy.