The Covid-19 pandemic has drawn attention to a variety of societal shortfalls, ranging from our ability to supply medical professionals with PPE to supply chain stability.
Still, one of the most pressing issues it has highlighted is the ongoing plight of disabled Americans. Those disabled individuals have long struggled to access necessary medical care; one of the most substantial structural challenges facing this population is actually financial. This may come as a surprise to those who are only marginally familiar with SSI/SSDI regulations, but it’s the unfortunate truth.
Disabled people struggle financially because because caps on income and assets are unrealistically low and haven’t been increased in decades; for example, SSI recipients can have a maximum of $2,000 in assets, or $3,000 for a couple, though most married people can’t even qualify due to their spouse’s income.
However, with the number of people unable to work due to Covid expected to spike, this issue is attracting public attention, and many families are scrambling to address potential financial concerns.
Planning amidst precarity
One of the biggest challenges for families trying to plan for disabled relatives’ financial futures right now is overall financial precarity. Though markets are recovering, Covid-19 has rocked the financial system, and with cases on the rise again due to the Delta variant and a decrease in public precautions, investors are still looking at the market through a lens of anxiety.
Expert analysis suggests that commodities will do better over the next decade, but for those seeking more economic certainty, that’s not much of a reassurance.
Perhaps one surprising winner in the current environment is certain insurance and financial services companies. Recognizing how fragile our lives and our health can be, more people are considering life insurance policies that include long-term care coverage.
Planning when it seems too late
One of the best steps that people can take if they are currently able-bodied is to invest in a long-term disability insurance policy. While it’s too late for those with long Covid and other long-term disabilities to purchase such a policy, the plight of many previously healthy, hard-working people – people who are now forced to live on less then $1,300 per month – underscore just how important these policies are.
What options, beyond SSI/SSDI, are available to people who are already disabled by Covid-19? The reality is complicated. Relatives might choose to create financial trusts, but need to consult with experts to ensure this does not impact the affected party’s disability benefits and Medicare eligibility.
Financial trusts can be a good option because they typically aren’t controlled by the person they benefit, so they may not count against asset limits, but this depends on their source of disability income (SSI vs. SSDI), so it’s important to do the legal and financial groundwork before setting aside such funds.
Parents of children who have fallen ill with Covid-19 should also pay attention to their long-term planning options, as many of these young people have already shown signs of lasting disability. Children and young adults with long Covid may be eligible for ABLE accounts, a special tax-exempt savings account for those who became disabled before age 26.
It’s historically been difficult for financial planners to convince their clients of the importance of disability insurance, but the Covid-19 pandemic may have driven that point home for them. With millions of people expected to deal with lasting effects similar to or classified as chronic fatigue syndrome/myalgic encephalitis (CFS/ME) and potentially unable to participate in the workforce, disability-based financial precarity has come home to roost, impacting everyone, no matter their age, race, or previous source of employment.