Disability Financial Planning – 9 Needs and 8 Tools and Tactics 

Financial planning for you and your spouse is hard enough… what if you need to plan for your disabled child as well? NOTE – I think the logic of this should work for disabled adults…but I may be wrong.

We’ve had to start thinking about this for our family. Our autistic son currently has fairly extensive support needs and so either we plan for his whole life (as well as ours)… or we rely on what the state (California… meh)  will provide (a group home? and some other support services… unless the US budget gets cut again –

FYI the core funding for all disability services comes through the Medicaid program in the US, not just healthcare).

I’ve tried to generalize off of what we are working through. If you have different experiences or perspectives… let me know so I can improve this and share it! 

First, what problems do we need to solve?

Money, Money, Money….

Let’s start with the big money needs that everyone has:

• Housing – rent or own, maintenance (this part may be tricky)
• Health Insurance – standard insurance
• “Life” – food, personal items and services, hobbies, etc. 
• Retirement/Savings – can be tricky.

Then, we add in disability specific services (I’m not sure these are broken out the right way):

• Self-Care – “in home” support for self-care activities (bathing, eating, …)
• Independent Living – cleaning, bills,… can you live “on your own”
• Disability specific healthcare – things over and above what would typically be covered by standard health insurance (wheelchairs, extra co-pays)
• Community – pro-active social facilitation
• Work – aid to be able to work

Anything else?

Government Programs

There are 3 major government programs that need to be considered:

• Disability Services (typically only requiring a qualifying disability as is the case in California, but your mileage may vary a lot).
• Healthcare Services (Medicaid in the US, except for the Disabled Adult Child – DAC – who can access Medicare 2? years after starting the program)
• Social Security Income (SSI for those with developmental disabilities, SSDI for those who become disabled as an adult, and DAC and some various other options)

There are some disability specific services (such as those for blind/vision-impaired individuals) and variations below the national level as well as local variations.

In the US, the key distinction is between programs that are in the “Poverty by Design” (broadly “Benefit” programs – SSI / Medicaid) and those that are not (“Insurance” – Social Security & Medicare). As noted above, “pure” disability services currently seem to not be tied to income… am I wrong on this? How about in other countries? From the small samples I’ve seen, both Canada and the UK have a similar “benefits” / mandatory low-income system.

Your Own Resources

The two financial tools that US disabled people can use on their own behalf that I am aware of are:

ABLE Accounts – a Roth-style savings and investment program. Funds can be used for almost anything:

Funds in an ABLE account can be used for qualified disability expenses (QDEs). Not all QDEs are disability specific, and they are not limited to items that are medically necessary or those that only benefit the individual with a disability. The funds are intended to help the ABLE account owner to increase their independence, maintain their health, and improve their quality of life. This may include expenses related to education, food, housing, transportation, employment training and support, assistive technology, personal support services, medical, prevention and wellness expenses, financial management, administrative services, legal fees and other expenses. The term QDE should be broadly understood to include “basic living expenses.” The Social Security Administration considers food a QDE.  – ABLE National Resource Center

The notable restriction on them is that they are a “first party” asset (owned by the disabled person), not a “third party” asset (owned for the benefit of a disabled person) and thus exposed to Medicaid Estate Recovery and other restrictions. This is a fairly perverse system – folks who the government define as being those with the most substantial disabilities (requiring Medicaid or SSI) are the least able to use this tool. The easiest fix would be to allow this to be held as a third party asset or just excluded from being considered a resource or source of income for eligibility (talk to your member of Congress). My guess is that no one really looked closely at this… if you know anyone working on this – let me know!!!! You can only have ONE ABLE account (I’m not sure how you’d move one to a different state – any experience with that?)

Special Needs Trusts – can be held as either first party or third party assets (see above)… the restriction is that they cannot be used for core expenses such as housing or food… which seems kind of mean. They can hold pretty much any asset. You can have more than one. As long as they are not used for core expenses, they do not count as either resources or income for eligibility for Medicaid or SSI.

One clever suggestion that I’ve seen is that Special Needs Trusts can be set up to contribute money to an ABLE account. NOTE – You can have multiple of these trusts.

DOUBLE NOTE – We really need to create or find a “Special Needs Trusts in a Box” – few people need a fancy trust, they just need a place to put and park money. If you are interested or have ideas on this, let me know. This SHOULD be totally do-able under current law. AND once such a vehicle existed, you could use it as a pass through for funds from other accounts…

Pooled Trusts – a different third party trust that otherwise works like a Special Needs Trust… I’ll write more about these at some point, they don’t seem super common and I’m not sure what problem they solve for who.

Other savings and investments – whatever else you own or control could be used to help a disabled person… barring their impact on eligibility for government programs.

Where are you? Where you are!

Where you live can have a massive impact on all aspects of your financial life. It drives costs, availability and price of services, community… everything.

A nifty tactic that a parent shared with me was to live just over half the year in a state that supports Self-Determination (a user-defined level for Disability Services) and the other (almost) half a year in another country – with radically lower costs (in this case it was the Philippines), BE CAUTIOUS – some medical and social security services do not support extended international travel!

Soon, more details and a process for walking through all of these things….