DISABILITY PERSPECTIVE-People with disabilities and their family members are often too busy managing their disability to give much thought to future care needs.
Weeding through the intricacies of government programs and financial options can be overwhelming when you’re trying to get through one day at a time.
However, providing for safe and effective care later in life requires researching all the financial options open to you or a loved one. It’s not a lighthearted conversation to have, and it’s tempting to ignore the problem until it’s too late. Facing the future by planning now is essential if your loved ones are to be made aware of your care and end-of-life arrangements.
Medicaid is one important resource that is often overlooked because it is widely understood to be solely for the financially disadvantaged. It’s also a benefit that covers health care needs for disabled persons over the age of 18 and provides access to services and government programs that can help with a wide range of daily living needs, including learning vocational or life skills.
In some cases, Medicaid may also pay for group residence living arrangements. Some families are able to supplement Medicaid by contributing to a special needs trust fund, which can help finance a disabled person’s living expenses without putting other government benefits at risk. Medicare Supplemental Insurance is another fill-in-the-gap option.
The 529A (or ABLE) savings account was launched a couple of years ago to give disabled people the opportunity to do more with savings. Typically, a disabled individual with more than $2,000 in savings would be disqualified from public benefits such as Supplemental Security Income and Medicaid. The ABLE account allows you to save for qualified expenses without being taxed on the earnings and, in most cases, retaining eligibility for many benefit programs. It’s designed to be a simpler and less expensive option than setting up a special needs trust.
Contributions to an ABLE account aren’t tax-deductible (rules vary by state), though growth is tax-free as long as withdrawals are used to pay for disability-specific expenses. It’s an especially attractive option for disabled persons who want to save more than $2,000 and for families who wish to deposit financial gifts or inheritance from individual family members.
There are a number of special-needs trusts that can be used to supplement what a disabled individual receives from government-operated programs. Money can be added as desired or life insurance and estate proceeds can be used to fund them, and there are few restrictions as far as what the money can be used for as long as it’s for the beneficiary.
Disabled individuals often use an insurance policy to help fund supplemental trusts. Term life insurance is the most affordable option because it covers only a limited time period, though disabled individuals may require something more lasting over time. It makes good financial sense to purchase a policy sooner than later. Acquiring a policy at age 50 can be significantly more expensive than one purchased at age 30.
Planning for the future and taking action now can save you a lot of money later in life when your need is greater. Don’t avoid having the conversation about care arrangements and how to provide for them. It’s the best way to make sure that family members understand your arrangements.
(Patrick Young writes from personal experience. He is disabled, lives in Los Angeles and is a CityWatch contributor.) Image courtesy of Pixabay.com. Prepped for CityWatch by Linda Abrams.