Gifts + Estate Planning

A Financial Guide for People With Disabilities and Their Families

BY Spectrum Wealth Management | Mar 18, 2022

Financial planning is difficult for everyone, but especially so for families affected by disabilities. Though there is a range of financial help available if you or a family member are affected by a disability, navigating all the different benefits, accounts, and bills can be overwhelming. While the costs associated with a disability vary depending on the type and severity, many conditions incur high costs that families feel unprepared to handle.


  • If you are caring for a disabled child, you have a wide range of federal and state benefits available to you. These benefits change, but do not necessarily stop, once a child with disabilities turns 18.
  • ABLE accounts were created by 2014’s Achieving a Better Life Experience (ABLE) Act. Funds in an ABLE account do not, for the most part, count towards an individual’s eligibility for federal or state benefits programs.
  • Supplemental needs trusts don’t have any limits on the amount of money you can put aside to help with expenses related to a disability. On the other hand, they can be expensive to set up and more complicated to manage than ABLE accounts.
  • Families affected by disability should also check if they are eligible for an HCBS (home and community-based services) waiver. This Medicaid waiver allows states to provide care to people with disabilities in the community, rather than putting them into institutional care.

This can be made even worse by feeling that you are alone. But take heart. You are not. At any given time, almost 9 million families in America are caring for a child with disabilities.1 And many of these families are dealing with significant financial difficulties. For example, the average cost of autism is $60,000 a year through childhood, and adults services are expected to exceed $461 billion by 2025.2 Meanwhile, according to CDC research, the average lifetime cost for an individual with cerebral palsy can top $1.5 million, once adjusted for inflation.34

In this guide, we’ll help you plan for your financial future by looking at the four financial topics that are likely to have the most impact if your family is affected by a disability: making sure you receive the right level of benefits, ABLE accounts, supplemental needs trusts, and Medicaid waivers.

It’s likely that you’ll still have questions, of course, because individual situations vary widely. If you need further information, the federal government offers resources, including a variety of programs and services on the many aspects of living with a disability. And if you need to talk to a specialist, the Special Needs Alliance can help you find an attorney.


If you are caring for a disabled child, you have a wide range of federal and state benefits available to you. These benefits change, but do not necessarily stop, once a child with disabilities turns 18.

According to Juliana Crist, senior consultant at AKF Consulting, a municipal advisor to state-run investment plans, families say there are three benefit programs that are particularly important: Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), and Medicaid. If you are looking for an extensive list of benefits available to you or your family as a result of a disability, a great place to start is with the official U.S. government website on disability services.

For most families caring for a disabled child, the most important benefit is SSI. This program provides monthly payments to people with limited income and resources. Children younger than age 18 can qualify if they have a medical condition (or a combination of conditions) that meets Social Security’s definition of disability. A young person’s income and resources must fall within the eligibility limits to qualify for this program.5

When a child with disabilities reaches 18, they are considered an adult. As a result, your family’s entitlement to disability benefits will change.

Some adults can continue to receive SSI. However, the amount they receive may change. This is because when they reach 18, the SSA no longer counts the income and resources of family members (except their spouse) when deciding if they meet the financial limits for SSI. They also apply the disability rules for adults, which are slightly different. In all cases, the SSA will review a person’s medical condition, normally within a year of them turning 18. In some cases, a person who didn’t qualify for SSI before they were 18 will qualify for it afterward.6

ABLE Accounts

Public benefits such as SSI and Medicaid have limits on how much money (and other assets) you can have and still be eligible. Before ABLE accounts, individuals receiving SSI could not have more than $2,000 in countable assets ($3,000 for a couple) without jeopardizing their SSI benefit. The ABLE program was designed to allow disabled people to save money without jeopardizing these benefits. Funds in an ABLE account do not, for the most part, count towards an individual’s eligibility for these programs.7

ABLE accounts have had many positive impacts on those affected by disabilities. According to a spokesperson at the ABLE National Resource Center, people who use the accounts “identify as savers, rather than spenders. With the opportunity to save more in ABLE, [or] through employment, people with disabilities are in many cases hearing for the first time that they are allowed to work. In fact, SSA encourages people to work to their fullest ability and save income to improve their lives.”

Here’s how it works. A disabled person, or their friends or family members, can invest money in an ABLE account. The contributions themselves are not intended to be tax-deductible, although some states may allow deductions against state income taxes. However, the funds within the account grow tax-free.7,8 Cash funds in an ABLE account deposited at an FDIC-insured institution are covered by the Federal Deposit Insurance Corporation (FDIC) for up to $250,00.9

There is a limit to how much they can contribute: $16,000 for 2022.10 An eligible individual may have only one ABLE account. You can use the money in the ABLE account, and won’t have to pay any taxes on the funds, provided that you spend this on qualified disability expenses. Individuals who work can contribute above that annual limit, thanks to the Tax Cuts and Jobs Act of 2017. The ABLE to Work Act allows an ABLE account beneficiary who does not participate in an employer-sponsored retirement plan to contribute, on top of the $16,000, up to the lesser amount of either the prior year’s federal poverty limit ($12,880 in 2022) or the account owner’s compensation for the year.8

Four states—Idaho, North Dakota, South Dakota, and Wisconsin—do not have active ABLE programs. If you live in those states, you should sign up with a state program that accepts outside residents.11 Some states only allow residents to have ABLE accounts. Different states also have different limits on how much you can keep in your ABLE account, and charge different levels of fees for using them.

When it comes to choosing an ABLE account, says Crist of AKF Consulting, you should start with your home state. Many states offer state tax incentives and other benefits (such as exemptions from Medicaid clawbacks) that taxpayers could miss out on by choosing an out-of-state plan. Beyond that, says Crist, cost, ease of use, investment options, and debit card functionality can all be important to consider.

Fast Fact: Not all states have ABLE programs. However, no matter where you live, you can open an ABLE account in any state that accepts outside residents into their program.11

Supplemental Needs Trusts

Both ABLE accounts and supplemental needs trusts (also known as special needs trusts) allow a person diagnosed with disabilities—or their relatives—to save money without affecting their eligibility for public benefits. Before 2014, only supplemental needs trusts could be used for this purpose.

ABLE accounts are easier and cheaper to set up and manage. However, they come with some disadvantages—primarily, limits on the amount of money you can save each year. Supplemental needs trusts don’t have any such limits but can be expensive to set up and more complicated to manage.12

The money in a supplemental needs trust can be used only for a limited range of expenses. You are not supposed to use these funds to cover basic living expenses. Instead, proceeds from this type of trust are commonly used for medical expenses, payments for caretakers, transportation costs, and other permitted expenses.12

If you or a family member are eligible for an ABLE account, it makes sense to establish one. This will help to protect a disabled person’s access to public benefits, can make tracking expenses much easier, and may give you immediate tax benefits.

Today, the main reason for setting up a supplemental needs trust is if you want to put aside more money than ABLE accounts allow—up to about $100,000 without affecting public benefits—or if you want to contribute more than $16,000 per year to your disability-related accounts.13 In that case, it makes sense to pay an attorney to help you set up a supplemental needs trust.

Even after you set up a supplemental needs trust, you can keep using your ABLE account for qualified disability expenses—which are often common, everyday items—such as food, housing, education, personal support services, and assistive technology as well as other quality of life expenses related to living with disabilities.7

Note: The money in supplemental needs trusts is to pay for extra expenses that are not covered by public benefits. You can use the money in an ABLE account for a much broader range of expenses, including the basic costs of living, education, food, employment, and transportation.

Medicaid Waivers

A Medicaid waiver is a way for the federal government to waive rules that normally apply to the Medicaid program. In general, states choose groups of people with particular needs and health conditions and use a waiver to make them eligible for Medicaid.14,15 There are hundreds of Medicaid waivers in force across the country, and Medicaid provides a full list of them on their website.

For most people, the most relevant type of waiver will be the HCBS waiver. The purpose of an HCBS waiver is to let states provide care to certain individuals in the community, rather than putting them into institutional care. This includes elderly people and those with disabilities.15

Those who are accepted into their state’s HCBS waiver program will receive a range of medical and non-medical care, which can vary depending on the individual’s needs and situation, as well as state guidelines.

This may include:

  • Personal care services and supervision, at home or in an assisted living facility
  • A home health aide
  • Nursing
  • Medical supplies and medical equipment
  • Chore and homemaking services, such as shopping, laundry, and cleaning
  • Hot meal delivery services
  • Respite care to relieve a primary caregiver
  • Counseling services
  • Home and/or vehicle modifications, such as ramps and safety rails, to increase independence
  • Support and case management
  • Assistance transitioning from a nursing home into the community
  • Access to senior centers or adult group daycare
  • Transport to and from non-emergency medical appointments
  • Non-medical transportation services
  • Personal emergency response systems15,16

Katie Beckett Waiver

The Katie Beckett Waiver, sometimes also called TEFRA, is a type of Medicaid waiver. It is a particularly important type of Medicaid waiver for families affected by disability because it provides people under the age of 19 with serious conditions with “institutional level” care at home.17

Financial eligibility for the waiver is assessed only against the child’s income and assets, not those of their parents. Unlike home and community-based services (HCBS) waiver programs, states cannot limit the number of “Katie Beckett” participants, so there are no waiting lists.18

If your child qualifies for the Katie Beckett program, they are eligible for a full range of services covered by Medicaid. You can start using these services right away. There is no waiting period.19

Here are some examples of the types of care this waiver will cover:

  • Doctor visits
  • Hospitalizations
  • X-rays
  • Lab tests
  • Prescription drugs
  • Dental and hearing screenings
  • Behavioral health screenings
  • Physical, occupational, and speech therapy
  • Medical equipment and supplies

Coverage varies a little by state, as does the definition of institutional-level care, so check your state’s program for more specific information.

How Does SSA Define Disability?

The law defines disability as “the inability to do any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.”21

What Is an ABLE Account Used for?

ABLE Accounts allow individuals with disabilities to save and invest money without losing eligibility for certain public benefits programs, like Medicaid, SSI, or SSDI. Earnings in your ABLE account are not subject to federal income tax, so long as you spend them on qualified disability expenses.8

Who Qualifies for a Medicaid Waiver?

Generally, states offer HCBS waivers to elderly people (aged 65 or over), physically disabled people, adults and children with developmental disabilities, and medically fragile people who require life support or other extensive medical equipment.15,16

The Bottom Line

Financial planning can be difficult for any family and is especially complicated for families affected by disability. There are, however, a few key elements that can make your financial future more secure.

You should check that you are receiving the right level of benefits, look into setting up an ABLE account or supplemental needs trust, and make sure you understand Medicaid waivers. This advice will apply to almost every family with a member who has a disability, but every family is different, so you should also seek specialist advice when you need it.

This article was originally published by Investopedia on February 25, 2022, and was written by Matt Ryan Webber.


1. Consumer Education Services. “The Cost Of Raising A Special Needs Child.”

2. Autism Speaks. “Autism Statistics and Facts.”

3. U.S. Bureau of Labor Statistics. “CPI Inflation Calculator.”

4. Centers for Disease Control and Prevention. “Data and Statistics for Cerebral Palsy.”

5. Social Security Administration. “Benefits For Children With Disabilities,” Pages 1-4.

6. Social Security Administration. “Benefits For Children With Disabilities,” Page 6.

7. ABLE National Resource Center. “About ABLE Accounts.”

8. Internal Revenue Service. “ABLE Accounts—Tax Benefit for People with Disabilities.”

9. Federal Deposit Insurance Corporation. “Deposit Insurance.”

10. Internal Revenue Service. “Frequently Asked Questions on Gift Taxes,” Select, “How many annual exclusions are available?”

11. ABLE National Resource Center. “Choose the program that’s right for you!”

12. Special Needs Alliance. “Your Special Needs Trust (“SNT”) Defined.”

13. Social Security Administration. “Payee and ABLE Accounts.”

14. Centers for Medicare & Medicaid Services. “Managed Care Authorities.”

15. Centers for Medicare & Medicaid Services. “Home & Community-Based Services 1915(c).”

16. Assisted Living. “What is a Medicaid Waiver? Your Guide to Medicaid Home and Community Based Services.”

17. U.S. Congress. “H.R.4961 – Tax Equity and Fiscal Responsibility Act of 1982,” Page 375.

18. Special Needs Alliance. “Katie Beckett Waiver Brings Home Care to Kids with Serious Disabilities.”

19. Health Insurance Marketplace. “The Children’s Health Insurance Program (CHIP).”

20. Centers for Medicare & Medicaid Services. “CHIP: Benefits.”

21. Social Security Administration. “Code Of Federal Regulations.”

Spectrum Wealth Management, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Additional information about Spectrum’s investment advisory services is found in Form ADV Part 2, which is available upon request. The information presented is for educational and illustrative purposes only and does not constitute tax, legal, or investment advice. Tax and legal counsel should be engaged before taking any action. The opinions expressed and material provided are for general information and should not be considered a solicitation for purchasing or selling any security.