People with disabilities often face unique challenges — the most pervasive of which are financial. This segment of the population is a disproportionate percentage of the unemployed, making up what is known as the “disability employment gap.” According to the U.S. Bureau of Labor Statistics, the unemployment rate for people with disabilities in 2023 was 7.2%. That is more than double that of people without disabilities, which was 3.5% during the same time frame.
This challenge, among others, can lead to overwhelming levels of debt. However, there are steps that people with disabilities can take to recover and improve their financial situation.
Disability and Financial Vulnerability
Financial vulnerability is a common experience for people with disabilities since they often lack the economic resources to pay for or recover from unexpected expenses. And when someone is dealing with a special need, unexpected costs are par for the course.
This can have profound implications for those with limited resources and high expenses. A lack of funds may threaten their ability to maintain necessary housing, nutrition, medical care, and other key factors affecting health and survival.
The absence of such resources can result in further financial instability. Failure to maintain a healthy financial plan can trigger a downward spiral resulting in bankruptcy, diminished health (both physical and mental), and financial dependence on family members and friends. It is unfortunate that people in the greatest need appear to be disproportionately subject to extraordinary costs of living.
There are many reasons the disabled experience monetary instability at higher rates. Below are some reasons that make them more at risk:
Underemployment
Underemployment is working fewer hours than desired or being employed in a job that does not reflect one’s qualifications. This is all too common for people with disabilities. Additionally, underemployed individuals with a psychiatric diagnosis are more likely to live in poverty and experience financial burdens. They may also have difficulty paying for necessities like housing, food, and medical care. This has profound implications for individuals with mental health issues.
Fortunately, there are programs in place that can help disabled people who are underemployed.
Here are some organizations that provide resources on employment:
- The National Disability Institute – Offers a financial coaching program for people with disabilities. The program provides free one-on-one financial coaching and education to help participants improve their economic situation.
- The Association of People Supporting Employment First (APSE) – This is a national organization that promotes employment opportunities for the disabled. APSE offers resources and support to individuals, families, and organizations striving to improve employment outcomes.
- The Equal Employment Opportunity Commission (EEOC) – This commission is responsible for enforcing laws regarding discrimination against job applicants and employees based on their disabilities.
- The Office of Disability Employment Policy (ODEP) – The US Department of Labor is working to increase employment opportunities for disabled individuals. ODEP provides resources and support to individuals, businesses, and service providers.
- The Job Accommodation Network (JAN) – This consulting service provides information and advice for workplaces to provide accommodations for individuals with disabilities.
Lack of Access to Financial Institutions
People with disabilities are less likely to have a bank account. According to the National Library of Medicine, “…the proportion of people with disability who are not engaging in the financial sector, and classified as ‘unbanked’ is significantly higher than that of people without disability.”
This lack of access to financial institutions can make it difficult for the disabled to save money, pay bills, and build credit. It can also make them more susceptible to financial exploitation. The good news is that online banking now provides access where there once was none.
Fixed Income and Low Wages
It is not uncommon for people with disabilities to live on fixed incomes, whether from social security disability insurance, supplemental security income, or other sources. This can make it challenging to provide the essentials for oneself or one’s family, especially if the amount of money is insufficient to even cover the basics.
In addition, people with disabilities often have a lower income due to limited positions available. They are also less likely to have access to well-paying work, which means their financial capabilities are further limited.
This combination of low wages and fixed incomes can make it difficult to get ahead with their finances. It can also make them more likely to experience poverty and financial insecurity.
Increased Cost of Living
Financial challenges are not unique to people with disabilities. Inflation and the increased cost of living has hit everyone. But it can make it especially difficult for the disabled to make ends meet. As a result, people with disabilities can find it harder to maintain their standard of living.
Medical Debt
Medical debt is the leading cause of bankruptcy in the United States. So, it should come as no surprise that extra medical expenses are known to make a significant impact on the amount of debt for individuals with disabilities.
Luckily, there are medical debt relief options that can help. For example, many hospitals offer financial assistance programs for those struggling to pay their bills.
If you or a loved one has a disability, you may be able to get help through programs like Medicaid or Medicare. You can also consider ways to lower costs, such as prescription assistance programs or negotiating with your medical providers.
You might also want to consider seeking credit counseling or debt consolidation services. They can help you develop a plan to pay off your debts and create a plan to live a less limited lifestyle.
Inaccessible and Unaffordable Transportation, Housing, and Support
People with disabilities often face inaccessible and unaffordable transportation, housing, and support services. This makes working or participating in activities outside the home difficult, which can lead to isolation and mental health issues.
However, some programs and services can address these issues:
- The Social Security Administration (SSA): This administration offers two programs that provide benefits to people with disabilities: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). The SSDI program is for individuals who have previously worked for a certain number of years and have become disabled. The SSI program is for low-income individuals who are disabled, blind, or over 65 years old.
- USA.gov: This website provides information on government programs and services that can help the disabled. The housing help page includes information on accessible and affordable housing options.
- The National Housing Trust Fund: This organization provides financing for developing and preserving affordable housing for low-income people, including people with disabilities.
Recognizing Scams
Many companies claim the ability to be able to resolve your debt, but not all of them are legitimate. These scams can cause significant harm to the disabled, costing them time and money. To protect your personal finances from these scammers, it is important to recognize some of the warning signs and find ways to protect yourself.
Warning Signs
The more you are aware of the different scams that target people with disabilities, the more equipped you will be at preventing a future attack. Generally speaking though, most scams will come with warning signs, so you can act accordingly. According to the Consumer Financial Protection Bureau, here are some warning signs that a company or an individual may be scamming you:
- IRS or government scam: This scam involves someone pretending to be from a government agency or collection company and asking for personal information, such as your Social Security number or bank account information. They may also threaten legal action if you do not pay them.
Words of advice: the IRS and the government will NEVER ask for personal information over the phone. If you are worried the call might be real, hang up and call the agency to confirm that the call is legit or a hoax.
- Fake debt relief scam: In this scam, a company offers to help you pay off your debt for a fee. They may require you to provide your bank account information or make payment upfront. Once they have your money, they will disappear, and you will still be in debt.
Words of advice: It is illegal for a debt relief company to request fees upfront. If someone does, they are trying to take your money and run.
- Counterfeit cashier’s checks: In this scam, you receive a check for more money than you are owed. The scammer asks you to wire them the difference. The check is fake, and you will be responsible for any money you wire them.
Words of advice: Never wire people money unless you know them. Once initiated, wired funds can’t be cancelled.
These are just a few warning signs that can help you avoid scams. It is important to remember that you should never give your personal information to someone you don’t know or trust.
Protecting Yourself
To protect yourself from scammers, it is essential to:
- Verify the person’s identity and company by asking for their name, company name, and contact information.
- You can then research the company online or use the Better Business Bureau’s scam tracker to see if the company is legitimate.
- Don’t give out personal information until you verify the company is verified as genuine.
- If a scammer pressures you into making a decision, tell the person you need time to think about it and end the conversation.
You can also report any suspicious activity to local law enforcement or the Federal Trade Commission.
Resources That May Reduce Financial Vulnerability
Since individuals with disabilities have so many financial hurdles to jump through, there are several resources available that can reduce financial stress:
ABLE Accounts
ABLE savings accounts, or Achieving a Better Life Experience savings accounts, allow contributions by the account holder, family, friends, or special needs trust to add funds tax-free.
Supplemental needs trusts
A supplemental needs trust is a legal arrangement that allows someone else to control how money is spent on behalf of a person with disabilities. This does NOT affect their eligibility for government benefits. This type of trust can be used to supplement government benefits and cover items such as housing, transportation, medical expenses, and education.
Medicaid waivers
Medicaid waivers are programs that provide services and support to the disabled so they can live independently in their own homes or communities instead of institutions. Each state has different Medicaid waiver programs, so it is important to research the options in your state.
Katie Becket waivers
The Katie Becket Waiver program provides in-home and community services so that children with disabilities can live at home with their families. This program is available in every state but has different eligibility requirements.
Policy solutions
Since these aforementioned methods don’t solve the foundation of the problem, this is when the government steps in. They can direct policy to address the unique financial challenges people with disabilities face. Here are some potential policy solutions:
Reforming asset limits
Asset limits are often a barrier for individuals with disabilities trying to save money or qualify for certain government benefits. Reforming asset limits would allow more people to save money without fear of losing their benefits from housing assistance and other aid.
Some states have already reformed their asset limits, which has positively impacted the financial security of people in those states.
Temporary disability programs
Temporary programs are available to help the disabled who cannot work, like SSI and SSDI. These programs can provide income support. Once approved for benefits, it is essential for you to understand how much you will receive and what expenses are covered. That is why it is essential to check with your state’s Department of Labor to see if you qualify.
Disabled worker tax credits
The Social Security Administration offers a Disabled Worker tax credit for people who are unable to work. This tax credit can help offset costs like medical expenses and housing. To qualify, you must meet certain requirements that include income and resource limits. Other tax credits are available, including the Earned Income Tax Credit and the Child Tax Credit.
There is also the Disability and the Earned Income Tax Credit (EITC), a program that can help the disabled who work and earn low incomes save money on taxes.
Ensuring Housing and Transportation Are Affordable and Accessible
Due to the shortage of accessible and affordable housing, it can be difficult for individuals with disabilities to find a place to live. This is especially true in urban areas with high demand and limited availability.
By offering incentives to developers and businesses, the government can help ensure that housing and transportation are more affordable and accessible. Improving accessibility and lowering costs can help reduce the overall cost of living and make it easier to get around. The government can also help by providing funding for accessible housing and transportation.
Raising the Minimum Wage
People with disabilities are more likely to work in minimum-wage jobs. Raising the minimum wage would help increase their overall income.
Jobseeker’s Allowance
The Jobseeker’s Allowance is a government benefit that provides financial assistance to people looking for work. The allowance can help cover the cost of things like housing and transportation. To qualify, you must be unemployed and actively looking for a job.
Debt Management Options and Strategies
In the meantime, there are plenty of options available for people to address their debt now while these government initiatives take place. They can help you keep up with your debt payments if you have a disability and live on a fixed income.
Bankruptcy
Bankruptcy is a legal procedure allowing people to discharge their debts and strategize their next financial steps. When applying for bankruptcy, an automatic stay is placed on all collection activity, including wage garnishment, foreclosure, and repossession, giving you time to catch up on your bills and get your finances back on track.
Individuals can file bankruptcy in two ways: Chapter 7 and Chapter 13. With Chapter 7 bankruptcy, assets are sold to pay off debts. In Chapter 13 bankruptcy, a repayment plan is created to pay off your debts over time.
This option has many pros, including the discharge of most types of debt, preventing collection activity, and keeping certain assets. However, there are also cons, such as being expensive and time-consuming.
Social Security Disbility Income
Social Security Disability Income (SSDI) is a non-garnishable source of income. SSDI can help you pay down credit card debt with a low income because your creditors cannot garnish wages or withdraw money from your bank account if you receive these benefits. This can help disabled individuals with a low income by providing them access to credit card debt relief.
Self-Payment Initiatives
A self-payment initiative is a program that allows individuals to negotiate their debts directly with creditors without going through a debt relief company. This process can be helpful for people with a steady income and who can make regular payments.
This option has a couple of pros, including saving money on fees and an improved credit score. There are also cons, such as difficulty in negotiating with creditors, and it taking a longer amount of time to pay off.
Debt Consolidation
Debt consolidation is the process of using a new loan to pay off existing debts. Consolidation can be done using a personal loan, home equity loan, or balance transfer credit card. This procedure can help you get out of debt faster by consolidating payments into one monthly expense.
Resources for Disabled Veterans
There are several resources available that will help resolve veteran debt, including:
- Veterans’ Benefits Administration: This program helps Veterans and their families buy homes, stay healthy, start careers, earn degrees, and more.
- Veterans Affairs Regional Service Office: This site can help Veterans locate the nearest VA office to provide in-person assistance.
- Veterans Crisis Line: This national hotline provides crisis counseling and support to veterans needing further assistance during a personal crisis.
- Veterans Health Administration: This site provides information on healthcare benefits for disabled veterans.
- National Debt Relief Veteran Resource Guide: This organization provides a resource guide with information on various programs and benefits available to disabled veterans.
Special Relief Options for People with Disabilities
If someone with a disability has a surmounting problem that is contributing to their financial issues, such as medical or student loan debt, there are several unique relief options available.
Student Debt
Several repayment options can make student loan payments more manageable. These options include:
- Income-based repayment: To qualify, you must have a higher debt than your income. Your monthly payment will be 10-15% of your discretionary income.
- Pay as you earn repayment: This repayment plan is similar to Income-Based Repayment, but your payments will be 10% of your discretionary income.
- Extended repayment: This repayment plan extends your loan term, which lowers your monthly payments for up to 25 years.
- Income-contingent repayment: If you have a Direct Loan, you may be able to choose this repayment plan. Your monthly payment will be the lesser of 20% of your discretionary income or the amount it would require to pay the loan in 12 years.
- Total and permanent disability discharge: If you are permanently disabled, you may qualify for a total and permanent disability discharge. This discharge will cancel your federal student loan debt. To qualify, you must complete an application and provide documentation of your disability from a licensed physician.
Grants
An individual earning a low income may qualify for a grant. These grants can help with rent, utilities, and other expenses. Contact your local government or community action agency to determine if you qualify. For more information, you can also check the USA.gov website and visit the Financial Assistance and Support Services for People with Disabilities.
Medical Debts
If you are struggling to pay off medical debts, there are government and private grants available to help with medical bills. Here are some reliable sources to find a grant:
- Cindy Donald Dreams of Recovery Foundation: Dreams of Recovery strives to help individuals receive the therapy they need and the necessary equipment to improve their condition.
- The Michael-Ryan Pattison Foundation: The mission of this organization is to increase awareness and support for people living with paralysis. They offer scholarships so more people can access specialized therapies that will improve their quality of life.
- Medicaid: Medicaid is a program providing health insurance to low-income individuals.
- Social Security Disability Insurance: Social Security Disability Insurance (SSDI) is a federal program that benefits those with disabilities who have worked in the past.
In addition, several nonprofits can help with medical bills. These organizations may provide financial assistance or help you negotiate with your creditors:
- RxAssist: This website provides information on patient assistance programs.
- Freeclinics.com: Free clinics provide free or low-cost medical care to those who can’t afford it.
- Community Health Advocates: Community Health Advocates is a nonprofit organization that helps with medical bills or helps you obtain health coverage. They will negotiate on your behalf with creditors and help you create a payment plan.
Debt Management: Other Important Resources and Information
The following are valuable resources and information for disabled people who need help with debt management:
- National Disability Rights Network: This organization provides information and resources on various issues affecting people with disabilities.
- Disability.gov: This website provides information and resources on various topics, including employment, education, housing, and benefits.
- Benefits.gov: This website provides information on government benefits programs, including programs for the disabled.
Budgeting Tools
In addition to debt management resources, you can also utilize budget tools available online to help manage your money and get out of debt.
- Quicken Simplify: This personal finance app can help you track your spending, create a budget, and find ways to save money.
- You Need A Budget (YNAB): This is another personal finance app that offers a free trial to help you get started with budgeting.
- EveryDollar: This budgeting tool from Dave Ramsey can help you create a budget and track your progress.
Finding Accessible Work
If you are struggling to find work, the following resources may be helpful:
- Vocational Rehabilitation: Vocational rehabilitation (VR) services can help people with disabilities find and keep a job.
- Ticket to Work: The Ticket to Work program can help the disabled who receive Social Security disability benefits find and keep a job.
- One-Stop Career Centers: One-stop career centers offer job search assistance, including resume help and interview preparation.
- Local Chambers of Commerce: Local chambers of commerce can help connect you with businesses in your area.
If you or a loved one is living with a disability, there are many options available to help you live the fulfilling life you deserve. We couldn’t name them all, but the above information offers a great start.
