How Much Money Can a Disabled Person Have in the Bank?

Navigating financial resources while receiving disability benefits can be complex for individuals and their families. Many government support programs for those with disabilities include specific financial limitations, such as restrictions on bank account balances. Understanding these rules is important to ensure resources are directed to those with the greatest need and to prevent unintended consequences that could jeopardize benefit eligibility. Awareness of these guidelines helps beneficiaries manage their finances effectively without risking their essential support.

Supplemental Security Income (SSI) Asset Rules

Supplemental Security Income (SSI) is a federal program administered by the Social Security Administration (SSA) that provides financial assistance to disabled, blind, or aged individuals who have limited income and resources. This needs-based program has strict asset limits to determine eligibility. For an individual, the countable asset limit is $2,000, while for a couple, the limit is $3,000.

Countable assets for SSI purposes include cash, funds in bank accounts such as checking, savings, and certificates of deposit (CDs), as well as stocks, bonds, and other liquid resources that can be converted to cash. However, not all assets are counted towards these limits. Excluded assets typically include the home in which the individual lives, one vehicle used for transportation (regardless of its value), household goods, and personal effects. Certain dedicated accounts established for specific purposes, such as an ABLE account, are also excluded, allowing beneficiaries to save without affecting their SSI eligibility.

Exceeding these asset limits can result in a temporary or permanent suspension of SSI benefits. It is important for beneficiaries to report any changes in their financial situation, including increases in bank account balances or acquisition of new assets, to the SSA promptly. Failure to report changes can lead to overpayments that must be repaid, and in some cases, could result in penalties. The SSA provides detailed guidance on what counts as income and resources for SSI, emphasizing that regular review of these rules is beneficial.

Medicaid Asset Rules

Medicaid is a joint federal and state program providing health coverage to millions, including many disabled individuals. While SSI recipients are generally automatically eligible, many disabled individuals not qualifying for SSI may still be eligible, particularly for long-term care services. The asset limits for Medicaid can vary significantly depending on the state and the specific Medicaid program, such as community Medicaid versus long-term care Medicaid.

In some states, Medicaid asset limits may be similar to SSI limits, often around $2,000 for an individual. However, other states may have higher limits or different rules, especially for married couples where “spousal impoverishment” rules apply. These rules are designed to prevent the spouse of a long-term care recipient from becoming impoverished by allowing them to retain a certain amount of assets and income. Common countable assets for Medicaid include bank accounts, investments, and most real property beyond the primary residence.

Excluded assets often include the primary residence, one vehicle, household goods, and personal effects, similar to SSI rules. However, the specifics of these exclusions can differ by state. Due to state variations, individuals should consult their state’s Medicaid agency for precise rules and requirements. Understanding these state-specific guidelines is necessary for accurate financial planning related to Medicaid eligibility.

Distinguishing SSI from Social Security Disability Insurance (SSDI)

Understanding the difference between Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) is important, as they have distinct eligibility requirements, particularly regarding financial assets. SSDI is an earned benefit, meaning eligibility is based on an individual’s work history and their contributions to Social Security taxes through payroll deductions. This program functions much like a disability insurance policy, where benefits are paid based on past earnings.

A crucial distinction between these two programs is that SSDI has no asset limits. An individual receiving SSDI can have any amount of money in the bank, own multiple homes, or possess substantial investments without affecting their SSDI benefits. This contrasts sharply with SSI, which is a needs-based program with strict limits on income and countable assets. Eligibility for one program does not automatically grant eligibility for the other.

While some individuals may qualify for both SSI and SSDI, this typically occurs when an individual’s SSDI benefit amount is very low, making them eligible for SSI as a supplemental payment to bring their total income up to a certain threshold. In summary, while SSI beneficiaries must carefully manage their assets, SSDI recipients do not face such financial restrictions.

ABLE Accounts

ABLE (Achieving a Better Life Experience) accounts offer a way for disabled individuals to save money without jeopardizing their eligibility for certain means-tested government benefits like SSI and Medicaid. To be eligible for an ABLE account, an individual must have developed their disability before age 26. These accounts are designed to allow individuals to accumulate funds for disability-related expenses.

Annual contributions to an ABLE account are limited to the federal gift tax exclusion amount, which is $18,000 per year as of 2024. The total balance allowed in an ABLE account varies by state, but generally the first $100,000 in the account is disregarded when determining eligibility for SSI. The entire balance in an ABLE account is disregarded for Medicaid eligibility purposes, regardless of the amount. Funds within an ABLE account grow tax-free, and distributions for “qualified disability expenses” are also tax-free.

Qualified disability expenses are broad and can include:
Housing
Transportation
Education
Employment training and support
Healthcare
Assistive technology
Personal support services
Financial management

These accounts provide a way for disabled individuals to build financial security and independence while maintaining access to necessary public benefits. Setting up an ABLE account involves enrolling with a state-sponsored program, and various states offer different investment options within their ABLE programs.

Special Needs Trusts

Special Needs Trusts (SNTs), also known as Supplemental Needs Trusts, are important financial planning tools used to hold assets for the benefit of a disabled person without disqualifying them from needs-based government benefits like SSI and Medicaid. These trusts are designed to supplement, rather than replace, government benefits by paying for expenses not covered by those programs. The primary purpose is to improve the disabled individual’s quality of life.

There are generally two main types of SNTs. A First-Party SNT is funded with the disabled individual’s own assets, often from a personal injury settlement, inheritance, or retroactive disability payments. These trusts are subject to Medicaid payback provisions, meaning that upon the death of the beneficiary, any remaining funds in the trust must first be used to reimburse the state for Medicaid services provided. In contrast, a Third-Party SNT is funded by assets belonging to someone else, such as parents, grandparents, or other family members.

Third-Party SNTs are not subject to Medicaid payback provisions, offering greater flexibility and protection for remaining assets. The trustee of an SNT manages the trust assets and makes distributions for supplemental needs, which can include:
Specialized medical care not covered by Medicaid
Recreational activities
Education
Transportation

Establishing an SNT is a complex legal process that typically requires the expertise of an attorney specializing in disability law or elder law to ensure compliance with federal and state regulations.