Facing a new disability: A guide to disability benefits

Becoming disabled can potentially lead to a reduced income, along with an increase in costs. In fact, research from the National Disability Institute has found that households that include an adult with a disability require 28% more income to maintain the same standard of living as those that don’t.

Naturally, this can feel overwhelming, especially when you’re navigating the complex emotions and sometimes complicated logistics of a new disability. But becoming disabled doesn’t have to be a permanent barrier to financial empowerment.

“A lot of times, people see disability as the end of the financial road, and it doesn’t need to be,” says Thomas Foley, Executive Director of the National Disability Institute. “It can just be a pause before you move on with your career and your financial journey.”

This checklist can guide you through some of the most important monetary considerations—from benefits to tax breaks—so you can get your financial situation in order one step at a time.

Step 1: Check your disability insurance policy

No one thinks they’re going to become disabled, especially to the point where they’re unable to work. But when the unexpected happens, long-term disability insurance may help fill gaps in your income.

This kind of disability insurance goes into effect if you can’t work for an extended time due to an injury or a disability. These plans give the policyholder a portion of their lost income—typically 60% to 80% of their monthly salary.

You may be able to purchase insurance through your employer, or you can buy a policy on your own. To make a claim, however, you’ll have to acquire a policy before a disability happens and make all premium payments to keep it in force. 

Step 2: Apply for disability benefits

Beyond private disability insurance, some federal and state resources are available to help supplement the income of those affected by a disability. These include Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and Veterans’ benefits.

Social Security Disability Insurance

One of the most common types of financial help for disabled adults is SSDI. This benefit compensates individuals for lost income due to a disability that has greatly reduced their ability to work—or has required them to stop working entirely.

In 2024, eligible persons may receive up to $3,822 per month—although the exact amount is based on work history. You might be eligible for SSDI if:

• You have a disability (including blindness).
• You have worked for at least five of the last 10 years.

While these are the general guidelines, there are some exceptions. For example, people under the age of 24 might not have to meet the work history requirement. Learn more about SSDI eligibility requirements, including what you may be able to expect in your specific situation.

Supplemental Security Income

Another common financial resource for people with disabilities is SSI. This federal program provides monthly income for people with disabilities and older adults with little to no income or resources.

Currently, individuals can receive up to $943 a month and couples can receive up to $1,415 from SSI. The monthly amount a person receives is determined by factors such as other income, living situation, assets, and more.

Some states offer additional payments for residents with disabilities that won’t impact their SSI eligibility. These state supplements are meant to cover the necessities of daily living, like food and shelter. Check if your state offers SSI supplements.

Veterans’ benefits

IIf you’re a Veteran, you might be eligible for Veterans Affairs (VA) disability compensation. This is a monthly, tax-free payment for Veterans who suffer service-related illnesses or injuries—affecting either their physical or mental health. In some cases, preexisting conditions are also covered if the Veteran’s service made the condition worse.

What to know when applying for disability benefits

You can apply for disability benefits like SSDI and SSI as soon as you become disabled. Note that you can apply for both programs at the same time—eligibility for one won’t affect eligibility for the other—but only about 10% of beneficiaries qualify to receive both.

However, you’ll have to wait six months to receive SSDI benefits, and this waiting period starts the first full month after your disability began, as determined by the Social Security Administration. For SSI benefits, you’ll begin receiving payments the first full month after you apply or after your eligibility is approved, whichever is later.

To apply for either or both programs, you’ll need to complete an application for disability benefits and an Adult Disability Report. You can submit both forms online or during an interview with a Social Security Administration representative. Your interview may take place either in person at your local Social Security office or by phone.

Make sure your application isn’t delayed by thoroughly reviewing this checklist of necessary information. This optional medical and job worksheet can also help you organize information for your application.

Learn more: How to handle financial challenges when supporting loved ones with disabilities.

Step 3: Get additional financial support if needed

Ultimately, if you are unable to work or need to reduce your hours because of a disability, you may need to reassess your budget and spending. And if you’re coming up short, some programs can help fill in the gaps, like:

• Temporary Assistance for Needy Families (TANF): This federal, time-limited program provides financial support for families. Each state manages its own arm of the program and determines the specific benefits and eligibility requirements.
• Supplemental Nutrition Assistance Program (SNAP): This federal nutrition assistance program provides benefits for families, enabling them to make eligible food purchases in authorized stores.

While making less money can be discouraging, having a disability doesn’t mean you need to resign yourself to living with a low income or no income forever.

“People with disabilities have the same talent and ambitions as everyone else,” Foley says. “A disability doesn’t mean you can’t retrain for a new or even better job and build whatever financial future you want to have.”

Step 4: Navigate insurance coverage

It’s crucial to have health insurance, especially when you’re dealing with a disability. But if you can’t continue working, or continue working enough to keep your current coverage, you’ll need to find an alternative to employer-provided insurance.

If you’re eligible for SSDI payments, you’ll also gain access to health insurance coverage under Medicare. However, there is a two-year waiting period before this coverage kicks in. 

One solution: You may be able to get Medicaid coverage while you wait. The purpose of Medicaid is to offer health insurance coverage to low-income Americans—a group that currently includes more than 10 million adults and children with disabilities. 

Medicaid benefits

Medicaid is a joint federal and state program, which means each state runs its own Medicaid program. States determine the type, amount, and duration of Medicaid benefits that eligible residents can receive.

However, there are certain mandatory benefits that all states must provide, such as:

• Inpatient and outpatient hospital services
• Physician services
• Laboratory and X-ray services
• Home health services

Learn more: See the full list of mandatory and optional Medicaid benefits.

Medicaid qualifications

You may be eligible for Medicaid based on your household income, disability, and other factors. Specific eligibility requirements vary per state—see if you’re eligible for Medicaid in your state and find out how to apply.

It’s also important to know about Medicaid waivers, which allow states to make exceptions to the typical Medicaid qualifications. Often, these waivers are geared toward providing services that help people with disabilities or medical needs stay in their homes. Check your state’s waiver list for more information.

Finally, if you’re turned down for Medicaid, you may be able to enroll in a private health plan on HealthCare.gov while waiting for your Medicare coverage to start.

Step 5: Assess home modification needs

If you’ve recently become disabled, you might need to consider physical modifications to make your home safer and more functional. This is typically the case when your disability impacts your mobility or requires you to use a wheelchair or other mobility device.

Common home alterations include:

• Installing ramps and lifts
• Widening doorways
• Adding accessible showers and toilets
• Lowering counters and sinks

If you need assistance financing these renovations, some federal and local programs may be available, including those that provide grants or low-interest loans for rural homeowners and grants for Veterans. Check with your state to see what local programs exist and if you qualify.

Learn more: Budgeting for accessibility: How to finance a home modification.

Step 6: Ask for work accommodations

No matter your disability, you have the right to the same employment opportunities and to be free from employment discrimination. These rights are protected by the Americans with Disabilities Act (ADA), which can help people with disabilities maintain financial wellness by protecting their source of income.

Under the ADA, employers are required to make reasonable accommodations to ensure people with disabilities have equal opportunity during the application process, can perform the essential functions of their job, and enjoy equal benefits of employment.

Step 7: Learn about available tax breaks

Taxpayers can claim many income exclusions, deductions, and credits, but some are particularly helpful for people with disabilities and their families.

Income exclusions

Income exclusions are what they sound like—money that’s not included in the IRS calculation of your taxable income. Below are two disability income exclusions to familiarize yourself with.

• Social Security benefits: If SSDI payments were the only income you received during the year, your benefits are generally not taxable. If you received other income, part of your benefits may be taxable. SSI payments, however, are exempt.
• Military and government disability pensions: Certain military and government disability pensions or disability benefits you receive from the Department of Veterans Affairs are not taxable.

Tax deductions

Tax deductions decrease your taxable income, lowering your overall tax liability. If you’ve been affected by a disability, you may be allowed to deduct expenses like these (within some limits):

• Impairment-related outlays to help make your work environment more accessible
• The cost of home improvements designed to enhance your home’s accessibility
• Medical and dental expenses you pay for yourself, your spouse, and your dependents

People who are legally blind also qualify for an extra standard deduction on their taxes ($1,850 for the 2023 tax year). And people who are legally blind and over age 65 qualify for a deduction that’s double that amount.

Tax credits

A tax credit is a dollar-for-dollar reduction in the amount of tax you owe. Below are some common examples.

• Credit for the elderly or disabled: You can claim this credit if you are 65 or older during a given tax year or if you have a permanent or total disability.
• Earned income credit: You may qualify for this credit if you have earned income (some disability payments qualify as earned income), and it falls within certain limits.
• Saver’s credit: You may be able to claim this credit if you make eligible contributions to an ABLE account (see below).

Learn more: Information about a government benefits program that provides tax help for people with disabilities.

Step 8: Consider an Achieving a Better Life Experience (ABLE) Account

ABLE accounts are another helpful financial resource. These tax-favored savings accounts are available to people diagnosed with significant disabilities before age 26. Thanks to the recent ABLE Age Adjustment Act, that threshold will increase to age 46 in 2026.

While the account owner is the designated beneficiary, anyone can contribute to the account. There are some limits on annual contributions, but any interest earned grows tax-free if you use the money for qualified expenses. What’s more, funds in an ABLE account won’t affect eligibility for needs-based assistance programs like SSI and Medicaid.

“They’re a wonderful savings opportunity,” Foley says. “It’s a great way to make sure that someone with a disability has a savings tool that doesn’t affect their public benefits eligibility.”

Learn more: Getting and using an ABLE account, including eligibility details and other common questions.

Banking with a disability

Like many other aspects of life, banking can be affected by a disability, but it doesn’t have to be. Make sure that your bank is inclusive of all abilities—with an accessible website, app, and other user interfaces.

Discover^® is committed to creating a seamless experience for everyone, such as by offering Braille credit cards. 

A disability doesn’t disqualify you from a bright financial future  

If you’ve recently faced a disability or are likely to do so soon, the financial challenges involved may seem daunting. But it’s important to remember that a disability doesn’t need to stand in the way of your financial stability.

“Disability is a normal part of the human experience,” Foley says. “And just because you have a disability doesn’t mean you can’t build a bigger, better, brighter future for yourself and your family.”

If you or a loved one are facing a new or existing disability, it may seem overwhelming. Fortunately, there are resources available that may help you address financial and emotional challenges as they arise.

Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.

This article is for informational purposes only and is not intended as a substitute for professional advice. For specific advice about your unique circumstances, you may wish to consult a qualified professional, at your expense.