Social Security Solutions, another leading provider of software-based optimization, prefers to provide advice in this area one-on-one to its clients due to the complex factors involved. The firm usually begins by advising clients to start the application process early.
“It can be a long process to be awarded either SSDI or SSI benefits,” says Robin Brewton, vice president of client services for the company. (A Social Security Administration brochure that guides families through the available benefits for disabled children and how to apply is available here.)
Brewton also notes that claims for disability benefits often are denied on first application.
“Often, families will either accept the denial and walk away, or they will file another claim for benefits,” she says. “Instead, they should always file an appeal to the initial denial.” If the appeal is denied, a disability attorney can help with an appeal.
Saving, Investing, and Insurance
Congress created a new saving opportunity for people with disabilities in 2014 with passage of the Achieving a Better Life Experience Act. The law permits creation of ABLE tax-advantaged savings accounts that permit people with special needs to save up to $100,000; amounts over that amount can lead to suspension of SSI benefits. ABLE accounts are similar to 529 college saving accounts. A number of states have created ABLE accounts. (More information is available in this recent Morningstar column [subscription required] and from the Able National Resource Center.)
Ehlert advises clients to fund the trust while they are still working and household income is higher. The trust can hold a mix of assets, including cash, an investment portfolio and life insurance.
Ehlert also advises clients to buy “second to die” policies that provide benefits to heirs after the last surviving spouse dies. The policy amount should be geared to a calculation of the disabled child’s living expenses and projected lifetime needs.
“It’s really the cheapest way to fund living expenses for a child,” she says.
The Broader Family
Parents should leave behind a carefully prepared document spelling out needs and wants of the family member for use by his guardian. It should coordinate with the care plan, cash flow, retirement plan, and estate plan.
After a retirement plan is in place, don’t neglect sharing it with extended family. Anyone with a specific future role needs to know what it is, and agree to it.
“It’s important to educate the family on what the parents have set up, and to make sure everyone knows where the important documents can be found,” Ehlert says. “Often we find that people don’t know what they are supposed to do after the parents are gone.”