Medical and Financial Planning for Special Needs Children

Parents with special needs children understand the importance of having quality health care and how changes to the laws can impact their decisions on planning for the future of their child.  Health care reform has changed the face of health insurance in the past few years.  With these changes come challenges and decisions regarding medical and financial planning.

The Patient Protection and Affordable Care Act of 2010

The Affordable Care Act or more commonly known as health care reform brought many changes to the health care industry and how Americans look at health care coverage.  This ever-changing program promises to bring about even more changes in the future and the parent of a child with special needs should be aware of the ins and outs of health care reform.

Health Care Provisions

All health insurance companies must comply with the changes to health care.  These provisions include:

  • All young adults under age 27 can continue health care coverage under a parent’s policy.
  • Health insurance plans are prohibited from using any pre-existing conditions as a means for exclusion.
  • Lifetime limits on the monetary amount of coverage are not allowed.
  • Coverage cannot be denied or rescinded for any insurer who becomes sick.
  • No annual dollar amount of coverage can be limited.
  • Children with special needs may also qualify for other government health care programs such as Medicaid.

According to, any changes to this law are updated on this government information site.  Eligibility for subsidies and other income based programs can also be determined.

Pre-Existing Conditions

Parents of special needs children and adults often worry about being denied coverage for their child due to the many different disabilities that can be present.  Under the current law, health insurance companies cannot refuse coverage for a health problem that an insurer had before the date that the new health insurance coverage began.  Patients with pre-existing conditions may not be charged more for insurance coverage.  

In the past, health insurers denied coverage for children with pre-existing health conditions such as cancer, diabetes, or even asthma.  Currently, under the law, these insurance companies cannot limit the benefits for any pre-existing condition and once insured, they cannot refuse to cover treatment for any pre-existing condition.  The only exception to this law is “grandfathered” individual health insurance policies that a person bought for themselves or family members before 2010.  These policies must not have been changed in certain specific ways that reduce benefits or increase costs to consumers.

Young Adult Coverage

Children may remain on their parent’s insurance plan until they turn 26 years old.  A child can remain on a parent’s plan even when they are:

  • Married
  • Not living at home with parents
  • Attending school
  • Not financially dependent on their parents
  • Eligible for enrollment in an employer’s plan

When the young adult turns 26, coverage under the parent’s plan will terminate.  However, some of these young adults can qualify for a special enrollment period which allows them to enroll in a health plan outside of the Open Enrollment period without penalty.

Financial Planning for Special Needs Family Members

Supplemental Security Income (SSI) benefits are available to any adult or child who is blind or disabled.  SSI is meant to supplement the income of an individual up to a certain level.  These levels vary from state to state.

If a special needs child is under age 18, the income and assets of the parents will be considered when deciding the eligibility and qualification for SSI benefits.  However, when the child turns 18, even if they live in the home with parents, the parental income and assets are no longer considered.  This means that a child who was not eligible for SSI benefits before age 18 may be eligible once they turn 18.  

To be eligible for SSI benefits, assets or “countable resources” may not exceed $2,000 and “countable income” may not be in excess of the maximum Federal benefit rate.  This rate changes year to year.  Under the recently passed ABLE Account Act, the first $100,000 in an ABLE Account will not be considered when determining SSI benefits.  This allows parents to set aside money for medical expenses for their special needs child to use after the parents passing.

State and community programs can offer additional financial resources for children and adults with special needs.  Check with the federal, state, county, and local agencies for program requirements and benefits.

Other Financial Considerations

When setting up a trust for a special needs child, there are several sources to consider for funding:  wills, guardianship, letters of intent, and special needs trusts.  For more information and particulars on these sources, consult a highly qualified financial planner that is familiar with planning for a child with special needs.

For parents that want to ensure that their special needs child is taken care of financially in regards to their medical needs, careful planning and knowledge of the different types of programs and trusts available is key.  With the many changes that are sure to take place in the health care realm in the next few years, parents with special needs children need to stay up to date on changes and program requirements.

Discussing any concerns and goals with a financial planner will allow for a special needs child to be taken care of long into their adult life, even after the parents have passed.  If you are the parent of a special needs child, discuss your particular goals and funding with a professional.

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