BETH SUFIAN
Career planning should take many factors into consideration.
Factors such as health insurance, sick leave offered by employers, legal protection from discrimination, and the potential health effects
of certain work should be explored.
BY BETH SUFIAN
In the Summer 2001 and Fall 2001 issues of CF Roundtable this column addressed issues related to financial planning. Career planning, having realistic financial obligations and dedicating savings for possible future COBRA payments were all things suggested for adults with CF. This month’s column will discuss additional things individuals with CF should consider when planning for their financial future.
1. Be Realistic About The Ability to Work
While individuals with CF continue to live longer, with such longevity come new challenges. As adults with CF pursue careers, marriage and family life there are many things that need to be addressed in relation to their financial future. Financial planning for the adult with CF should include a discussion of the possibility of early retirement. While most individuals do not want to contemplate the possibility their health will cause them to stop work, for individuals with CF early retirement often is a reality. Many adults with CF who decide to retire from work in order to devote more time to their health care are faced with financial difficulties because no plans were made for the possibility of an early retirement. Therefore, one important part of financial planning for the future is the realization that early retirement may be a possibility. Once a person accepts the idea of early retirement it will be easier to plan financially for such retirement. People with CF can use many of the same retirement ideas that individuals are encouraged to use when planning for retirement at the age of 65. There are also specific considerations that will assist those who want to plan for the possibility of early retirement.
2. Social Security Disability Benefits
In most cases the adult with CF who has worked full time for at least two years will be able to apply for and receive some Social Security Disability benefits. As I have written in previous columns a diagnosis of cystic fibrosis is not enough to qualify for SSDI benefits. An individual must meet certain medical requirements and must have worked and contributed enough in the payment of Social Security taxes in order to receive SSDI benefits in the event their health prevents them from engaging in work activity. A list of the SSDI medical qualifications for a person with cystic fibrosis is printed in the box at the end of this column (page 12). In addition, there are separate requirements related to diabetes and gastrointestinal problems that may qualify individuals with CF for SSDI benefits. For more information go to the Social Security website at www.ssa.gov.
The monthly payment is based on how much money an individual has paid in Social Security taxes over their working life. Therefore, individuals who have made a higher salary will receive a higher SSDI benefit. Most individuals who have worked for 10 years for a salary of $30,000 will receive approximately $1000 a month in benefits. A rough estimate of the maximum amount most people will be able to receive would be $1650. To find out a more accurate estimate of what a specific person may get in the form of SSDI benefits, it is best to call Social Security. An individual can obtain a Personal Benefits Summary from Social Security to determine the amount of their monthly benefit payment by calling 1-800-772- 1213.
3. Long Term Disability Benefits
In addition, adults with CF should be sure to sign up for a Long Term Disability (LTD) benefit insurance plan if such a plan is offered by their employer. Employers have no obligation to offer LTD insurance benefits to all employees. However, many large and some small employers offer such benefits to employees. An LTD policy usually will provide 60-70% of an employee’s salary in the event the employee is unable to work due to a medical condition. In most cases the LTD policy will deduct the amount a person receives from Social Security from the amount that is paid to the employee. For example, if the employee would receive $2000 from their LTD insurance plan and $1000 in the form of a SSDI payment, the LTD plan will pay the employee only $1000 a month. The LTD policy will state if such a deduction will be made in the payment.
Most LTD policies will cover pre-existing conditions if the person has been employed for a year. However, some LTD policies will not provide benefits if the employee is unable to work due to the worsening of a disability caused by a pre-existing condition. Adults with CF should examine any LTD policy offered by their employer to make sure that in the event the person became unable to work due to CF, the person will be able to receive an LTD benefit. If the LTD policy does not provide coverage for a pre-existing condition, the individual will be able to plan accordingly. There are only a few states that regulate LTD plans and there is no national regulation of LTD companies. Therefore, companies that sell LTD individual polices can restrict the sales to anyone. In most cases, the insurance company does not want to provide LTD insurance to anyone who is at a risk of becoming unable to work. The best and often only way for an adult with CF to obtain LTD benefits is from their employer.
Spouses, partners and parents who support a person who has CF should also have LTD policies. In the event the person becomes unable to work due to a medical condition, it will be important to have the LTD benefit to help meet monthly expenses. Often, the person who does not have CF is overlooked as someone who may become unable to work. There are many medical conditions that can lead to adults becoming unable to work. Therefore, if an employer does not offer LTD benefits it may be important for the non-CF partner or parent to look into purchasing a private policy.
4. Life Insurance
Individuals with CF will also find it is also difficult to purchase life insurance. Companies that offer life insurance policies do not want to insure individuals who are at a high risk of having to use the policy. The best way for an adult with CF to obtain life insurance is if such insurance is offered by an employer. In the event an employer offers life insurance usually all employees are covered.
However, adults with CF can usually purchase life insurance that will pay a benefit to family members in the event the person dies as the result of an accident. Adults with CF who have family members that will need financial support upon their death may want to consider purchasing such a policy. In the event the adult with CF dies as the result of an accident the life insurance will pay a benefit to the designated beneficiary.
It is very important for a spouse, partner or parent to determine if purchasing a life insurance policy is necessary. If the individual with CF will not have a means of support if the spouse, partner or parent passes away, then life insurance will be important for the financial future of the person with CF. The receipt of life insurance benefits will not affect the receipt of SSDI benefits because SSDI benefits are not based on an individual’s assets.
However, if an individual is receiving SSI benefits, the receipt of any amount of money over $2000 ($3000 for a couple) will affect the receipt of SSI benefits. There are ways to protect the receipt of SSI benefits through the use of a special needs trust. An individual needs to consider a special needs trust only if the individual will risk losing their SSI/Medicaid benefits if the person receives an inheritance that is over the SSI income allowed amount. Many individuals pay to have a special needs trust set up when such a trust is not necessary. A special needs trust is necessary only if the person with CF relies on SSI/Medicaid or another program to provide benefits that are based on the person’s income and assets. If an individual with CF does not rely or have the possibility of relying on such a program in the future then a special needs trust usually is not needed. In most cases, an individual receives an SSDI benefits that is greater than the State SSI payment then the person will not be eligible for SSI or Medicaid and the amount of assets the person has will not matter as the person will never be eligible for an income/Asset based program due to their receipt of SSDI benefits. For example, if Anna receives $1200 a month in SSDI benefits and the state SSI payment is $550 a month. Anna will not be able to receive SSI benefits and it is unlikely she will ever qualify for Medicaid so she will not need to worry about keeping her assets low.
5. Credit Card and Other Debt
As suggested in the Summer 2001 column, adults with CF should try to maintain realistic debt. House payments and car payments are two sources of debt as well as credit card debt. If a person has accumulated a large amount of credit card debt and then becomes unable to work it may become difficult to meet monthly expenses. For example, if a person has a minimum monthly payment of $150 a month and will receive only $750 a month in SSDI benefits, a large portion of monthly income will have to be used to pay credit card debt.
It has become very easy for young adults to obtain credit cards. Often this leads to credit card debt at an early age. Many adults with CF find themselves in financial trouble if they must stop work and have a large amount of credit card debt. Therefore, prior to becoming unable to work it is best to have a monthly budget and to try to reduce the likelihood of large credit card debt if at all possible. Such a plan takes financial planning and restraint but will pay off in the future.
Credit card companies do not “write off” credit card debt just because a cardholder has stopped working and receives only SSDI or SSI benefits as their source of income. It is rare for credit card companies to reduce the minimum monthly payment if a cardholder has stopped work. Usually the only way to reduce the minimum monthly payment due is to enter into some type of credit counseling arrangement or file for bankruptcy. If an individual thinks that bankruptcy is the only way to meet their monthly financial obligations it is best to consult a bankruptcy attorney. Financial planning and budgeting at a young age and at the beginning of a person’s career, not right before an individual decides to retire from work, can reduce the likelihood of financial difficulties if an individual must retire.
