Every time I use a certain gas station near my children’s school, I am prompted to scan my rewards card. Since I don’t have one, I am then asked if I want to apply for one. So far, I haven’t because aside from the one near my children’s school, I do not frequently encounter that brand of gas station. Completing the application, just to save a couple cents per gallon, feels like too much effort, and often I am in a real hurry. As a responsible financial planner, though, I should be a little more analytical. Given that my car takes premium gas, that the gas station is in a high-cost-of-living Chicago suburb, that I drive a lot, and that I may very well encounter more of this brand of gas if I keep my eyes open, it may very well make financial sense for me to take a few minutes, one time, to fill out the darn application and then save even a few cents, time after time after time. (photo courtesy of Wesley Tingey, via Unsplash)
Some clients come to me, when their family member with a disability is in her/his 40s or 50s and having skipped the steps of applying for the building-block government benefits of Supplemental Security Income (SSI) and Medicaid when their family member was 18. They skipped the steps for what seemed like good reasons at the time. The maximum SSI payments was only $407 in 1991 and $531 in 2001. If the family did not want to charge their young adult/adult child room and board, the payable amounts were only 2/3 of those. If their family member has the capacity to work, it would not take long for the formulaic 50 cents on the dollar reduction (after the miniscule earned-income exclusion) to have their loved one’s SSI payable to $0 anyway. Applications for both SSI and Medicaid (in states where Medicaid does not come automatically with SSI) can be complicated, and (in most cases) Medicaid is vastly inferior to the private health insurance that the family member had under a parent’s employer- sponsored plan (which could continue as long as the parent was covered). At 18, when the parent’s family member was still in school and living comfortably at home with support from the school along with family and friends, the hassle of applying for and maintaining these benefits seemed to outweigh the pluses.
However, when the adult child reaches her/his 40s or 50s and the parents are in their 60s, 70s or even 80s or more, the situation is different. Now, Mom and Dad are beginning to realize that they cannot continue to provide the same level of support to their adult child as they did when s/he and they were much younger. Even when parents are healthy and able and also perhaps freer to provide support because they are retired, they are forced to acknowledge that at some point they will not be around to provide any support at all. If there are adult siblings in the family, they are starting to wonder who will assume the mantle after Mom and Dad are gone, particularly if they have their own children or if they live out-of-state. If the person with a disability has no siblings, Mom and Dad are wondering how or even whether more distant relations or even friends of the younger generation would be able to step in.
When Mom and Dad retire on a fixed income and begin to draw down their own retirement assets, they sometimes come to appreciate that it would be helpful to the success of both their own and their adult child’s financial future if the adult child was also collecting Social Security benefits. In some cases, this is not too hard a fix. If the adult with a disability has never worked or has only worked a under the level that Social Security would consider performing Substantial Gainful Activity (SGA), then it is straightforward to apply for benefits, even when the person is older, although it might require paying out-of-pocket for IQ and other testing that might have been done on the school’s time and dime had the person applied while still in school. But without clear evidence that the disabling conditions started before the person’s age of 22, s/he can only collect SSI and not the so-called Childhood Disability Benefit (CDB) that is based on a parent’s work record and may be much higher. With good forensic detection, it may be possible to build a case for a date of onset before age 22, but it can be very challenging for behavioral health and other conditions that are known to change over time. If the adult with a disability has worked and exceeded the level that Social Security terms Substantial Gainful Activity (SGA), it might be that they did so only because their generous supervisor made accommodations for them, and that, therefore, under Social Security’s own Work Incentives, not all of their earned income should be countable. But it is hard to make this argument after decades of work.
In all cases, as Mom and Dad age, it become clear that professional, paid support will be necessary, eventually. And there’s the rub. In every state, almost every program that can provide people with disabilities assistance with activities of daily living is funded by Medicaid through Medicaid waivers. The services range from part-time support at a minimum level of around 15 hours/week, so that a direct support professional can assist an adult with a disability with managing their home upkeep, health care and activities to full-time, 24-hour support in what we would term a “group home” and may also include employment supports or daytime activities. Even at minimum wage, privately paying a support worker for 15 hours per week at $13hour, would cost more than $10,000 per year, on top of any assistance the family member might need to cover rent, food, and other necessary expenses. Twenty-four-hour support in a small group-home setting would cost upwards of $50,000-$80,000/year or even more, depending on the level of support the family member requires. This is way beyond the private-pay capacity of all but the wealthiest families.
It is not impossible to obtain Medicaid in one’s 40s or 50s but in many cases, it can be a lot harder. The simplest way to obtain Medicaid in states that expanded it through the Affordable Care Act is to be a low-income adult. The problem is that many of the people with disabilities, who passed on obtaining Medicaid at 18, did so because they had the capacity to work and are now earning more than 138% of the Federal Poverty Level, which is the cutoff for ACA Medicaid in most states. The other way for people with disabilities to obtain Medicaid is, in many states, by having SSI. But, again, many of the people with disabilities who passed on obtaining benefits at age 18, now earn too much to qualify for SSI. This can be particularly true for people, whose disabilities are largely physical and who are capable of career-level jobs but also need a lot of personal attendant support to manage their activities of daily living. In addition, in some states, people must fall into certain categories to access certain services. In my home state of Illinois, for example, people, who have an intellectual or developmental disability, are best served by accessing the Developmental Disability waiver; however, in order to do so, they have to establish a disability onset date prior to 18 and must have documents from that time—often hard to locate 30 or 40 years later.
With the help of a trained expert, many of these situations can be rectified, but it takes a lot more time and work to do so than if the person with a disability had applied for benefits as soon as they were eligible, with recent documentation readily at hand and very little work history to get in the way. While it is never too late to start this kind of benefits planning, the best time to start is when your child is turning 18. The second-best time to start, if you child is over 18, is today. If I can take my own advice, I will enroll in that rewards program the very next time I use that brand of gas station by my children’s school. Even if I only save a few cents per visit over the long term it will add up.