What kind of advice do we need? Disability and finance
December 2, 2020 12:05 PM Subscribe
A relative is very ill and will be unable to work for an unspecified period, possibly permanently. We need expert advice but I'm not sure what kind.
The relative is in their forties, single with a child, has no money and has student loans. They are currently on long-term disability from their job, but they will be let go from their job in coming months since they've been ill most of the year and the job is such that it just can't be left empty any longer. The relative is staying with friends but will need to move in January or February. They must stay in Minnesota to continue to access insurance through MNCare.
Basically, we need to figure out how best to guarantee their long-term financial stability. Their parents are retired fairly comfortably and will, with luck, leave a modest middle class estate (house, small amount of investments) but this is not a family with pots of money sitting around.
It seems clear that the relative will need to live with family for a long time or permanently. No family is currently housed in Minnesota in such a way that the relative can live with them, so family is looking into renting a larger apartment, maybe co-signing loans with the parents to buy a house to share, etc etc. Because there are not pots of money sitting around, we really need to game out the best thing to do in case we do need to support the relative and the child permanently.
What kinds of advisors do we need? How can we find specific ones? (We have a good lead on someone who can tell us about literally *getting on disability*, so it's more "how best to manage money and how do larger family finances relate to this?)
In particular, I am looking for advice about finance and disability. I know there are specialized websites, advisors and discussion boards but I can't seem to find anything really good.
The relative is in their forties, single with a child, has no money and has student loans. They are currently on long-term disability from their job, but they will be let go from their job in coming months since they've been ill most of the year and the job is such that it just can't be left empty any longer. The relative is staying with friends but will need to move in January or February. They must stay in Minnesota to continue to access insurance through MNCare.
Basically, we need to figure out how best to guarantee their long-term financial stability. Their parents are retired fairly comfortably and will, with luck, leave a modest middle class estate (house, small amount of investments) but this is not a family with pots of money sitting around.
It seems clear that the relative will need to live with family for a long time or permanently. No family is currently housed in Minnesota in such a way that the relative can live with them, so family is looking into renting a larger apartment, maybe co-signing loans with the parents to buy a house to share, etc etc. Because there are not pots of money sitting around, we really need to game out the best thing to do in case we do need to support the relative and the child permanently.
What kinds of advisors do we need? How can we find specific ones? (We have a good lead on someone who can tell us about literally *getting on disability*, so it's more "how best to manage money and how do larger family finances relate to this?)
In particular, I am looking for advice about finance and disability. I know there are specialized websites, advisors and discussion boards but I can't seem to find anything really good.
ABLE accounts are only available to those who were significantly disabled before the age of 26.
posted by blue suede stockings at 12:45 PM on December 2, 2020 [1 favorite]
posted by blue suede stockings at 12:45 PM on December 2, 2020 [1 favorite]
They must stay in Minnesota to continue to access insurance through MNCare.
Once this person is on SSDI (assuming they have worked enough over the course of their career to qualify), they will usually be eligible after two years for Medicare. So this isn't necessarily the case permanently if it presents a real difficulty. (SSDI payments may be too high in the interim for Medicaid eligibility but some states have various ways to buy in.)
If you're already talking to a lawyer who handles SSDI applications, they can almost certainly refer you to another lawyer who specializes in these kind of family law issues. That's where I'd start if I were seeking private assistance. (There's at least one Mefite who does this kind of work but I always forget his name, sorry.)
posted by praemunire at 1:37 PM on December 2, 2020
Once this person is on SSDI (assuming they have worked enough over the course of their career to qualify), they will usually be eligible after two years for Medicare. So this isn't necessarily the case permanently if it presents a real difficulty. (SSDI payments may be too high in the interim for Medicaid eligibility but some states have various ways to buy in.)
If you're already talking to a lawyer who handles SSDI applications, they can almost certainly refer you to another lawyer who specializes in these kind of family law issues. That's where I'd start if I were seeking private assistance. (There's at least one Mefite who does this kind of work but I always forget his name, sorry.)
posted by praemunire at 1:37 PM on December 2, 2020
I run up against this in my work often, and even with 20 years of experience I still lean on professionals and experts to help me evaluate a client's public benefits options. SSI v SSDI v Medicare v Medicaid v Expanded Medicaid ... they all have different requirements, different advantages etc.
If I don't have an expert in a given state, I often search for disability support groups and public benefit coordinators. Here are a couple of possible groups that may be of assistance:
Disability Hub MN
Mid-Minnesota Legal Aid
Minnesota Care Planning Council
Is there a specific reason that this relative must stay on MNCare and cannot apply for Medicaid in a new state of residence? I anticipate you may tell me that MNCare is Expanded Medicaid (higher resource limits) and the family members are in states without Expanded Medicaid (so lower resource limits), but I raise the question just in case considering it is helpful.
Depending on how much there is terms of assets/potential support, one vehicle through which money or assets can be given to a disabled individual without loss of means-tested benefits, is a Special Needs Trust. This can be done through non-profit trustees. Also look into Pooled Trusts. These exist because when someone is on a means-tested public benefit that they qualify for due to being low income, giving them income or assets would make them no longer eligible. When the giving is done through an appropriate vehicle like an SNT, it doesn't affect eligibility.
I think your best bet is looking for a Trust/Estate or Elder Law attorney that has expertise with Medicaid asset protection. There is a lot of overlap between these two expertise, and while I know your relative is in their 40s I still think this is the zone of what you want. The resources I linked above may be able to help you find lawyers.
When you contact potential resources, I think you want to tell them that you need help ensuring a vulnerable relative gets access to the most appropriate package of public benefits available, and that limited family support resources are used in the most effective way that does not undermine eligibility. Don't completely cut off the idea of moving states, if health coverage can be obtained in the target state where relatives could provide support.
I realize limited ability to provide financial help means that funds paid to lawyers could be a concern. Don't give up on the idea of a lawyer without reaching out to them to understand their fee structure, costs, etc. Be up front about it, there is no shame in getting early clarity about whether options are affordable.
posted by MustangMamaVE at 2:25 PM on December 2, 2020 [3 favorites]
If I don't have an expert in a given state, I often search for disability support groups and public benefit coordinators. Here are a couple of possible groups that may be of assistance:
Disability Hub MN
Mid-Minnesota Legal Aid
Minnesota Care Planning Council
Is there a specific reason that this relative must stay on MNCare and cannot apply for Medicaid in a new state of residence? I anticipate you may tell me that MNCare is Expanded Medicaid (higher resource limits) and the family members are in states without Expanded Medicaid (so lower resource limits), but I raise the question just in case considering it is helpful.
Depending on how much there is terms of assets/potential support, one vehicle through which money or assets can be given to a disabled individual without loss of means-tested benefits, is a Special Needs Trust. This can be done through non-profit trustees. Also look into Pooled Trusts. These exist because when someone is on a means-tested public benefit that they qualify for due to being low income, giving them income or assets would make them no longer eligible. When the giving is done through an appropriate vehicle like an SNT, it doesn't affect eligibility.
I think your best bet is looking for a Trust/Estate or Elder Law attorney that has expertise with Medicaid asset protection. There is a lot of overlap between these two expertise, and while I know your relative is in their 40s I still think this is the zone of what you want. The resources I linked above may be able to help you find lawyers.
When you contact potential resources, I think you want to tell them that you need help ensuring a vulnerable relative gets access to the most appropriate package of public benefits available, and that limited family support resources are used in the most effective way that does not undermine eligibility. Don't completely cut off the idea of moving states, if health coverage can be obtained in the target state where relatives could provide support.
I realize limited ability to provide financial help means that funds paid to lawyers could be a concern. Don't give up on the idea of a lawyer without reaching out to them to understand their fee structure, costs, etc. Be up front about it, there is no shame in getting early clarity about whether options are affordable.
posted by MustangMamaVE at 2:25 PM on December 2, 2020 [3 favorites]
blue suede stockings, thank you for correcting me. My own disability's onset was ongoing for several years, so I did not know there was an age limit.
posted by Fukiyama at 3:08 PM on December 2, 2020 [1 favorite]
posted by Fukiyama at 3:08 PM on December 2, 2020 [1 favorite]
Just FYI, many SSI/SSDI lawyers work on contingency. There's a statutory cap on the percentage of the award they can receive. So funds for that part of the problem don't necessarily have to come out of the family's assets.
posted by praemunire at 4:23 PM on December 2, 2020 [1 favorite]
posted by praemunire at 4:23 PM on December 2, 2020 [1 favorite]
Disability and financial matters are complex, and elder law attorneys generally know quite a bit about being strategic with assets, even if the person with a disability is an adult and not “an elder”, sometimes that can be planning so a typical inheritance does not knock the recipient off of SSDI or their health insurance/access to health care.
Not being from MN, our local Office on Aging, Department of Disabilities and Centers for Independent Living can have website/FAQ information that is more specific for that area.
MustangMamaVE is spot-on
posted by childofTethys at 5:23 PM on December 2, 2020 [1 favorite]
Not being from MN, our local Office on Aging, Department of Disabilities and Centers for Independent Living can have website/FAQ information that is more specific for that area.
MustangMamaVE is spot-on
posted by childofTethys at 5:23 PM on December 2, 2020 [1 favorite]
The student loans can be discharged (forgiven) because of disability. This is actually fairly easy, in my experience helping others. Get a forbearance or other means to stop payments. Get the disability discharge info from the loan services and step through the process.
There is no federal tax liability on the discharge if your relative is insolvent. The discharge is not considered income if the debtor is insolvent at the time of discharge/forgiveness. This applies to credit card and other kinds of debt as well. I have had success helping others get credit card debt forgiven entirely or settled at 15 to 50 percent because of disability. The tax relief applies to this debt as well if your relative is insolvent. There is an IRS publication, probably online although I haven’t looked tonight, that explains “insolvency” and when it results in exclusion of the benefit of loan forgiveness from income.
The states usually have a similar tax relief provision and publication explaining it. I don’t know specifically about Minnesota.
This is like a super-double-secret bankruptcy. The only public sign will be the credit card settlements on their credit reports. Multiple settlements at the same time have surprisingly little and short term effect on the debtor’s credit score.
A couple of caveats:
1. You must find all the outstanding debt and do the forgiveness/debt settlement all at once. Pull all the credit reports ( free on the FTC website for the major three). Get the utility credit reports and the bank bounced check reports as well. I have not worked in Minnesota, so can’t list all the credit reporting agencies in use there. If you google it you likely can find a complete list with contacts. Beware the zombie debt which comes back to haunt your disabled resident years later. This zombie debt is the major credit score depressor and human stressor when you relative is going for a new apartment or mortgage or car loan. It suddenly appears and tries to ruin the downtrodden persons life. Find all the debt now to avoid zombie debt later.
2. Secured debt is not suitable for forgiveness/discharge/tax relief/credit report improvement. Pay it off or give the car back, but be careful of your relative’s inability to keep up with ongoing debt payments because of disability, even if the funds are available. Sometimes it is a “no spoons left” situation, not a no money left situation.
3. You may have to overcome your relative’s psychological hurdles to what is effectively a private bankruptcy. I helps to explain how this debt settlement/discharge cost to the lender is already built into the price debtors pay for borrowing money. This is a known risk for the lender, as some percentage of prime working age become unexpectedly disabled every year, so the lenders get paid in advance via higher interest rates, fees, etc. So the creditors have Akins of insurance to cover the risk in advance. In doing this pro bono work I have found the debtor’s resistance to what they consider a default to be a major impediment. You have to plan for this shame response in advance.
4. You do have to be careful of the credit reports, including the utility credit reports. Otherwise you may face a sudden crisis because they can’t get the gas turned on because of some rogue Comcast bill. Watch out for debt that your relative does not actually owe, like Comcast, Bank of America, Wells Fargo, and any bank that charges $700 in fees on a $4 overdraft, and extorts the full amount via the utility black list or the checking account blacklist. They call them credit reports, but they are really blacklists, as you cannot get utilities or checking accounts until you pay the extortion. Regular credit reports are different in that the potential debtor can almost always still get credit, though at a much higher rate.
5. Beware sudden secret court judgements. Disabled persons often don’t have the spoons to respond to notices. Unscrupulous collectors will fake service of process and get a default judgement without notice. Very difficult to overturn, very distressing for your relative. This is one reason why you must be aggressive in finding all the debt at the start.
6. Be wary of paying for any part of this except tax advice, loan settlement advice, and judgement overturning legal work. The work I have described is absolutely essential to settle disabled person up for financial serenity, but most of it does not require a lawyer at all. But the disabled person is often unable to do any of this work.
7. Medicare starts two years after the date of onset of disability. It does not matter if the disabled person didn’t get social security disability right away. But the person has to have SSDI to get Medicare. The SSDI determines the date of onset of disability, and thus the date two years later when the person gets Medicare.
Pardon my typos I am engaged in this work pro bono for another prime working age disabled person. If I don’t get back to it the person will become homeless. I wish you and your relative the best of luck in slogging through the nitty gritty of this process.
posted by KayQuestions at 3:50 AM on December 4, 2020 [2 favorites]
There is no federal tax liability on the discharge if your relative is insolvent. The discharge is not considered income if the debtor is insolvent at the time of discharge/forgiveness. This applies to credit card and other kinds of debt as well. I have had success helping others get credit card debt forgiven entirely or settled at 15 to 50 percent because of disability. The tax relief applies to this debt as well if your relative is insolvent. There is an IRS publication, probably online although I haven’t looked tonight, that explains “insolvency” and when it results in exclusion of the benefit of loan forgiveness from income.
The states usually have a similar tax relief provision and publication explaining it. I don’t know specifically about Minnesota.
This is like a super-double-secret bankruptcy. The only public sign will be the credit card settlements on their credit reports. Multiple settlements at the same time have surprisingly little and short term effect on the debtor’s credit score.
A couple of caveats:
1. You must find all the outstanding debt and do the forgiveness/debt settlement all at once. Pull all the credit reports ( free on the FTC website for the major three). Get the utility credit reports and the bank bounced check reports as well. I have not worked in Minnesota, so can’t list all the credit reporting agencies in use there. If you google it you likely can find a complete list with contacts. Beware the zombie debt which comes back to haunt your disabled resident years later. This zombie debt is the major credit score depressor and human stressor when you relative is going for a new apartment or mortgage or car loan. It suddenly appears and tries to ruin the downtrodden persons life. Find all the debt now to avoid zombie debt later.
2. Secured debt is not suitable for forgiveness/discharge/tax relief/credit report improvement. Pay it off or give the car back, but be careful of your relative’s inability to keep up with ongoing debt payments because of disability, even if the funds are available. Sometimes it is a “no spoons left” situation, not a no money left situation.
3. You may have to overcome your relative’s psychological hurdles to what is effectively a private bankruptcy. I helps to explain how this debt settlement/discharge cost to the lender is already built into the price debtors pay for borrowing money. This is a known risk for the lender, as some percentage of prime working age become unexpectedly disabled every year, so the lenders get paid in advance via higher interest rates, fees, etc. So the creditors have Akins of insurance to cover the risk in advance. In doing this pro bono work I have found the debtor’s resistance to what they consider a default to be a major impediment. You have to plan for this shame response in advance.
4. You do have to be careful of the credit reports, including the utility credit reports. Otherwise you may face a sudden crisis because they can’t get the gas turned on because of some rogue Comcast bill. Watch out for debt that your relative does not actually owe, like Comcast, Bank of America, Wells Fargo, and any bank that charges $700 in fees on a $4 overdraft, and extorts the full amount via the utility black list or the checking account blacklist. They call them credit reports, but they are really blacklists, as you cannot get utilities or checking accounts until you pay the extortion. Regular credit reports are different in that the potential debtor can almost always still get credit, though at a much higher rate.
5. Beware sudden secret court judgements. Disabled persons often don’t have the spoons to respond to notices. Unscrupulous collectors will fake service of process and get a default judgement without notice. Very difficult to overturn, very distressing for your relative. This is one reason why you must be aggressive in finding all the debt at the start.
6. Be wary of paying for any part of this except tax advice, loan settlement advice, and judgement overturning legal work. The work I have described is absolutely essential to settle disabled person up for financial serenity, but most of it does not require a lawyer at all. But the disabled person is often unable to do any of this work.
7. Medicare starts two years after the date of onset of disability. It does not matter if the disabled person didn’t get social security disability right away. But the person has to have SSDI to get Medicare. The SSDI determines the date of onset of disability, and thus the date two years later when the person gets Medicare.
Pardon my typos I am engaged in this work pro bono for another prime working age disabled person. If I don’t get back to it the person will become homeless. I wish you and your relative the best of luck in slogging through the nitty gritty of this process.
posted by KayQuestions at 3:50 AM on December 4, 2020 [2 favorites]
You do not say your relative is on SSDI. If there disability is expected to lat a year, or has lasted a year, you can and should apply immediately. As you say they are very ill, it is very unlikely they will be able to get he application in and pushed through. Don’t wait. Apply for them now online or on the telephone. It may take five years to get SSDI. They can get back pay, but the cannot get back Medicare. You want to have SSDI for them before two years from the date of onset of disability so they get Medicare as soon as they qualify.
You relative’s long term insurance carrier is going to deduct from their disability payments the amount of SSDI they would get starting five months after the date of onset of their disability. It does not matter if they have applied for or received SSDI. You can ask now the amount the long term disability insurance carrier intends to deduct. (Your relative may still be on short term disability.)
Keeping your relative on short, then long term disability, then SSDI are critical to their financial stability. You need to have some family member responsible from the start. A very ill person cannot maintain this crucial aspect of financial stability. SSDIis review atregular intervals. If they don’t respond to the request for doctor’s names,etc. they will be kicked off and lose Medicare as well.
posted by KayQuestions at 4:15 AM on December 4, 2020 [1 favorite]
You relative’s long term insurance carrier is going to deduct from their disability payments the amount of SSDI they would get starting five months after the date of onset of their disability. It does not matter if they have applied for or received SSDI. You can ask now the amount the long term disability insurance carrier intends to deduct. (Your relative may still be on short term disability.)
Keeping your relative on short, then long term disability, then SSDI are critical to their financial stability. You need to have some family member responsible from the start. A very ill person cannot maintain this crucial aspect of financial stability. SSDIis review atregular intervals. If they don’t respond to the request for doctor’s names,etc. they will be kicked off and lose Medicare as well.
posted by KayQuestions at 4:15 AM on December 4, 2020 [1 favorite]
Gees my typos are egregious. Sorry I can’t do better on a tiny screen under time pressure.
There is a Nolo book on SSDI which is very helpful. It will give you the details behind my skeleton advice above. You do not need a lawyer to get your relative on SSDI. Most lawyers don’t want to do the applications and participate in the early process because they are legally limited to only about a $6000 total fee. This comes out of the SSDI award, either back pay or ongoing pay. Lawyers get involved right before the appeal hearing, after your relative has been denied, reviewed and denied multiple times over five years.
Check to see if your relative has one of the currently listed conditions that results in an immediate grant of SSDI. Fax one letter from one doctor with that diagnosis and it is like magic, poof your relative is on SSDI.
For financial purposes, have your relative try to keep on good terms with their last employer and coworkers. Try to have them maintain some positive contact with two or three people from work. (This also helps with psychological well-being for your relative, but you asked about financial issues and expert help, so I will stick to that.) Most under 60 persons will avoid your relative because of what I’ve heard called the “icky sick person syndrome.” Some kind of fear of death, illness, shame surrounding disability that overcomes normal people when faced with a suddenly seriously ill coworker.
This common but unpleasant aspect of human nature has financial consequences for your relative. They may need help staying on their long term disability. They may recover enough to be able to work a few hours a week and need a reference. (Ssa allows some working income each month without triggering a loss of SSDI. I think the current amount is around $1500. This is enough to make a big difference in financial security.)
posted by KayQuestions at 5:07 AM on December 4, 2020 [1 favorite]
There is a Nolo book on SSDI which is very helpful. It will give you the details behind my skeleton advice above. You do not need a lawyer to get your relative on SSDI. Most lawyers don’t want to do the applications and participate in the early process because they are legally limited to only about a $6000 total fee. This comes out of the SSDI award, either back pay or ongoing pay. Lawyers get involved right before the appeal hearing, after your relative has been denied, reviewed and denied multiple times over five years.
Check to see if your relative has one of the currently listed conditions that results in an immediate grant of SSDI. Fax one letter from one doctor with that diagnosis and it is like magic, poof your relative is on SSDI.
For financial purposes, have your relative try to keep on good terms with their last employer and coworkers. Try to have them maintain some positive contact with two or three people from work. (This also helps with psychological well-being for your relative, but you asked about financial issues and expert help, so I will stick to that.) Most under 60 persons will avoid your relative because of what I’ve heard called the “icky sick person syndrome.” Some kind of fear of death, illness, shame surrounding disability that overcomes normal people when faced with a suddenly seriously ill coworker.
This common but unpleasant aspect of human nature has financial consequences for your relative. They may need help staying on their long term disability. They may recover enough to be able to work a few hours a week and need a reference. (Ssa allows some working income each month without triggering a loss of SSDI. I think the current amount is around $1500. This is enough to make a big difference in financial security.)
posted by KayQuestions at 5:07 AM on December 4, 2020 [1 favorite]
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posted by Fukiyama at 12:23 PM on December 2, 2020 [1 favorite]