Four ways persons with disabilities can safely save for the future
Savings are an asset, and there are options for individuals for people with disabilities that do not impact the asset limits with Social Security Income (SSI), Medicaid or other benefits.
The largest minority group in the United States are persons with disabilities, comprising 19 percent of the population or about 53 million people, according to Michael Morris at the National Disability Institute. Their barriers to financial stability include low or unstable income, the extra costs of living with a disability and a thinner margin of health. Benefit payments come with restrictions that limit the options for making money and saving. Savings are an asset, and there are options for individuals for people with disabilities that do not impact the asset limits with Social Security Income (SSI), Medicaid or other benefits. Persons with disabilities may need to talk to their caregiver or another professional for details and more explanation.
If you receive public benefits including Social Security Income (SSI) or Social Security Disability Income (SSDI), you also should know the restrictions for making money and saving. To keep essential benefits, you must follow complex rules if you decide to make changes in your life and finances. The good news is that there are several saving options for individuals with disabilities that do not impact asset limits ($2000 in Michigan) associated with SSI, Medicaid or other benefits. Let’s talk about basic information for these four special savings accounts: ABLE accounts, Individual Development Accounts (IDAs), the PASS program and special needs trusts and pooled trusts.
Achieving a Better Life Experience (ABLE) Accounts
Saving in ABLE accounts does not affect eligibility for Supplemental Security Income (SSI), Medicaid, or other federal means-tested benefits. ABLE accounts are set up by or for people with disabilities. The disability had to occur before the age of 26. Anyone can contribute to an individual’s ABLE Account, up to $15,000 (2018). Distributions are not taxed as long as the funds are used for qualified disability benefits, including education, housing, transportation, employment training and support, personal support services, health care expenses, financial management and administrative services. Find more information on the Social Security Administration website and MiABLE accounts in Michigan.
Individual Development Accounts
Individual development accounts are a matched savings account that the account owner uses to start a business, buy a home or get an education or training to help get a better paying job. Each time the account owner adds to their IDA savings account, they may earn a match. For example, when the match is two to one, each time they deposit $25, they will get $50 more toward their savings goal. A federally funded IDA program enables a person to save without reducing SSI benefits. Check here for more information and local participating banks.
Plan to Achieve Self-Support (PASS)
Plan to Achieve Self-Support is for people who are already receiving SSI or SSDI and want to save for a work-related goal. With a PASS, a person can set aside money toward starting a business, going to school or getting training for a job. The work goals include earning income that will partly or completely reduce their SSI or disability benefits over time. Information and the application is on the Social Security Administration website.
Special needs trusts and pooled trusts
Special needs trusts and pooled trusts offer a way to manage and protect resources for people with disabilities without risking their benefits. Governmental benefits provide for the basic
needs of an individual, such as an income, housing, medical benefits and food. Generally, trust distributions must meet several criteria: (1) the expense must be for the sole benefit of the beneficiary, (2) in his or her best interests, (3) other resources are unavailable and/or no other responsible party and (4) be fiscally prudent. Check these resources from the Michigan Law Center.
Again, Michigan State University Extension recognizes all of these choices are complicated and you may need more information from someone you trust or a professional before making a decision. It is good to plan for long-term savings. Find more information about saving and investing by visiting MIMoneyHealth.org.