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Raising any child is expensive, but there are additional financial responsibilities to consider when you are raising a child with special needs.
Costs for medical visits, treatment appointments, medications and special equipment add up. The time it takes to provide care may limit your or your partner’s ability to work outside the home, or even not work at all.
Depending on your child, you may need lifelong support for them.
Just dealing with the medical and emotional aspects of your child’s specific challenges can be overwhelming. Here’s what to know so your finances don’t add to this stress.
4 Fund Transfers for Families of Children with Special Needs
1. Apply for government benefits
After your child is diagnosed, you will need to speak with a social worker who can help you understand what support is available to your family and how to apply for it. Your child’s doctor may recommend a social worker, or you can contact your city or county social services department.
A special needs lawyer can also help you. Robert Fechtman is a special needs attorney in Indiana and also Special Needs Coalition, a national organization of attorneys specializing in disability and public welfare law. He helps families navigate the public welfare system and plan for their children’s futures.
Families may be eligible for financial assistance through Social Security, Fechtman said.
Social Security Bureau issued a document Supplemental Security Income, also known as SSI, for children whose household income is below a certain threshold and who have qualifying medical conditions. The amount of aid paid out each month varies by state.
Once your child is an adult, he or she may also be able to accept Social Security Disability Benefits, which provides income for adults who are unable to work due to medical conditions.
Depending on your family’s income, your children may also be eligible for free health insurance by Medicaid. Generally, if your child is eligible for SSI, he or she is also eligible for Medicaid.This Children’s Health Insurance Plan, or CHIP, for families who make too much money to qualify for Medicaid but still can’t afford private health insurance.
Families who are not eligible for publicly funded health insurance can find affordable health insurance providers through the following health insurance marketplaces Healthcare website. Outside of the annual open enrollment period, you can enroll if you have a qualifying life change, such as you recently lost your health insurance.
Fechtman also told his clients to apply Medicaid Waiver, which allows those in need of long-term care to receive free health care at home rather than in a nursing facility. Children with special needs may qualify regardless of the parents’ income or assets. Each state has its own Medicaid waiver program.
Fechtman said many families were unaware of the exemptions. Applicants often have waitlists, so this is usually one of the first things he asks when meeting with new clients.
Families struggling financially should also check their eligibility for other nonprofit programs such as Temporary assistance for needy families (TANF) or Supplemental Nutrition Assistance Program (broken). TANF provides monthly cash assistance to families, while SNAP provides funds specifically for food purchases. Both are income-based plans.
2. Setting up a 529 ABLE Account or Special Needs Trust
When you apply for government aid, the governing body usually dictates how much income your family can earn and how much assets you can have. Funds in traditional checking or savings accounts can limit households’ access to public benefits.
However, Fechtman says parents can save money Chapter 529 or a special needs trust, and these dollars will not be included in household assets.
The ABLE account, like the 529 college savings accounts, is tax-deferred. However, ABLE account funds can be used for more than just education. Eligible expenses also include health, wellness and transportation for eligible children with disabilities, Fechtman said.
according to SavingforCollege.com, families can withdraw the money tax-free, up to $100,000 in the account, without affecting the child’s eligibility for SSI benefits.
The annual contribution limit for 2022 is $16,000.
Opening and maintaining an ABLE account is relatively inexpensive, Fechtman said. One drawback, however, is that if the child dies, the money in the account must go to repay the state’s Medicaid benefits for the child.
Families saving for children in special needs trusts need not worry about those savings being repaid to the state. A special needs trust is a legal arrangement designed to hold funds for a person with a disability so that the person can continue to receive public benefits. Trustees – the people who manage the trust – usually have few restrictions on how trust funds can be used, as long as they don’t interfere with beneficiaries receiving government aid.
Another difference between the two money-saving tools is cost, which depends on factors such as who sets up the account and which state you live in.
Fechtman told The Penny Hoarder in 2019 that lawyers could charge around $1,500 to draft a special needs trust. However, families can also join a collective trust managed by a nonprofit organization for perhaps half the cost. Setting up an ABLE account can cost as little as $50, he said.
3. Seek help from nonprofits
Government programs are not the only source of aid. The nonprofit also provides assistance to families in financial difficulty.
Here are some organizations that help families in need:
- Morgan plan There is a Pediatric Disability Device Exchange program that allows families to receive donated medical equipment for free.
- Uncle McDonald’s House Charity Provide accommodation for families who must travel so children can receive long-term care in hospitals far from home. Families may be asked to make a nominal donation, but no family will be turned away if it cannot be paid.
4. Develop a retirement plan
No parent wants to consider a situation where they are not alive to care for a child’s special needs, but it’s important to be prepared for your child’s care once you’re gone.
“Everyone with a disabled child is appalled by the idea that they will die before the child, and that the child will not receive the care and support and everything that the parent provides,” Fechtman said.
A will is required. Fechtman said wills should direct estate funds to special needs trusts so that children can continue to be eligible for public benefits.
Designating who will be the child’s guardian is also key, he said. Parents should look for someone who can provide proper care.
Additionally, Fechtman said, parents should have adequate life insurance coverage to cover their families in the event of their untimely death.
He advises parents—especially those in two-parent households—to purchase a survivor’s life insurance policy, also known as a second-death life insurance policy. It covers both parents but will not be paid until both parents have passed away.
One benefit of this type of policy is that the premiums are usually much lower than other policies. Another benefit is that the coverage lasts until the policyholder dies – unlike term life insurance, which ends after a certain number of years. This is especially important for parents of children with special needs, who may not be able to be independent and support themselves once they reach adulthood.
Of course, single parents cannot open such policies, and if one parent is the only source of income for the family, it may not be enough.
“If you only have one breadwinner, you need to buy personal insurance for that breadwinner,” Fechtman said. “Maybe you’re lucky and they get some kind of life insurance through work, so maybe you don’t have to run out and get a separate policy.”
It is important to have a plan so that your child will be financially cared for no matter what.
Editor’s note: This article was originally published in February 2019. Nicole Dow is a senior writer at The Penny Hoarder.
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