Planning for potential long-term disability

[maisymouser]

I'm a rather healthy (other than what is reviewed below) 29F planning for FIRE by 50 at the latest, 40 if things go well. MFJ with a 2-year-old and hopefully 1-2 future kids. My husband is working currently but we are exploring the possibility that he will start SAH parenting and/or RE'ing in a few years potentially, but that's certainly not decided at this point.

Our specific financials aren't that terribly relevant to my questions I think, but generally speaking we are on track to spend ~$40k/year and are sitting at somewhere near ~$750k NW, not including our primary residence that we plan to keep long-term.

I have two chronic conditions, one of which could render me disabled at any point- most likely physical impairment/loss of motor control or blindness. While they have been extremely well monitored and controlled for ~10 years (I live a totally normal life and never really have to think about them), I am realizing that I need to put together a long-term plan in the event I can no longer work. It's going to sound really bad to say this, but I don't have a great handle on what long-term options would be available to me if I couldn't work starting tomorrow.

My understanding is that I would be covered temporarily by my short term disability coverage and SSDI. No reason not to think that as far as I know.

My company terminated our LTD plan last year and I did not elect to pay the company-covered premiums to continue coverage, figuring I could shop around if I wanted to do that. Should I seriously consider buying LTD insurance? What are things to keep in mind when looking for coverage, and when do I know if a policy is "worth it" considering I have no idea whether my conditions will actually deteriorate?

In a total, can't-imagine-it, worst-case scenario where I need to be placed in a care facility due to impairments, what are typical options? SSI doesn't seem to even touch the cost of care facilities, and I'm not sure if that's something my health insurance should cover.

Again, I'm super late in planning for this kind of thing. It seems so impossible to imagine- everything is fine, I am healthier than ever, and we are on track to FIRE and have happy, long, unimpaired lives- but DH pointed out last night it is irresponsible of us not to prepare for these possibilities based on my diagnoses on paper.

Edit: I meant SSDI, not SSI

[ChpBstrd]

Sorry to hear about your situation!

Step one is probably to shop for LTD insurance and get an idea of the cost. If the LTD insurance is prohibitively expensive for someone with pre-existing conditions, you might discuss your public assistance options with a social worker or someone from your local Medicaid office. Find out if you could get on Medicaid in the event of disability and how the means-testing works.

Step two is to keep the pedal to the metal while you can, and try to achieve and exceed FI. Your discussion with the social worker / Medicaid agency may reveal that your wealth precludes you from public assistance, and that your expenses will have to drain your savings before you qualify. If this is the case, you might consult with an estate planning attorney to see how you could arrange things to avoid the assets counting as yours. E.g. trusts and/or 529s for the kid(s), retirement accounts for DH, a safe full of gold, or paying down the mortgage.

TL;DR: I don't know the answers, but it's time to talk to professionals to get information about your specific scenario.

[former player]

I don't know the specifics in your location, but it might be worth your thinking now about whether you would lose any rights to social security/disability/etc. if you were to stop working voluntarily or reduce your hours and income voluntarily- it's pretty common for women with two or three children to reduce working hours or stop altogether but if that is going to take you out of whatever protections you currently have through being a working person then it would be worth knowing in advance.

[maisymouser]

Sorry to hear about your situation!

Aw, don't feel bad for me. I am living the life of my dreams and have everything to look forward to. When I rarely compare myself to others who have zero health issues, I realize that I'd take my life. Every time.

Things are so good I can't imagine them getting bad... Hence my stalling on getting a plan together should things go south.

Thanks for all your feedback, @ChpBstrd - You confirmed my suspicion, that if I am near-FI but end up disabled, it might preclude me from taking benefits I would have otherwise had. Not sure what the local/state rules are here on that front. I will look into all those options and post an update.

I don't know the specifics in your location, but it might be worth your thinking now about whether you would lose any rights to social security/disability/etc. if you were to stop working voluntarily or reduce your hours and income voluntarily- it's pretty common for women with two or three children to reduce working hours or stop altogether but if that is going to take you out of whatever protections you currently have through being a working person then it would be worth knowing in advance.

I mean, I don't think there ARE any rights to SS/SSI disability if it's voluntary. Right? In the situation I'm trying to plan for, I would most likely be declared physically disabled by a medical professional. I have no intention to stop working unless things get that bad for me.

[Queen Frugal]

You would not qualify for SSI, you'd qualify for SSDI.  24-30 months after qualifying for SSDI you would be eligible for Medicare.

I agree you should get quotes for disability insurance but it may be cost prohibitive due to preexisting conditions.

If you need long term care in a facility, your options are 1) private pay, 2) VA benefits if you qualify, 3) long term care insurance, and 4) Medicaid. You are correct that SSDI would not be enough to pay for care in a facility. 

[DaMa]

Here's one to know...there is a recent work test for Social Security Disability:  you must have worked at least 5 of the last 10 years.

I also have health problems could get me to disabled before I'm 65.  I read that to mean once I'm RE for 5 years + 1 day, I won't qualify.  I decided I am ok with that.

[former player]

I don't know the specifics in your location, but it might be worth your thinking now about whether you would lose any rights to social security/disability/etc. if you were to stop working voluntarily or reduce your hours and income voluntarily- it's pretty common for women with two or three children to reduce working hours or stop altogether but if that is going to take you out of whatever protections you currently have through being a working person then it would be worth knowing in advance.

I mean, I don't think there ARE any rights to SS/SSI disability if it's voluntary. Right? In the situation I'm trying to plan for, I would most likely be declared physically disabled by a medical professional. I have no intention to stop working unless things get that bad for me.

Right.  If the financial consequences to you of becoming disabled while not employed are unacceptable you need to keep working rather than taking a break from work while having kids.  That means planning on being the full-time working mother of two or three children with limited time off for the births followed by up to 20 or so years of raising kids while working full time. 

I think you may need to plan for your staying healthy during this period but not having the option of stopping work if for instance one or more kids has a need for a parent to be around more for a while.  Is your back-up plan your husband stopping work, or having family help out, or employing more staff?  If you don't have the flexibility of stopping work you may need those extra back-up plans in place instead.

Another point is that if there is the possibility of benefits being means-tested then you may need to look at structuring your assets into investments that don't count for means-tests, such as a primary home and retirement funds rather than eg rental properties and post-tax invesments that you might have to spend down before getting assistance.  Securing your assets against being counted for those purposes might on the other hand be less than ideal if you would want them available to you if eg you did become disabled before retirement age, so that could be a tricky balance to arrive at.

[better late]

You would not qualify for SSI, you'd qualify for SSDI.  24-30 months after qualifying for SSDI you would be eligible for Medicare.

I agree you should get quotes for disability insurance but it may be cost prohibitive due to preexisting conditions.

If you need long term care in a facility, your options are 1) private pay, 2) VA benefits if you qualify, 3) long term care insurance, and 4) Medicaid. You are correct that SSDI would not be enough to pay for care in a facility.

I would suggest you log into the Social Security website to check on how many quarters/credits you’ve worked/earned this far and if you’d qualify for Social Security Disability insurance (SSDI).  At one point it was 40 quarters (10 years) but I’m certain it now is more complicated that that simple rule. You can get a good sense of the safety net amount you would have coming in each month if you were to be deemed disabled. 

[better late]

I don't know the specifics in your location, but it might be worth your thinking now about whether you would lose any rights to social security/disability/etc. if you were to stop working voluntarily or reduce your hours and income voluntarily- it's pretty common for women with two or three children to reduce working hours or stop altogether but if that is going to take you out of whatever protections you currently have through being a working person then it would be worth knowing in advance.

I mean, I don't think there ARE any rights to SS/SSI disability if it's voluntary. Right? In the situation I'm trying to plan for, I would most likely be declared physically disabled by a medical professional. I have no intention to stop working unless things get that bad for me.

Right.  If the financial consequences to you of becoming disabled while not employed are unacceptable you need to keep working rather than taking a break from work while having kids.  That means planning on being the full-time working mother of two or three children with limited time off for the births followed by up to 20 or so years of raising kids while working full time. ....

Am I missing something here? Do you have to be full time to earn the ability to qualify for SSDI?   Is that the financial consequence you are referencing?

[maisymouser]

You would not qualify for SSI, you'd qualify for SSDI.  24-30 months after qualifying for SSDI you would be eligible for Medicare.

I agree you should get quotes for disability insurance but it may be cost prohibitive due to preexisting conditions.

If you need long term care in a facility, your options are 1) private pay, 2) VA benefits if you qualify, 3) long term care insurance, and 4) Medicaid. You are correct that SSDI would not be enough to pay for care in a facility. 

Thank you for the straightforward explanation of how SSDI would work. I also just read that SSDI does not have asset limits, which I did not know before doing initial research.

As for LTC in a facility- option 1 sounds cost-prohibitive from a Mustachian standpoint at first glance. Option 2- I don't qualify, 3) I'm looking into, and 4) I might qualify for Medicaid if both DH and I manage to RE if/by the time I have to consider it.

Here's one to know...there is a recent work test for Social Security Disability:  you must have worked at least 5 of the last 10 years.

I also have health problems could get me to disabled before I'm 65.  I read that to mean once I'm RE for 5 years + 1 day, I won't qualify.  I decided I am ok with that.

Thank you! If I am able to RE by 40, I might consider working six months a year or some equivalent (every other year) to maintain eligibility. Or maybe I'll go the same route you have, and decide SSDI eligibility won't be worth it to me. Either way, it's good to know this way in advance, so thanks for sharing.

I don't know the specifics in your location, but it might be worth your thinking now about whether you would lose any rights to social security/disability/etc. if you were to stop working voluntarily or reduce your hours and income voluntarily- it's pretty common for women with two or three children to reduce working hours or stop altogether but if that is going to take you out of whatever protections you currently have through being a working person then it would be worth knowing in advance.

I mean, I don't think there ARE any rights to SS/SSI disability if it's voluntary. Right? In the situation I'm trying to plan for, I would most likely be declared physically disabled by a medical professional. I have no intention to stop working unless things get that bad for me.

Right.  If the financial consequences to you of becoming disabled while not employed are unacceptable you need to keep working rather than taking a break from work while having kids.  That means planning on being the full-time working mother of two or three children with limited time off for the births followed by up to 20 or so years of raising kids while working full time. 

I think you may need to plan for your staying healthy during this period but not having the option of stopping work if for instance one or more kids has a need for a parent to be around more for a while.  Is your back-up plan your husband stopping work, or having family help out, or employing more staff?  If you don't have the flexibility of stopping work you may need those extra back-up plans in place instead.

Another point is that if there is the possibility of benefits being means-tested then you may need to look at structuring your assets into investments that don't count for means-tests, such as a primary home and retirement funds rather than eg rental properties and post-tax invesments that you might have to spend down before getting assistance.  Securing your assets against being counted for those purposes might on the other hand be less than ideal if you would want them available to you if eg you did become disabled before retirement age, so that could be a tricky balance to arrive at.

Well, I never said I wanted to stop working while having kids. I do understand that there is a possibility that a new kid could require more attention/resources than I expect, but I find it to be 95% unrelated to my initial question about benefits for the disabled. Also, I have been balancing WFH with my toddler home full-time. I do not have any desire whatsoever to be a SAHM especially after this year of being with him so much.

But since you asked, it's much more likely my partner would be interested in being a SAHD if that were absolutely necessary. Or maybe seeking additional paid help, if it makes sense. We are probably only a few years out from being FI and could possibly be lean FI now, so this wouldn't hurt *too* much to do either financially. All that said, I don't think I need to plan for that. But I'm open to convincing if you think it does.

I appreciate the advice to look into means testing in my area. It sounds like the feedback I'm getting is to figure that out, pronto. Right now nearly all my assets are in retirement accounts, but DH has a good deal of cash/RE/brokerage assets relative to me. We've got to figure that out. I will certainly post what I find/decide!

[maisymouser]

You would not qualify for SSI, you'd qualify for SSDI.  24-30 months after qualifying for SSDI you would be eligible for Medicare.

I agree you should get quotes for disability insurance but it may be cost prohibitive due to preexisting conditions.

If you need long term care in a facility, your options are 1) private pay, 2) VA benefits if you qualify, 3) long term care insurance, and 4) Medicaid. You are correct that SSDI would not be enough to pay for care in a facility.

I would suggest you log into the Social Security website to check on how many quarters/credits you’ve worked/earned this far and if you’d qualify for Social Security Disability insurance (SSDI).  At one point it was 40 quarters (10 years) but I’m certain it now is more complicated that that simple rule. You can get a good sense of the safety net amount you would have coming in each month if you were to be deemed disabled.

Thanks, this is done. I do qualify now, it's not a whole lot though (~$1600/mo). I figure if I am at that point in my disability journey, I will definitely need to supplement somehow with other benefits to maintain a quality standard of life. Hence, this post! :)

[Metalcat]

As someone who tried to make the exact same plan for the exact same reasons, I kind of have to chuckle at the responses.

So, I intended to keep working full tilt, pedal to the metal, until my early 40s so that I could secure my comfortable  FI and be free to physically fall apart after that point if that's what I was destined for. I was in relatively pretty good shape when I started working at 31.

Well shit, that didn't really work out. By 34 I was already falling apart and dropped my workload dramatically, and by 37 I literally couldn't physically do it, or much of anything, anymore.

Now, that's not to say that that's your fate, you might hang in there just fine into your senior years, who knows. But serious, chronic, potentially disabling illnesses don't tend to be predictable. Mine escalated FAST, and it wasn't until it was too late that me and my medical team figured out that the job itself was directly worsening my condition. 

I was basically uninsurable, but through my professional organization was able to maintain a very small "own occupation" LTD policy that didn't require underwriting, so that helps, but only because I'll be able to invest it and let it grow, not actually try to live on it.

So what do I recommend?

Well first: watch what your job is doing to your body. If you are being at all overloaded, you have no idea when your systems could go into total failure. There's a temptation to push hard now to reach your savings goal, but what happens if you don't make it?

Second: build resiliency into your plans. The moment I knew I was vulnerable, I dedicated myself to expanding my work options to include multiple part time income streams that I could do even if I was totally physically fucked. This is why, even in my mangled state, I have more high-paying, interesting work options than most able-bodied people do.

Third: absolutely try and get yourself an LTD policy, or see if there's any way to get back on to your employer's policy. If you manage to get a policy, find a good disability lawyer and invest in an hour of their time to understand how disability claims work. I wish I knew years ago what I know now about what I needed my doctor's to document in their notes. I could have dodged a long, difficult, and expensive process had j just been a little more proactive. Thankfully, I was proactive enough to contact a lawyer *before* I filed my initial claim, but I wish I had thought to do it when I first purchased it and knew I would probably use it someday.

Fourth: thoroughly research what kind of medical support you might need. What specific disabilities do you think could lead you to requiring ongoing nursing care? A lot of very disabled people manage to not need full institutional support if they're fully cognitively functional. So understand the varying levels of care you could need and what they might cost. Thoroughly research what programs exist, even though they can change over time, it helps you become familiar with navigating the system.

Overall, be very honest with yourself and your spouse about what the actual impacts of disability would be. How would it affect your shared life? How would you stay fulfilled and happy? What are the biggest real life risks to your collective well being, not just finances. The money is just part of the big picture.

For me, between managing to get debt free, keeping our expenses low, DH making enough money for us to live on, having a small disability policy, having multiple options for non-physically-damaging work, having a DH who is a certified nurse's aide who used to work in a nursing home, and a family full of people with complex medical issues who have been-there-done-that. For me, it isn't this big boogeyman that can ruin my life.

I mean yeah, it utterly fucked my career, but my life is still pretty awesome because I've spent so many years realistically preparing for this, and not as some kind of apocalyptic/worst case scenario kind of thing. Just as a normal part of being a person with certain health risks.

[maisymouser]

Thanks all for the suggestions- I've reached out to a local social worker who will be calling me on Monday after pulling together a whole plethora of resources for me! That was great advice. I never would have thought of actually using the local gov't services that are literally there for this kind of thing.

[ctuser1]

Could it be possible for you to perhaps move to a different state with a better safety net as it would apply to your specific situation?

In the past, I have known of someone who moved from somewhere in midwest to upstate NY for the safety net that NY State offered for their disabled child. Perhaps you could consider making such a move if at all practical.

Doing this would of course require that you thoroughly research the safety net as it exists in NC, research further into other states that you could consider moving into, and then arriving at any decision(s). So your current course of action to reach out to a local social worker to learn about local resources is a very good start whatever you decide to do.