Raising any child carries a price tag, but when your child has special needs, there are additional monetary demands to plan for.
Expenses for doctor appointments, therapy sessions, medications and adaptive equipment accumulate quickly. The substantial time required for caregiving can limit your ability — or your partner’s ability — to work outside the home, or at all.
Depending on your child’s condition, you may be responsible for supporting them throughout their lifetime.
Juggling the medical and emotional sides of your child’s needs is challenging enough. Here’s what to know to keep financial pressures from compounding that strain.
4 Financial Steps for Families With Children Who Have Special Needs
1. Pursue Government Assistance
After your child’s diagnosis, connect with a social worker who can outline potential aid programs and guide you through the application processes. Your child’s doctor may be able to refer someone, or you can reach out to your municipal or county social services department.
An attorney specializing in special needs can also be helpful. Robert Fechtman, an Indiana-based special needs attorney and past president of the Special Needs Alliance, assists families with navigating public benefits and planning for their children’s long-term care.
Fechtman noted that families might be eligible for assistance through Social Security.
The Social Security Administration administers Supplemental Security Income (SSI) to children with qualifying medical conditions whose household income is below certain limits. Monthly benefit amounts vary by state.
When your child becomes an adult, they may also qualify for Social Security disability benefits, which provide income for adults unable to work due to medical issues.
Based on household income, your child might also be eligible for no-cost health coverage through Medicaid. Typically, children who qualify for SSI are also eligible for Medicaid. For families whose income is too high for Medicaid but who cannot afford private plans, the Children’s Health Insurance Program (CHIP) is another option.
Families who don’t qualify for public health programs may find affordable coverage through the Health Insurance Marketplace at HealthCare.gov. Outside the yearly open enrollment window, you can enroll if you experience a qualifying life event, such as losing previous coverage.
Fechtman also advises clients to apply for Medicaid waivers, which allow people needing long-term care to obtain services at home instead of in institutional settings. Children with special needs can often qualify for these waivers irrespective of their parents’ income or assets. Each state runs its own waiver program.
Fechtman mentioned that many families are unaware of waiver programs. Because waitlists are common, he typically raises this topic early when working with new clients.
Families facing financial hardship should also explore eligibility for other public aid, such as Temporary Assistance for Needy Families (TANF) or the Supplemental Nutrition Assistance Program (SNAP). TANF offers monthly cash support for families, while SNAP helps with food purchases. Both programs are income-based.
2. Open a 529 ABLE Account or Create a Special Needs Trust
When applying for public benefits, agencies often set limits on household income and countable assets. Money held in standard checking or savings accounts can jeopardize benefit eligibility.
However, Fechtman explained that parents can save via a 529 ABLE account or a special needs trust, and those funds typically won’t count against the family’s asset limits.
ABLE accounts offer tax-advantaged growth similar to 529 college plans, but their uses extend beyond education. Fechtman said qualifying withdrawals can cover health, wellness and transportation costs for a person with a qualifying disability.
Per SavingforCollege.com, funds withdrawn from ABLE accounts can be taken tax-free, and accounts may hold up to $100,000 without affecting SSI eligibility.
The annual contribution cap for 2022 is $16,000.
Fechtman noted that establishing and maintaining an ABLE account is relatively low-cost. A drawback is that if the beneficiary dies, remaining funds may need to be used to reimburse the state for Medicaid expenses.
Savings held in a special needs trust are not usually subject to Medicaid reimbursement upon the beneficiary’s death. A special needs trust is a legal vehicle designed to hold assets for someone with disabilities so the individual can remain eligible for public benefits. Trustees manage the trust funds and generally have flexibility in using them as long as such use doesn’t disqualify the beneficiary from government assistance.
Another contrast between ABLE accounts and special needs trusts is cost, which depends on factors like who prepares the trust and state-specific rules.
Fechtman told Savinly in 2019 that having an attorney draft a special needs trust might cost about $1,500. Families can also opt for a pooled trust run by a nonprofit, which can be roughly half that price. Opening an ABLE account could cost as little as $50, he said.
3. Seek Help From Charitable Organizations
Government support isn’t the only avenue for aid. Nonprofit groups can also provide financial help to families in need.
Here are several organizations that offer assistance:
- The HealthWell Pediatric Assistance Fund offers financial support for families when health insurance doesn’t cover essential pediatric treatments.
- The UnitedHealthcare Children’s Foundation awards grants to help children access medical services that aren’t fully covered by private insurance.
- The Different Needz Foundation provides grants so families can obtain medical devices or services.
- The M.O.R.G.A.N. Project runs a pediatric equipment exchange that allows families to receive donated adaptive devices at no cost.
- Ronald McDonald House Charities offers lodging to families traveling for a child’s extended hospital care. Families may be asked to give a small donation, but no one is denied assistance for inability to pay.
4. Put End-of-Life Financial Plans in Place
No parent wants to envision a future in which they aren’t present to care for their child, but planning for your child’s wellbeing after you’re gone is essential.
“Every parent of a disabled child fears dying before that child and that the child will lose the care and support the parents provide,” Fechtman said.
Having a will is critical. Fechtman recommends directing inheritance proceeds into a special needs trust so the child can continue to receive public benefits.
Naming a guardian who would care for the child is also vital. Parents should choose someone capable of providing appropriate care.
Fechtman also suggests carrying sufficient life insurance to protect your family if you die unexpectedly.
For two-parent households, he recommends a survivorship life insurance policy (also called a second-to-die policy). It covers both parents but pays out only after both have passed away.
This type of policy often has lower premiums than individual policies and remains in force until both insured individuals die, unlike term policies that expire after a set period. That ongoing coverage can be especially important when a child may not be able to work or live independently as an adult.
Of course, single parents cannot obtain a survivorship policy, and it may not be suitable if one parent is the sole earner in the household.
“If there’s only one breadwinner, you’d need individual coverage for that earner,” Fechtman said. “You might be fortunate if they have workplace life insurance, so a separate policy might not be required.”
The crucial point is to have a plan so your child remains financially supported no matter what happens.
Editor’s note: This article was initially published in Feb. 2019.Nicole Hart is a senior writer at Savinly.
