If you’re raising a special needs child, you may benefit from specialized financial planning. A good financial advisor can help you get a handle on the additional expenses that you may encounter over the next few decades and the resources available to help protect your family’s assets throughout the process. This article can help you start to understand some of the considerations and options you might discuss.

Costs associated with raising a special needs child

There tend to be numerous costs associated with a child’s special needs. In addition to the potential for extra medical expenses, you may need to budget for:

• Various therapies, including speech, occupational, and physical.
• Specialized medications.
• Assistive technology, such as communication or mobility aids.
• Educational support, including tutors or advocates.
• Home and vehicle modifications (as well as transportation or travel costs).
• Support for you and your spouse, including respite care or home help if needed.

While some of these services may be partly covered by medical insurance, many are not. Plus, this list focuses primarily on immediate needs. You may also need to consider longer-term costs as your child may require additional support in adulthood. For example, you might consider:

• Long-term caregiving, including group homes or home-health support.
• Employment support programs.
• Legal fees if you need to remain a guardian or conservator in adulthood.

While there are programs and products that can help you prepare for these expenses, the most basic takeaway is simple: Build a larger emergency fund so you have more flexibility in the face of variable expenses. You may even want to set up a separate, easy-to-access care fund to complement any additional steps you take. We’ll get into the types of accounts that may make the most sense for this type of fund a bit later in the article.

Support for special needs children and parents

The government offers several benefits to support special needs children. However, there are strict rules for how these benefits are used. Many benefits are only available to people with assets below a certain (often very low) amount. That means if you save money for your child in their name, you may inadvertently disqualify them from government benefits. The government does not look at the parents’ assets when determining eligibility.

Your special needs child may qualify for one or more of the following:

• Supplemental Security Income (SSI), which provides monthly stipends to qualifying people with disabilities and/or limited assets.
• Social Security Disability Income (SSDI), which provides a Social Security-style income payment to adult children with disabilities and is based on parents’ work history.
• Medicaid, which can help with medical expenses, including some of the long-term care costs that traditional medical insurance doesn’t cover.
• State-based programs, many of which operate through state agencies designed to support people with disabilities. States may also offer waiver programs to help supplement private care costs.

Beyond government resources, private foundations and charitable groups may offer helpful (and free) support for families. For instance, the Oklahoma Autism Foundation offers parenting classes and a database of specialized summer camps and childcare providers. Gigi’s Playhouse in Houston offers educational, occupational, and fitness training to individuals with down syndrome.* 

Just be sure to research the group you are working with; some groups with charitable titles are financial services companies. 

Smart ways to financially support your special needs child

There are a few tax-advantaged ways to save for and support a special needs child. The most common is an ABLE account. These are a type of 529 account in your child’s name; while you contribute after-tax dollars, any growth is tax deferred. Income is taxed on withdrawal. The biggest perk of an ABLE account is that the balance doesn’t impact your child’s eligibility for some of the benefits discussed previously, including SSI and Medicaid.

Similarly, parents can establish a special needs trust (SNT). SNT’s allow you to place assets into a trust where they can accumulate for your child’s benefit without impacting the child’s eligibility for aid since the money is held by the trust and not your child. Your child can withdraw money from the trust to fund food and groceries, utilities, education, travel, and other expenses not covered by government programs. There are restrictions, of course—primarily that the funds must be used for the benefit of your child (the beneficiary) and can’t be used for “family trips,” for example. These irrevocable trusts are legal structures, so you’ll want to consult a specialist to better understand the details. 

It’s also important to make sure you and your spouse have an up-to-date estate plan and proper insurance coverage so that your dependent child is cared for if one of you dies or becomes unable to work. While this type of risk management is always advisable, it takes on additional importance when a dependent requires additional (and often pricey) care. 

A financial advisor, in conjunction with a lawyer and/or insurance professional, can help you review all of your coverage to help you better understand your existing level of protection and where you may need to focus going forward. At Revo Financial, our team is experienced with the various aspects of special needs planning and can coordinate with any existing professionals you’re already working with to ensure a seamless process for you. Contact us to learn more.

*Please note: These are examples only; Revo Financial is not affiliated with these groups nor offering an endorsement.