Disability requires special planning, resources

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At least 54 million Americans are physically or mentally disabled, half of them severely so, according to the U.S. Census Bureau. For most, disability creates tremendous financial uncertainty because of associated expenses and, often, the simultaneous loss of income. |ret||ret||tab|

Although one's disability may be permanent, financial uncertainty usually can be alleviated with proper financial planning.|ret||ret||tab|

The key to restoring and maintaining financial stability is to carefully manage limited financial resources. Start with the family. The expense of caring for a disabled family member, let alone the emotional aspects, will likely mean dramatic financial sacrifices and trade-offs. Professional help will be called for, including a financial planner familiar with disability issues.|ret||ret||tab|

Don't rush into making major financial decisions. Consider not only short-term medical needs, but long-term needs as well. A disabled person may live a long life, outliving those around them, and any financial settlement from insurance or a lawsuit may need to be stretched out over a lifetime.|ret||ret||tab|

One of the earliest planning steps will be to identify potential, "realistic" sources of income. Depending on the cause of the disability and the amount of available financial resources, these might include automobile insurance, medical insurance, worker's compensation, credit and mortgage disability insurance that pays off outstanding debts, savings and investments, the sale of a life insurance policy, employee benefits, court-ordered restitution from the person responsible for the disability, and civil lawsuits.|ret||ret||tab|

A critical source of income can be disability insurance, either private or through an employer. If such income-replacement coverage is not available, one can apply for Social Security disability insurance, though the standards are tough. Be persistent. About half of those rejected are accepted on appeal.|ret||ret||tab|

If disability and long-term care insurance aren't available, the federal and state governments may provide assistance. Those with low incomes and few assets may qualify for federal supplemental security income and Medicaid, which help pay doctor and hospital bills. States and counties can help provide assistance, and veteran's benefits can help. State vocational rehabilitation departments teach the disabled new job skills and help find employment. And there are local nonprofit charities, service clubs, churches and other organizations that may help.|ret||ret||tab|

Returning to work is another obvious, and often desired, source of income. It's also an important access to affordable health insurance and retirement plans. The American Disabilities Act makes it much easier for the disabled to return to work with former employers, or find new work. Many disabled have turned to self-employment. And, in late 1999, President Clinton signed a law allowing low-income disabled persons to return to work without losing important govemment-funded health coverage.|ret||ret||tab|

One source of potential income to avoid tapping, if possible, is one's retirement nest egg. Many disabled people face the same retirement issues as the nondisabled, so tapping retirement funds may seem to be a good short-term strategy, but usually is not a good long-term move.|ret||ret||tab|

Expenses associated with disability may range from medical and physical rehabilitation to home and automobile renovation and family counseling. Careful budgeting helps. You also may be able to negotiate lower payments or reduced obligations with creditors. Despite what may seem insurmountable expenses, try to keep or find medical coverage for family members, and try to keep contributing to the retirement accounts. Don't rush into bankruptcy, despite its allure. Bankruptcy should always be viewed as a last resort.|ret||ret||tab|

One other key area to consider involves estate planning documents. Get a durable power of attorney and a health care proxy, which are designed to allow a person to legally act on behalf of another, and a living will, in|bold_on| which the person expresses what types of lifesaving treatment they will allow.|ret||ret||tab|

|bold_on|(The preceding article was produced by the Financial Planning Association and provided by William O. Woody, CLU, ChFC, CFP, of Stovall Woody Associates.)|ret||ret||tab|

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