Special needs financing is a godsend for families of children with special needs. It allows you to borrow money for any long-term disability or medical expense. They can also use this financing for short-term or long-term use to ensure that special needs children can easily access their needs.
While challenging to process, special needs financing is possible. Learning what to do and who to approach to get financial support for your special needs child is vital. To get started, here are ten ways to financially support special needs children.
10 Steps To Special Needs Financing
- Find out what government benefits you qualify for
The first step is to determine what government benefits you can qualify for. As a parent of a special needs child, you may be eligible for Medicaid and other state programs that provide financial assistance.
Try looking into any other government benefits or resources available to you and your family, such as social security, disability insurance, and veteran’s benefits. For instance, Social Security’s Supplemental Security Income (SSI) program offers children with disabilities State supplemental payments, Medicaid, Food Stamps, and other social services. - Calculate your annual costs
Special needs children need enough funding to cover their medical care, therapy appointments, specialty treatments, medication, equipment, and transportation and education expenses, among other things.
Calculate the sum of all these expenses to know how much you can handle and how much you need from financial support. - Create a budget to figure out how much you can save
Create a budget that shows how much you’ll earn and what it will go toward, such as house payments or rent; utilities like electricity and internet access; groceries; car insurance; gas for vehicles; clothing items such as shoes and coats; and toiletries like shampoo.
You may also want to consider setting aside money each month for medical emergencies, unexpected expenses, or savings goals that can help your special needs child become independent in the future.
Use actual numbers in your budget and then estimate how much certain things cost monthly. This process ensures you get an accurate monthly budget.
- Look into state programs
Some states offer special needs trusts designed to help people with disabilities and their families manage assets. These trusts allow you to receive a monthly allowance for your care rather than having the state control your assets.
Some states also offer programs that help with medical expenses, such as the Children’s Health Insurance Program (CHIP). This program provides comprehensive health coverage to individuals under 19 years of age whose families can’t afford private insurance but are also overqualified for Medicaid. However, some states charge a modest premium to families with higher incomes.
- Investigate trusts and other planning tools
Trusts are helpful in many situations. You can use them to set aside money for your child’s future, ensure they have access to the funds when needed, and more.
One trust you can get is a Supplemental Needs Trust (SNT). It’s a Medicaid planning tool that protects people with disabilities’ assets to maintain their eligibility for government benefits and enhance their quality of life. - Get an insurance plan
Look into insurance plans, life insurance with riders, and annuities to support you and your special needs child’s financial needs. For instance, a life insurance policy for your child can replace your lost wages and retirement accounts when they die. Alternatively, the insurance proceeds from your policy can go to your beneficiaries when you pass away before them.
Life insurance with riders can also help pay the cost of extra care. Depending on your policy, this might be physical therapy, an in-home aide, or a special wheelchair.
Lastly, an annuity can pay you monthly payments from an investment account or lump sum of cash. It will continue to pay out if you become disabled or die. However, the money becomes yours if the annuity is not used for long-term care expenses as agreed upon in your contract.
- Work with experts specializing in special needs law and planning
Special needs law and planning is a niche area of law, so you need to work with a lawyer familiar with these issues. You will also need to have Expert ERISA disability lawyer if the disability is caused by an accident or work injury.
As far as financial advisors go, they’re not always up-to-date on the latest updates in special needs law. Ensure that the person you choose specializes in working with families of individuals with disabilities, especially if your loved one has complex needs and will require long-term care. Check their background, credentials, and references to ensure you work with the right person.
- Have a friend or family member serve as trustee for your child’s trusts
For your child to have access to money from a trust, they will need someone to serve as trustee—someone who manages and distributes funds from a trust.
If you choose someone other than yourself, be sure that person is trustworthy and has experience handling large sums of money. Although they’re not required to have any particular skills in managing investments, it’s wise for them to have some financial background so they can understand the documents they’ll be signing on behalf of your special needs child’s trust.
Once you’ve chosen your trustee, you should set up a revocable living trust to protect both assets belonging solely within the living trust and all assets that are held jointly with another owner, like bank accounts.
Having this trust ensures that your assets will pass directly into your child’s name upon your passing without going through probate court first. It also prevents anyone else from accessing those funds without permission beforehand.
- Research ABLE accounts
Achieving a Better Life Experience (ABLE) accounts are tax-free savings accounts that individuals or parents of special needs children can prepare to pay for education, housing, transportation, and other expenses.
Under the ABLE Act of 2014, these accounts allow individuals with disabilities to save up to $14,000 per year on top of support from SSI, Medicaid, and other government assistance programs.
Several factors determine whether your contributions will be deductible on your taxes:
- You or your child must have a diagnosed disability before age 26
- You must receive SSI benefits
- The ABLE account cannot replace any additional medical support, such as food stamps or housing vouchers
Expenses that ABLE accounts allow include education, food, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services, and other expenses that improve quality of life.
- Avoid burdening your child with debt after you die
Debt is often hard to pay off, especially if your income isn’t enough to cover all your financial obligations and your special needs child’s needs. While you’re still around, ensure that you pay off your debts on time to avoid financial problems in the future. Ask a financial advisor to help create a debt payback strategy and plot a long-term financial plan.
The sooner you pay off or manage your debts, the easier it’ll be to financially support yourself and your special needs child.
Prioritize Special Needs Financing For Your Peace Of Mind
Special needs financing is a complex process. If you’re thinking about doing it yourself, it’s essential to know what you’re getting into. The more steps you take to educate yourself about special needs financing, the better prepared you’ll be for success.
The steps outlined above can help you prepare for whatever happens to yourself and your special needs child. On top of these tips, remember to ask professionals for help or advice and ensure everyone involved in the process understands their role and responsibilities.