Saving money for people with disabilities

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About 1 in 4 American adults — 61 million in total — has a physical or mental disability, which can result in difficulty working and financial instability. Those who are disabled often find it challenging to save money due to factors like the inability to work full time or maintain a steady income.

Financial security for disabled individuals can be more easily attained if they know their money-saving options as well as the income limits for receiving government benefits.

 

Extra expenses and asset limits

Extra expenses for those with disabilities can include frequent doctor visits, prescriptions, special dietary needs and caring for a service animal. The costs may also be higher for housing that is handicap accessible and located near doctors, grocery stores and places of employment.

Disabled individuals who are able to work may need to abide by restrictions on their income and assets to receive certain benefits. The requirements for two government assistance programs are:

Social Security Disability Insurance (SSDI): This program pays benefits to disabled people who work and earn less than $1,310 a month in 2021, after a trial period. The monthly amount is $2,190 for those who are blind. There is no asset limit for those receiving SSDI.

Supplemental Security Income (SSI): This need-based program, also administered by the Social Security Administration, pays benefits to disabled or elderly individuals with low levels of both income and assets. The income limit varies based on where the recipient lives, while the asset limit for all recipients is $2,000 for those who are single and $3,000 for those who are married.

Whether or not you receive government benefits, it’s important to be able to save money for your goals, which may include attending college, buying a home, getting married, having children and retiring.

Savings accounts and trusts

Various types of accounts and trusts can provide savings for disabled individuals without disqualifying them for Social Security or Medicaid benefits. Being able to set aside money not only can help ensure financial security, but it can also pay for expenses not covered by other benefits.

ABLE accounts

These state-sponsored, tax-advantaged accounts were created after the U.S. Congress passed the Achieving a Better Life Experience (ABLE) act in 2014. They can be set up by or for people who became disabled before age 26. Up to $15,000 in post-tax dollars can be contributed yearly, and earnings are not taxed.

An ABLE account can hold up to $100,000 in total while being exempt from benefit limits imposed by the Social Security Administration. Various states sponsor ABLE programs, and you don’t need to live in a particular state to join most of them. One ABLE account is allowed per disabled individual.

Plan to Achieve Self Support

The Plan to Achieve Self Support (PASS) program is designed to help disabled people receiving Social Security benefits to return to work. Participants create an action plan with a work goal, steps needed to achieve it (such as education or training), a budget and a timetable. Money you spend for your education or training does not factor in when your Social Security means-tested benefit eligibility is determined. Those who are interested can fill out a PASS application and submit it to their local Social Security office.

Individual Development Accounts

Individual Development Accounts (IDAs) are special bank accounts designed to help low-income individuals accomplish goals such as receiving an education, buying a home or starting a business. Your contributions to your IDA account can be matched with funds from your state’s Temporary Assistance for Needy Families (TANF) program.

You may qualify for an IDA if you’re working and receiving TANF benefits from your state. More information about obtaining an IDA can be provided by your state’s TANF agency.

Trusts

A special needs trust enables family and friends to set aside funds for disabled people while still allowing them to qualify for means-tested Social Security benefits, Medicaid or Section 8 housing. Money in the trust can be used to pay for certain expenses that might not be covered by public assistance benefits such as dental or vision care as well as caretaker payments. There is no minimum balance required for a trust account, although you’ll likely need to work with a lawyer to set one up, which includes designating a trustee and a co-trustee to administer the trust.

Bottom line

Disabled people may be burdened with significant medical and housing expenses, as well as caretaker costs, all of which can be impediments to saving money and being financially secure. Other obstacles can include benefits that are only available to those who are below set income and asset thresholds. Knowing the ins and outs of ABLE accounts, PASS plans, IDAs and trusts can help you accumulate savings as well as peace of mind.

 

Written by
Karen Bennett
Consumer banking reporter
Karen Bennett is a consumer banking reporter at Bankrate. She uses her finance writing background to help readers learn more about savings and checking accounts, CDs, and other financial matters.
Edited by
Wealth editor