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Saving money for people with disabilities

adult with down syndrome using a computer
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adult with down syndrome using a computer
Jozef Polc/500px/Getty images
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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.

Key disability statistics

The likelihood of having a disability varies based on factors such as age, gender and race.

Age breakdown of people with disabilities

The prevalence of disabilities among age groups is as follows, based on data from the 2018 American Community Survey by the U.S. Census Bureau:

  • Ages 4 and under: 0.7 percent
  • Ages 5-15: 5.4 percent
  • Ages 16-20: 6.3 percent
  • Ages 21-64: 10.4 percent
  • Ages 65-74: 24.4 percent

Gender breakdown of people with disabilities

The rate of disability in people of all ages is slightly higher in women than men, with 12.4 percent of women and 12.7 percent of women having some form of disability.

Race breakdown of people with disabilities

The disability rate based on race in the U.S. is:

  • Black/African American: 14 percent
  • Non-Hispanic White: 11 percent
  • Hispanic/Latino: 8 percent
  • Asian: 5 percent

Breakdown in percentages of disability types

The most common disabilities are ambulatory ones — which are those in which a person experiences trouble walking — according to a 2018 report from Cornell University. The report breaks down the prevalence of various types of disabilities in non-institutionalized individuals of all ages:

  • Ambulatory: 6.8 percent
  • Independent living: 5.6 percent
  • Cognitive: 5.1 percent of
  • Hearing: 3.6 percent
  • Self-care: 2.6 percent
  • Visual: 2.3 percent

Extra expenses and income limits

Common expenses for the disabled

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 accessible and located near doctors, grocery stores and places of employment.

Based on data from Debt.org, Georgetown University, National Service Animal Registry and HomeAdvisor, common medical and disability-related expenses include:

  • Average cost for doctor visits in the U.S. for a patient requiring comprehensive evaluation: $234
  • Average annual out-of-pocket cost for prescriptions for adults: $177
  • Price of a service dog: $15,000-$30,000
  • Average cost for housing that is accessible: $4,492

Households with an adult member who has a work disability require an average of 28 percent more income, or $17,690 a year, to maintain the same standard of living as a household without a disabled member.

Expense Average cost
Home remodeling needed to make it accessible $4,492
Doctor visit for comprehensive evaluation $234
Annual cost of prescription drugs $177
Acquiring a service dog $15,000-$30,000
Annual care for service dog $500-$10,000

Income limits for government assistance

Disabled individuals who are able to work may need to abide by restrictions on their income and assets to receive certain benefits. Two government assistance programs are provided by the Social Security Administration, with maximum income and asset limits to qualify:

  • Social Security Disability Insurance (SSDI): This program pays benefits to disabled people who work, with income limits in 2022 of $1,310 for those who are not blind and $2,260 for those who are blind. There is no asset limit for those receiving SSDI.
  • Supplemental Security Income (SSI): This program pays benefits to disabled or elderly individuals with low levels of both income and assets, with income limits in 2022 of $1,767 for individuals and $2,607 for couples (if the income is earned from wages). The asset limit for all recipients is $2,000 for those who are single and $3,000 for those who are married.

The number of people receiving benefits under these two programs in January 2022 was:

  • SSDI: 7.8 million
  • SSI: 7.7 million

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 permitted per disabled individual.

More than 75,000 people have an ABLE account, while more than 14 million are eligible. The average balance is more than $6,000.

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.

The PASS program is only available to those who receive SSI benefits, which was 7.7 million in January 2022.

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. More than 100,000 people are estimated to have opened an IDA account in the U.S.

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 for expenses that may 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.

The percentage of caregivers of a dependent with special needs who had set up a special needs trust was just 12 percent in 2005, yet it had increased to 21 percent by 2011, a study showed.

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 achieving financial security. Other obstacles may 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