Parents of children with disabilities may be worried about how they will pay for the expenses they will encounter throughout their child’s life. Luckily, there are many financial resources available for children with disabilities that can be used to help defray costs of care. The following resources may be of potential use:
Health Insurance for Kids with Disabilities
Insurance plans for families of children with disabilities come in many forms, each with their own sets of benefits and limitations. The list below details several insurance options that may be of interest to families of children with disabilities:
- Private Insurance: Insurance distributed privately to individuals and families, often through an employer or other organization. Private insurance takes many forms including indemnity insurance (or “fee-for-service”), health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point of service plans (POSs). It may be advisable to speak with a benefits administrator or insurance coordinator about the benefits and limitations of your plan, and about which specific plan will work for you.
- Non-Private Insurance (Public Insurance): Insurance programs funded by local, state, or federal government departments, or large organizations. Public insurance is often used by those who do not receive employer-sponsored insurance or those who cannot afford it. Three important sources of non-private insurance that may help families of children with disabilities are Medicaid, Medicare, and the Children’s Health Insurance Program (CHIP).
Children with disabilities often require educational supports to maximize their learning experience. Sometimes, these differences may increase the costs of education for students with disabilities. Because of this, students with disabilities each have an Individualized Education Program (IEP). These documents contain an assessment of a child’s current educational status, along with a summary of their annual progress goals and plans for transitions as they age. In addition, an IEP will include mention of any support, service, or accommodations needed for the student to excel in their educational setting. Once an IEP contract is drawn up, financial funding from the public school district will work to pay for the services needed.
Personal Accounts and Trusts
There are a few types of financial accounts that can be created for a child with disabilities that can help to pay for medical, therapeutic, and other daily costs.
- ABLE Accounts: These are savings accounts that are subject to certain tax-advantages that other savings accounts are not. Individuals with disabilities are eligible for ABLE accounts if they fall below a designated income and resource level. The money in these accounts can be used for anything that considered a “qualified disability expense,” which provides some more choice and control for the individual and his/her family than other savings special needs savings options.
- Flexible Spending Account (FSA): These accounts allow individuals to set aside money from their employee benefit plan that can be used to help with medical or other qualified expenses. This money is not taxed, but the money must be spent by the end of the benefit year.
- Health Savings Account (HSA): A health savings account is very similar to a FSA, except that the money can be saved over time in this non-taxed account. Only people enrolled in a High-Deductible Health Plan (HDHP) are eligible for an HSA.
- Health Reimbursement Account (HRA): These accounts are funded by employers and set aside a certain amount of non-taxed money that is used to reimburse employees for the medical expenses of their family members. These plans vary based on employer contracts and preferences.
- Special Needs Trusts (SNT): Special needs trusts may be opened in the name of an individual with disabilities by a family member or loved one. These trusts do not count as income or assets, so their existence will not impact the beneficiary’s eligibility for public health insurance programs like Medicaid. The money placed in an SNT is under the control of a trustee who is in charge of spending this money in a way that helps the beneficiary. SNT funds can be used on things like personal care attendants, out-of-pocket medical expenses, and more recreational spending.
- Pooled Trusts: Pooled trusts are often used instead of SNTs in situations where there is no single trustee available, or there is not enough initial funding to open a special needs trust. In pooled trusts, money is given to a non-profit organization who manages it over the course of the beneficiary’s lifetime.
If you feel your financial skills are not adequate to make decisions about your child’s financial future, or you just would like some extra help, it may be useful to hire someone to assist you. Depending on your situation you might consider:
- A Financial Planner – A licensed financial planner is a qualified individual who can advise you on how to spend and allocate your assets. This may be beneficial for your family if you are unsure about how to spend and save your money. There are often financial planners who specifically work with families of children with disabilities. These planners will be well-versed in the many saving and spending options associated with disabilities.
- An Attorney for Estate Planning – An attorney for estate planning will function similarly to a financial planner, except that he or she can provide legally binding contracts that work to protect resources for your child. An attorney that focuses on estate planning will be aware of the potential benefits and drawbacks involved in setting up trusts and may help you safely allocate your money.
Income and Tax Help
Families of children with disabilities may be eligible for financial assistance that can supplement their income, or help to avoid paying taxes on disability-related expenses. Some income and tax benefits are available through:
- Supplemental Security Income: This program works to assist disabled adults and children who have limited income and financial resources. Unlike public insurance programs, SSI funding comes in the form of cash and can be used to pay for food, clothing, shelter, and other basic needs. SSI is distributed monthly, and like its name suggests, works alongside traditional income to help ensure that families of children with disabilities can support their needs.
- Federal Income Tax Credits: Tax credits reduce the amount of taxes that a family is required to pay. Parents of a child with a disability may be eligible for certain tax credits, each with its own value and eligibility criteria. For more information on federal income tax credits for disability, visit the IRS website and/or speak to your financial advisor.
The HIE Help Center is a resource site that provides families with information about, and resources for, hypoxic-ischemic encephalopathy (HIE), cerebral palsy, and other associated disabilities.