Stay Calm and Keep Your Money

By: 

Thea McDonagh

Recently, the government announced that starting December 1, 2015, people receiving provincial disability benefits (PWD) will be able to have more money and still be eligible for monthly benefits. According to the press release, a single PWD recipient’s cash asset limit will go from $5000 to $100,000, and a couple who are both designated PWD will be able to have $200,000 as opposed to the current $10,000. In addition, the government has said that people on PWD will be able to receive cash gifts without affecting their eligibility, and there will be no limits on trust payments.

TAPS is excited about this change. Over the years we have seen too many people who have been forced to live off their savings and lose any chance at financial security simply because they have a disability. Previous legislation dictated that if someone had more than $5000, they were ineligible for government assistance. Often, people looking for assistance were told to come back when they had less money. People with disabilities had to cash in RRSPs, life insurance plans and other assets in order to support themselves, thus eliminating any chance at future economic security.

PWD recipients with more than $5000 could, and still can, exempt assets by putting them into a trust, Registered Disability Savings Plan (RDSP) or other exempt vehicle. TAPS has assisted many clients with asset exemption, and while it worked well for a lot of people, it often created undue stress and hardship. It requires significant effort to establish a trust, and for people living with physical or mental impairments this is often challenging. Furthermore, there were strict restrictions on how money in a trust could be spent, and people had to learn how to administer and report expenditures. With these new changes this may no longer be necessary.

After December 1, and according to the government’s announcement, any limits or restrictions to how disbursements from a trust can be spent will be eliminated. Previously, money held in trust for PWD recipients could be spent either on disability related costs or on items that promote that individual’s independence. There was an $8000 cap on money that could be spent on promoting independence. By removing this cap, PWD recipients with trusts should have no restriction to how much money they can use from the trust or what it can be spent on. The limit to the amount of money that can be exempt in a trust will still be $200,000, but with the new cash asset limit, an individual on PWD could foreseeably have up to $300,000 in combined assets.

The government has also announced the removal of limits on cash gifts that people on PWD can receive. Previously, a PWD recipient could only receive a one-time cash gift without penalty as long as they did not exceed their cash asset limit. Gifts could not be periodic or ongoing and could not exceed the person’s cash asset limit. Now people on PWD will be able to receive multiple cash gifts with no effect on their eligibility for assistance. For example, if a family member would like to provide financial assistance to a child who is on PWD by giving $200 per month to help with groceries, it will not affect that person’s eligibility for assistance. In addition, inheritances, education and training allowances, bursaries and scholarships will now be exempt income and will not affect eligibility, whereas previously this income would have been deducted dollar for dollar.

Although TAPS welcomes this change and recognizes that it will have a positive effect on a portion of PWD recipients, we also recognize that there are many people on PWD who this will not affect. The vast majority of folks on PWD who come to TAPS do not have assets and won’t benefit from this change. If the government wants to change legislation to benefit all people receiving provincial disability benefits in BC, they need to raise the rates.

If you have any questions regarding these changes, you can call TAPS and ask to speak to an income assistance legal advocate.