As the world endures the disruptions of COVID-19, perhaps no group feels the weight of the health and financial concerns as acutely as the disabilities and special needs community.
Individuals with disabilities or special needs and their caregivers often receive external support from a variety of sources, from health care to recreation. In addition, children with individualized education programs depend on their schools for services, which may be disrupted by remote learning options (though legally, accommodations must be made). This disruption in services can leave the responsibilities for health care, recreation, teaching and education with caregivers, who are simultaneously facing their own work challenges.
As individuals with special needs and their caregivers navigate the disruption to their lives, the Coronavirus Aid, Relief and Economic Security Act has provided new opportunities — and raised new questions — about their finances. The complexities involved require reliable, trustworthy information about special needs planning topics from the advisory community, particularly by chartered special needs consultants who understand the unique financial challenges faced by this group.
One pressing financial challenge currently faced by the special needs community relates to the stimulus payments provided under the CARES Act. While most Supplemental Security Income recipients will automatically receive their stimulus payments, they must be vigilant about maintaining eligibility for SSI.
Although current guidelines indicate an extended 12-month period to pay this amount down, a stimulus-related deposit of $1,200 into a bank account could put them over the $2,000 asset limit. Financial representatives can work with SSI recipients to make sure appropriate planning vehicles are in place to help maintain eligibility, such as ABLE accounts and special needs trusts.
Equally important is the ability to access all funds available to them. SSI benefit recipients with dependents may need to take an extra step to receive $500 per qualifying child under age 17, in addition to their $1,200 stimulus payment, by registering with the IRS on its Non-Filers tool.
The CARES Act also provides individuals with greater early access to retirement funds via so-called coronavirus-related distributions without accruing the typical penalties for doing so. However, early withdrawals may be a less feasible option — or have a greater negative impact — on the special needs community and their caregivers than the general public.
For instance, employees with disabilities likely do not participate in their employers’ retirement plans so as not to jeopardize eligibility for SSI or Medicaid, so this provision may not help them. Caregivers often already underfund their retirement, not realizing the added cost of caring for a loved one through their entire life. This type of early withdrawal could have an outsized impact on their nest egg — and long-term financial wellness — down the road.
These types of challenges highlight a need for advisers to provide counsel on alternative emergency funding strategies to mitigate the need to tap into savings and retirement funds, where possible, including reducing cash outflow and maximizing cash inflow, turning to other tax-deferred accounts and even weighing low-cost debt options.
The questions raised by the CARES Act are just a taste of the often complicated financial planning considerations faced by the special needs community and their caregivers. One way for advisers to help their clients in the community navigate this is by using a comprehensive checklist that covers government benefits, legal and savings instruments and how they can be used to reach short- and long-term goals.
The growing costs and complex benefits for special needs care require planning and knowledge of the resources available — especially in the midst of a pandemic that has widespread health and financial effects. For advisers, working with this often underserved community provides the opportunity to truly make a difference, both now and in the future.
Jessica Tuman is head of Voya Cares Center of Excellence at Voya Financial.
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