Disabilities and Finances

This week, I’m doing a lot of learning… or at least trying. I started researching the subject of finances as they relate to persons with disabilities after seeing something I didn’t understand on my Facebook feed. It was a meme about income and asset limits for someone receiving disability assistance from the government. As an investor education coordinator, my mind first turned to investing, so I Googled “SSDI and investing income.” The search hurdled me through a rabbit hole of results and more questions.

Allow me to pause for a moment and stress that I am non-disabled, and I do not have any immediate family members with disabilities, so I’m not a special needs expert. 

I intend for this week’s blog to be an introduction to the topic of finances as they relate to persons with disabilities. I also intend to write additional posts that take a deeper dive into some specific issues, and these future posts will include interviews with caregivers, persons with disabilities, and experts. Here are some of the issues I hope to explore:

• Working and income
• Investing and saving for the future
• Social Security and Medicaid
• Financial planning

Statistics

Now for some statistics regarding employment, income, and financial stress. These findings from FINRA’s national financial capability study of adults with disabilities are eye-opening. Keep in mind, these stats are from a 2017 survey – nearly a decade after the Great Recession of 2008 but before the current Coronavirus pandemic.

• 1 in 9 working-age adults (18-65) have a disability. Of those, only 1 in 3 are employed.
• Persons with disabilities are almost 2 times more likely to have an income less than $35,000, and 26 percent of survey respondents with disabilities had household incomes below $15,000.
• Less income equals more financial stress. Persons with disabilities are almost 3 times more likely to have extreme difficulty paying bills, and 55 percent of survey respondents say they wouldn’t be able to come up with $2,000 to cover an emergency expense.

Resources

It’s not all bad news. There are resources available that can help. Programs like Section 8 housing vouchers, Supplemental Nutrition Assistance Program (SNAP), and Low-Income Home Energy Assistance Program are available to qualifying low income families, but they can also help alleviate some of the financial strain of having a disability. Other programs are specifically designed to assist Americans with disabilities.

SSDI and SSI

Social Security Disability Insurance (SSDI) provides benefits to people who have made contributions to the Social Security Trust Fund but are now unable to work due to a qualifying disability. Currently, the average disabled worker receives $1,258 per month. The amount received is based on average lifetime earnings, not on household income, financial resources, or how severe your disability is.  To receive SSDI, you must be deemed disabled and unable to work.

SSDI is different from Supplemental Security Income. SSI provides monthly cash assistance to disabled or elderly people who have financial needs regardless their work history. Currently, SSI’s maximum monthly payment is $783 for an eligible individual, $1,175 for an eligible individual with an eligible spouse, and $392 for an essential person.

Investopedia did a great job of explaining these two types of benefits in an easy-to-understand way, and their blog post walks you through the evaluation process. I highly recommend you give it a read if you or someone you know might be eligible to receive these benefits.

The National Council on Disability has a LOT of content related to financial assistance and incentives. You can find their publications here.

ABLE Savings Accounts

An “inability to work” is required for both SSDI and SSI benefits. That means earning too much money can endanger someone’s ability to receive critical financial support. Plus, SSI has asset limits that serve as a disincentive to save.

Enter ABLE savings accounts. The name ABLE comes from the Achieving a Better Life Experience Act of 2014. ABLE savings accounts allow qualified individuals with disabilities to save money and not risk losing vital public benefits, such as SSI or Medicaid. And these savings accounts are tax-advantaged. I asked the Indiana Treasurer’s office for some more information, and they told me about INvestABLE Indiana, our state’s 529A savings option.

Persons with disabilities can use ABLE accounts to save money and pay for disability-related expenses, including education, transportation, housing, and medical needs. Similar to 529 education savings plans, 529A contributions can be made by anyone, including the account owner, family, or friends. To be eligible, the account holder must have the onset of disability prior to age 26 and be receiving SSI or SSDI. If the account holder is not receiving SSI or SSDI, they will need to receive a doctor's diagnosis of significant functional impairment. The staff at the Indiana Treasurer's office can answer any questions you might have.

I plan to write a lot more about ABLE savings accounts in a future blog post.

I've barely scratched the surface when it comes to financial resources for persons with disabilities. It's a complex subject, and there's no one-size-fits-all assemblage of resources to address the needs of this large and diverse community. There's a lot to navigate when it comes to living with a disability, and not all of it is easy to understand. Financial planning can be difficult for caregivers and those who are differently abled. Based on the statistics outlined in this post, it's clear that persons with disabilities and their families are impacted more significantly than many of us may know. I will continue to educate myself and in turn educate you. Hopefully, through future posts, I can provide you with a starting point for addressing financial issues related to disabilities. If you believe I’m missing anything or have thoughts on future topics for discussion please reach out.