Written by Ed Carter

Living with a disability is expensive. You have to pay for ongoing medical care and medical devices, pay to retrofit your home for accessibility, and pay for caregiving to keep you safe, healthy, and independent. These expenses tend to increase with age as people with disabilities grow older and their physical limitations more severe.

On top of these high costs, many people with disabilities need to keep their income low enough to qualify for the benefits programs they need to survive. This adds major challenges to financial planning for people with disabilities. The simple advice to earn more, save more, and spend less is complicated when a healthy bank account threatens your financial security.

Considering these challenges, how can people with disabilities ensure a secure financial future for themselves and their families?

Know Your Benefits Cliffs

Many people with disabilities rely on Medicaid and Social Security Disability Insurance or Supplemental Security Income (SSDI/SSI) benefits to stay afloat financially. These programs are important safety nets, especially when it comes to keeping healthcare costs affordable. However, they don’t provide enough to live on, let alone save on.

SSDI recipients who earn more than $1,220 monthly risk losing their benefits, as do SSI and Medicaid recipients with more than $2,000 in countable assets or income over $750 a month. The Social Security Administration offers work incentive programs that let people with disabilities test their ability to work with a trial period; however, if the trial is successful, benefits are lost. Before committing to full-time work, it’s important to make sure your earnings potential is greater than what you can earn via benefits programs and part-time or occasional work.

Take Advantage of Tax-Free Savings

Adults who became disabled before the age of 26 can save money tax-free and protect their benefits eligibility with ABLE accounts. Individuals can save up to $15,000 annually in a tax-advantaged ABLE account, more if they work and earn and income. Since money in an ABLE account isn’t considered for benefits eligibility, qualified individuals can save and spend money without losing benefits. However, individuals do lose SSI eligibility if their ABLE account balance reaches $100,000.

Plan for Long-Term Care

If you have a physical disability, your condition may worsen with age, causing you to need a higher level of care. Whether you move into an assisted living facility or hire in-home caregiving, the cost of long-term care services is high.

Medicaid will pay for long-term care services for covered individuals. However, strict care criteria mean people covered by Medicaid have fewer choices of where to receive care. Instead, the state determines whether you’re eligible for nursing home care, assisted living, or home- and community-based services.

Individuals with earnings that exceed Medicaid eligibility limits can look into other options such as long-term care insurance. Unfortunately, medical underwriting makes some people with disabilities ineligible for a traditional long-term care policy. In that case, life insurance may be a suitable option. You can purchase a whole life insurance policy with a long-term care rider or a policy with “living benefits” that can be tapped into while alive. A life insurance policy also provides a financial cushion to family after death, giving family members quick access to funds for funeral expenses, medical bills, and outstanding debts. The range of policy types and coverage levels scares some consumers away from life insurance, but purchasing a policy doesn’t need to be complicated. If you’re a homeowner, another option is to sell your home to help pay for long-term care. Before planning to fund long-term care by selling your home, make sure you have an idea of its approximate value.

This is just a glimpse of all the factors people with disabilities have to consider as they plan for their financial futures. If you’re worried about how your disability will affect your ability to save for the future, talk to a financial advisor. With the right guidance, you can develop a financial plan that works for today and secures your tomorrow.

(Image via Pexels)