Additional living costs and barriers faced by families with children with disabilities: Evidence from the Participation and Activity Limitation Survey (PALS - 2006)

The analysis reveals that

• In general, families with children with more severe disabilities had similar characteristics to families with children with less severe disabilities.
• Overall, families with children with more severe disabilities were more likely to have out-of-pocket expenses (not covered by insurance or a government program), and the expenses tended to be higher for drugs, specialized equipment, health care, help, and transportation when compared to families with children with less severe disabilities.
• The study identified several working barriers and work-related consequences that the health condition of children with disabilities had on their parents. The study shows that families who had a child with a more severe disability were more likely not to have taken a job, to have quit work, refused a job, or to have worked shorter hours as a result of health conditions related to a child with a disability compared to families with a child with a less severe disability.
• 30.4% of families with a child with more severe disabilities indicated that during the last 12 months they had financial problems because of their child's condition, while 8.6% of families with children with less severe disabilities indicated that they were in that situation.

1.1 Study objectives

This study examines the 2006 PALS micro-data in order to address some of the limitations that the technical report for the formative evaluation has faced with the analysis of the Public-Use Micro File (PUMF). The objective is to better understand the impacts of additional costs borne by persons with disabilities and the kinds of barriers they face in terms of saving money which prevent them from establishing savings. As a result this study includes an analysis of children with disabilities under the age of 15, who are not included in the more recent 2012 Canadian Survey on Disability (CSD). Furthermore, the formative Evaluation observed that there is limited research available on the financial situation of parents of children with disabilities. The report presents information on parents of children with disabilities and provides evidence to inform the following two evaluation questions:

• What are the out-of-pocket expenses/costs for families with children with disabilities, and
• What kinds of barriers (e.g. ongoing financial requirements for medical supplies, assistive devices, at-home care etc.) prevent families of children with disabilities from working and saving?

1.2 Limitations

The first limitation of this study is that the PALS survey naturally does not include any information on whether households are using the RDSP or have received any incentive from the bond and/or grant) because it was conducted before the RDSP, grant and bond were introduced.

A second limitation discussed in detail in Section 2.0, is that individuals eligible to open an RDSP are those who are eligible for the Disability Tax Credit (DTC). The DTC has been in place in its current form since 1988 and a medical practitioner has to certify that the person “has severe and prolonged impairments in physical or mental functions”. Neither the CSD nor PALS identified persons with disabilities or children with disabilities who were eligible for the DTC. However, the PALS includes an index that categorizes the degree of severity of a person’s disability that is determined based on questions on intensity and frequency of the disability/disabilities (for more details on the index, see Section 3). Using this index as a proxy for the DTC/RDSP eligibility, we can assume that individuals with a severe disability represent the population of individuals with a disability who qualified for the DTC and subsequently are eligible for an RDSP. Consequently, the index is used to measure if persons with more severe disabilities had additional living costs and faced more barriers than those with less severe disabilities. Despite this inference, it is still possible for a person to indicate minor disabilities in more than one area but be identified as having a more severe degree of disability than another person who reports a severe limitation in only one area but who has only a “moderate” disability based on the index. However, as noted in the Data and Methodology Section (Section 3.0); the index properly identifies the degree of severity of the disabilities in most of the cases.

Although Question 2 is related to barriers that prevent families with children with disabilities (CWDs) from saving, the surveys do not provide information on savings behavior. Nevertheless, the surveys provide information on barriers that might affect earnings and contribute to financial hardship. It could be inferred that such families might have challenges in accruing wealth in the form of savings.

1.3 Report outline

Section 2 of the report provides a summary of RDSP rules as well as a summary about the program, as it pertains to eligibility criteria and maximum allowable contributions as well as a description of how the different components of the CDSP were implemented over the years. Section 3 examines the data and the methodology used in the report and provides socio-demographic profiles of families with CWDs with different degrees of severity. Section 4 presents descriptive and statistical analyses of the additional living costs (referred to as out-of-pocket expenses in the survey and the report) for families with CWDs with different degrees of disability severity and barriers to employment.

2.1 Registered Disability Savings Plans (RDSP)

An RDSP is a tax-assisted savings vehicle legislated under provisions of the Income Tax Act and administered by Canada Revenue Agency (CRA). It is an arrangement between a financial Institution and a plan holder (beneficiary, parent, legal guardian or public department) designed to encourage savings for the long-term financial security of a person with a severe and prolonged disability. RDSP beneficiaries are limited to residents of Canada who qualify for the Disability Tax Credit (DTC), have a Social Insurance Number and are under the age of 60. Contributions to an RDSP for a beneficiary are limited to a lifetime maximum of $200,000.

2.2 Canada Disability Savings Program (CDSP)

As mentioned in the Section 1.0, the CDSP was introduced in order to encourage Canadians with severe and prolonged disability to save through an RDSP. It includes two components: the bond and the grant. The bond is provided to RDSP beneficiaries with low to modest family net income, regardless of whether or not they contribute to an RDSP. RDSP beneficiaries with a family net income of $25,500 or less (in 2013) received a bond of $1,000. The amount of bond is reduced as family income rises, and is not available to RDSP beneficiaries whose family net income was $43,900 or higher. The income thresholds are revised each year based on the inflation rate. There is a $20,000 lifetime limit on bond paid to an RDSP.

The grant is a matching grant. An RDSP account may receive up to $3,500 a year in grant depending on the amount contributed and the beneficiary’s family net income. RDSP beneficiaries with a family net income of $87,900 or less (in 2013) were eligible to receive 300% of the first $500 in contributions and 200% of the next $1000 in contributions. If the beneficiary’s family income was greater than $87,900, the grant was 100% of the first $1000 in contributions. The lifetime grant limit is $70,000. An RDSP beneficiary is eligible to receive bond and/or grant until December 31st of the calendar year in which the beneficiary reaches 49 years of age.

Since the CDSP was launched in December 2008, there have been improvements. The Budget 2010 announced enhancements to RDSPs with the carry forward and RRSP/RRIF rollover provisions. The carry forward provision allows a 10-year carry forward of unused grant and bond entitlements. The RRSP/RRIF rollover allows a deceased individual’s retirement savings proceeds to be transferred into the RDSP of a financially dependent child or grandchild on a tax free basis.

In addition, Budget 2011 and Budget 2012 proposed further enhancements to provide beneficiaries and their households with increased flexibility to establish, contribute to and access savings from their RDSPs.

3.1 Socio-demographic profiles

In this section, the socio-demographic profile of children with disabilities (CWDs) is compared to that of children without disabilities (CWODs).

As indicated in Section 3.0, the group of CWDs is subdivided in two sub-groups using the disability severity scale to differentiate the groups (those with less severe disabilities and those with more severe disabilities) ^{Footnote 8}. The socio-demographic profile of each group is provided to obtain a better understanding of the different characteristics of the populations.

It appears that males are overrepresented among CWDs that are more severe (66.8%) compared to CWDs that are less severe (61.7%). By age, the data shows that CWDs tend to be older than children without disabilities. Nonetheless, among CWDs, there is no evidence that the distribution by age varies by the degree of severity of the disabilities, as about 50% of those with less severe disability and those with more severe disability were aged between 10 and 14 years old.

Table 1 shows that 59.6% of parents were not living as a couple while another 18% were living as a couple. There was no information provided for the remaining 22% of parents. Since it is out of the scope of this analysis, no further inferences will be made. On the other hand, the proportion of families who were immigrants was significantly lower among families with CWDs (3.8%) compared to families with children without disabilities (CWOD) (15.8%).

The proportion distribution by location indicate that a slightly higher proportion of families with CWDs lived in urban areas (21.2%) compared to the proportion of families with CWOD (14.0%). By province however, the percentage of CWD and CWOD is similar in each. It also seems that size of families does not explain the presence of CWDs or the degree of severity of the disabilities.

Table 1 also shows that the percentage of families with CWDs renting their dwelling is similar to the percentage of families with CWOD that rent their dwelling. In terms of average incomes we can see that families with CWD’s on average have lower income than families with CWOD. Even within families of CWDs, on average those with children who have severe disabilities have lower income compared to those with children with less severe disabilities. The degree of severity of the disabilities appears also to influence the family income.

Two statistical models were developed in order to determine the socio-demographic characteristics that mainly differentiate families with CWOD and families with CWDs. It attempted to profile families with CWDs that are less severe and those with CWDs that are more severe disabilities, when taking other factors into account. The two models are presented in the Appendix A (table A-1 and A-2). The summary of the results of the models confirmed the above descriptive analysis in that it illustrated that:

• CWDs were more likely to be male and older than CWOD. They were also more likely to live in an urban area and to be non-immigrants and
• CWDs with more severe disabilities were more likely to be male, aged between 5 and 9 years old, and to some extent living in a rural area

Table 2 provides the percentage distribution of the presence of different types of disabilities by the severity of disability. It reveals that disabilities such as chronic condition (67.0%), learning (59.8%), and speech (38.7%) were identified more frequently as the types of disabilities CWDs had. While the less frequent type of disabilities identified by respondents were seeing and developmental delay. Table 2 also reveals that within each disability type, a higher proportion of children have more severe disability. This observation is more likely to be correlated with how the degree of severity scale has been developed (see Section 3.0).

4.1 Additional living costs for families of CWDs

This Section presents a descriptive analysis of the proportion of families with CWDs with additional out-of-pocket expenses. We also compare the proportion of families with CWDs with additional out-of-pocket expenses by severity of disability. It is inferred that out-of-pocket expenses may have a negative effect on saving for families with CWDs. Additional expenses could also mean the need for additional revenue in order to contribute to an RSDP. The information collected by the PALS on the additional living costs is described as out-of-pocket expenses not reimbursed by any insurance or government program.

A series of six models were constructed to identify if the severity of disabilities was a significant predictor of out-of-pocket expenses among PWDs, when taking into account other socio-economic factors. The models could be described as:

Presence of out-of-pocket expenses (dummy) = X’α + β (severity of disabilities) + ε

In this equation, ‘X’ was defined as a vector that includes a constant and a set of CWDs characteristics such as age, sex, as well as family characteristics such as marital status, income, etc., while ‘α’ is a vector of coefficients. Beta (β) captures the differences between those with less severe disabilities and those with more severe disabilities, using a dummy variable. Each model shows the results of a probabilistic model (using probit regressions) to identify if the severity of disabilities and the characteristics of CWDs and their families impact the probability of having out-of-pocket expenses. The detailed regression results are presented in Tables B-1 to B-6.

In terms of direct expenses for prescription and non-prescription drugs, Table 3 reveals that the percentage of those with out-of-pocket expenses on drugs increased with the severity of disabilities, with 41.4% of those with more severe disabilities having out-of-pocket expenses compared to 34.3% for those with less severe disabilities. The statistical analysis confirms that those with more severe disabilities had significantly more frequent out-of-pocket expenses than those with less severe disabilities by 9.2 percentage points when taking into account other factors. Other significant factors in the model (see Table B-1) were mainly gender and age. Families with younger CWDs were more likely to have out-of-pocket expenses related to drugs compared to families with CWDs aged 5 years and older. Families that either rented or were low-income were also less likely to have out-of-pocket expenses related to drugs compared to families who owned their dwelling or with higher income. The present data could not address the reason for this relationship. Table 3 confirms that families with children with more severe disabilities had higher expenses on drugs ($1,000 and more) (22.0%) compared to families with children with less severe disabilities (11.1%).

Although a lower percentage of families with children with more severe disability (23.5%) had out-of-pocket expenses related to the purchase and maintenance of aids and specialized equipment than for drugs, it was also estimated that the percentage difference between the two groups was statistically significant (by 16.5 percentage points - see Table B-2). ^{Footnote 9} Nonetheless, it is unclear whether families with children with more severe disabilities had disbursed a higher amount than those with children with less severe disabilities as illustrated in table 3.

Table 3 examines if the proportion of families with CWDs having out-of-pocket expenses related to health care and social services was relatively stable among the two different groups based on severity of disability (from 19.9% to 28.2%). After taking into account some socio-demographic factors, the statistical analysis reveals that those with more severe disabilities more often had out-of-pocket expenses related to health care and service than those with less severe disabilities by 9.3 percentage points. The statistical analysis in Table B-3 shows that families with higher-income were more likely to have indicated out-of-pocket expenses than families with lower-income. Families with older children (10 to 14 years old) were less likely to have out-of-pocket expenses for health care and social services compared to families with younger children. Table 3 also reveals that families with children with more severe disabilities have higher out-of-pocket expenses ($1,000 and more – 36.7%) than those with less severe disabilities ($1,000 and more – 22.8%).

Regarding additional expenses for transportation, it appears that a greater proportion of families with children with more severe disabilities (38.2%) had out-of-pocket expenses in this regard compared to those with children with less severe disabilities (18.4%). The difference in the average proportion of those having out-of-pocket expenses related to transport was significant – by 17.2 percentage points. As observed for the other out-of-pocket expenses, families with children with more severe disabilities appear to have higher expenses than those with children with less severe disabilities.

Table 3 also reveals that the proportion of families with CWDs that have out-of-pocket expenses related to help with everyday housework noticeably increased with the severity of the disabilities (from 3.6% to 17.3%). However, Table 3 indicates that families with CWDs with less severe disabilities had higher disbursements than families with CWDs with more severe disabilities.

When cumulating all families with out-of-pocket expenses together, Table 3 shows that approximately 95% of families with CWDs had at least one out-of-pocket expense regardless of the degree of severity of the disabilities. The regression results corroborate this finding by revealing that there was no difference in the probability of having one out-of-pocket expense by the degree of severity of disability. Finally, Table 3 also shows that the proportion of families with CWDs having 3 or more types of out-of-pocket expenses was higher among those with more severe disabilities (25.5%) than among those with less severe disabilities (9.9%).

Table 3 – Out-of-Pocket expenses by families with children with disabilities related to the child’s disabilities by degree of severity of the disabilities – 2006

4.2 Barriers preventing parents or guardians of CWDs from working

Section 4.1 showed that families with CWDs with more severe disabilities tend to have more additional out-of-pocket expenses than families with CWDs with less severe disabilities. Consequently, it might be more difficult for the former families to contribute to an RDSP as they incur more expenses. Furthermore, it is essential to examine whether there are more barriers to prevent them from contributing to an RDSP.

Being prevented from working could be a barrier to contribute to an RDSP (facing more difficulty to generate savings), this section attempts to identify several work-related barriers for families with CWDs. The models used in Section 4.1 are detailed in Appendix C.

Based on the results from Table 4, it appears that 26.4% of families had someone in the family who did not take a job in order to care for CWDs. Furthermore, 39.8% of families with children with more severe disabilities faced this situation compared to 16.4% for those with children with less severe disabilities. Similarly, 21.6% of families with CWDs had a family member who quit their job. This proportion reaches 32.9% among families with children with more severe disabilities, which was 18.0 percentage points higher compared to those with children with less severe disabilities. The results from PALS also reveal that 11.0% of families with children with more severe disabilities had a family member who had lost a job due to the condition of their child, 8 percentage points higher than the other group.

Many families with CWDs were facing other types of difficulties related to their job. For instance, close to 20% of families with CWDs had a family member who turned down a promotion or a better job due to their child’s condition. Thus, those with children with more severe disabilities were also more likely to have turned down a job promotion by 21.0 percentage points compared to those with children with less severe disabilities. It should be noted that most of the other factors were not significant (see Table C-4), with the exception of income.

Approximately 50% of the families with CWDs had a family member who had to modify their working schedule. As was the case for the other questions, the prevalence was greater among families who had children with more severe disabilities than among those who had children with less severe disabilities. As expected, those with children with more severe disabilities were more likely to reduce their number of working hours compared to those who had children with less severe disabilities.

Families with children with more severe disabilities have on average lower income (see Table 1) and more often face work-related consequences. Their situation may have prevented some of them from generating savings and limited their ability to contribute to an RDSP. Table 4 also seems to corroborate this assumption as 30.4% of families with children with more severe disabilities had financial problems because of their child's condition during the last 12 months, while 8.6% of families with children with less severe disabilities were in this situation.

Table 4 – Impact of a child’s condition on employment by degree of severity of the disabilities – 2006