Putting your employee benefits to work for financial planning for people with disabilities

You work hard to create a lifetime of continuous care for your loved one with disabilities, so it only makes sense that your employee benefits do the same. One of the first steps in this process is to understand how your employee benefits align with your vision of your loved one’s future.

Carefully consider who you name as a beneficiary

First things first: You may wish to avoid naming your loved one with disabilities as a beneficiary on your 401(k), insurance policy or any other policy or asset. Leaving a benefit or other asset for as little as $2,000 could disqualify your loved one from receiving key government benefits, including:

• Medicaid
• Supplemental Security Income (SSI)
• Federal housing assistance
• Supplemental Nutrition Assistance Program (SNAP)

An alternative is to create a special needs trust (SNT) and name the trust as the beneficiary to receive the proceeds. The funds in the trust can then be used to create the quality of life your loved one deserves without interfering with government benefits.

Take advantage of the employer match

Many companies encourage participation in their 401(k) by offering a company match. A company match is when your employer matches your retirement plan contributions dollar for dollar up to a certain percentage of your salary. If your contributions are less than your employer’s company match rate, you’re leaving money on the table that could be used to help create the future you envision for your loved one. Also, make sure to pay special attention to your beneficiary designations on your retirement account.

Add protection with life insurance

Some companies offer employer-paid life insurance as an employee benefit with the option to purchase additional coverage. You can utilize this coverage to help fund your loved one’s SNT in the event of your death — giving you the comfort of knowing they will have resources should the unthinkable happen.

Plan for the unexpected with long-term disability insurance

If you were sick or injured and could no longer work, how would you make ends meet today and plan the future you envision for your loved one with disabilities? Long-term disability insurance can help replace part of your income for the duration of your disability or to normal retirement age (based on the policy). Your employer may provide coverage at no cost to you with an option for you to purchase additional coverage, or you may simply purchase coverage either at work or privately. You may need to complete a waiting period before benefits are payable and other sources of income that you are eligible to receive may offset and reduce your benefits. It’s important to review and understand your policy provisions and weigh the costs and benefits of coverage, especially if you’re the primary earner in your home.

Extend your support with the employee assistance program

Don't overlook the resources found in your employee assistance program (EAP). These programs may offer helpful assistance, information and solutions for a variety of personal situations, such as:

• Child care and adult day care providers
• Flexible work arrangements
• Stress management seminars
• Personal and legal counseling
• Several other services

Save money today with health care spending accounts

Your loved one’s out-of-pocket health care costs can cause a significant financial strain — even with health insurance. However, you may be able to use Health Savings Accounts (HSAs) and/or Flexible Spending Accounts (FSAs) to set pre-tax money aside to cover eligible expenses (based on the type of account you have) such as:

• Prescriptions
• Developmental services
• Doctor-recommended educational services
• Other qualified medical expenses

Whether your loved one needs at-home care, after-school care or attends a day care facility, these expenses can take a big bite out of your paycheck. One type of FSA is the dependent care flexible spending account (DCFSA), which is designed to help you save and pay for eligible out-of-pocket dependent care expenses. Just as with your HSA and FSA, contributions to your DCFSA are pre-tax, which means you’ll avoid paying federal, Social Security, Medicare and, in most instances, state taxes.

The amount saved in taxes will vary depending on the amount set aside in the account, annual earnings, whether or not Social Security taxes are paid, the number of exemptions and deductions claimed, tax bracket, and state and local tax regulations. Check with a tax advisor for information on whether your participation will affect tax savings. None of the information provided should be considered tax or legal advice.

Connect with a specially trained financial professional to learn more about creating a lifetime of continuous care for your loved one.