Facing Your Finances: Paying for Your Child’s Disability

By Kaumudi Marathé

paying for your special needs childAbout a year ago, financial planner Robert J. Smith received a call from the father of a 27-year-old woman with Down syndrome. “Mom had died two years previously and Dad was finally able to address planning for his daughter,” Smith says. “We asked if his daughter was currently covered by Social Security and Medicaid. He replied that she wasn’t and he was too intimidated and overwhelmed to apply.”

The father’s reluctance is not unusual, nor is his need. When a child is diagnosed with a learning, cognitive or physical disability, parents are suddenly faced with unexpected medical and emotional challenges and the prospect of an increased financial burden. They must consider ongoing medical treatments and therapies, educational options, estate planning and legal conservatorship for a child not capable of independence and self-care after the age of 18.

Smith is President of SilverTree Special Needs Planning, which has offices in Studio City and Thousand Oaks. He understands that parents are overwhelmed when told their child has a disability but urges them to think of the future. “It is never too early to start creating a plan for your special-needs child,” Smith says. “Without being too melodramatic, think about what would occur in your child’s life if you were suddenly not here tomorrow. Who will know what to do regarding daily activities, therapies, school, employment, assistance with bathing, dressing, toileting, etc.? Who will be the guardians and trustees?”

Needs and Costs

The needs of a child with a disability will vary with the diagnosis. These range from learning differences that could be helped through accommodations at school to severe developmental, cognitive or physical disabilities requiring extensive therapies, assistive equipment, medication or 24-hour care. Some children with disabilities will also require help developing vocational and independent-living skills, and might require assistance with job placement and housing as they reach adulthood.

While the U.S. Department of Agriculture reports the average cost of raising a healthy child born in the U.S. in 2015 to adulthood at $250,000, there is an additional cost of $30,000 a year for a child with a disability, according to several estimates. A 2012 report from the National Institutes of Health calculated the direct costs to families, direct costs to children with disabilities as they age into the labor force and the costs of safety-net programs for children with disabilities at $30,500 a year per family with a disabled child. Caring for children with disabilities can also put a strain on a parent’s health and on the parents’ relationship, curtailing the number of hours they work or causing them to leave the labor force.

Carolyn Curiel experienced this first hand. Her 12-year-old son was diagnosed with a mood disorder eight years ago and currently suffers from ADHD, bipolar and anxiety disorders. When he was in preschool, the Los Angeles Unified School District filed a lawsuit against the Curiels, asking that he be removed from public school because of his behavior.

Although the Curiels countersued and won the right for their son to stay in public school, the court case took a financial toll. Carolyn and her husband still each work two jobs to help pay off the legal fees and make up for wages lost while attending court dates. The Curiels’ son is currently settled in an LAUSD special day program, so their expenses are controlled, but Carolyn is always waiting for the other shoe to drop. “It’s like a roller coaster, waiting for something to happen,” she says. “It might be a phone call for us to come and get him from school. It might be how he reacts to middle school, which he is getting ready to attend. It might be doctors’ visits.” Although the Curiels have health insurance, the cost of copays and deductibles for counselors, psychologists and psychiatrist visits adds up. And their son’s disorders have resulted in stress and anxiety that affect the Curiels’ two older daughters as well.

Gloria Chang and her husband, Eric Powell, were so stressed by the financial and other pressures associated with caring for their son, Julian, who has high-functioning autism, that they left their home in California for Oregon in 2015.

“I do think California does a great job with services and we were very lucky,” Chang says. But while Julian received services and therapies for years at a California regional center, Southland traffic, distances and real estate prices led to the family’s decision to move. “We never had a cushion in California,” Chang says. “After paying our mortgage and other expenses, we could not afford a vacation, dinner out or any kind of leisure.” And though Chang says available services for Julian are not as good in Oregon as they were in California, the lower cost of living enables them to pay for therapy and still have money left over. They also receive free parent training and respite care through the state government.

Smith says parents of children with disabilities can reduce some of the kind of stress Chang and the Curiels faced by working with a professional financial advisor familiar with the challenges common in these families. His firm specializes in trusts, guardianship filing, government benefit eligibility, financial analysis and asset-preservation strategies, investments and estate, retirement, education, insurance and business-continuity planning.

Available Assistance

Benefits via Social Security, state agencies or the Veterans Administration might be available to your family, and a professional financial planner will know how to secure them. They will also know how to take advantage of individual insurance plans now required to cover people with disabilities rather than excluding them because of a pre-existing condition, and that children with disabilities can stay on insurance plans parents receive through their employers as long as the parent is covered – rather than until age 26, which is the limit for children without disabilities. “The point here is that if the person is ineligible for Medi-Cal or Medicaid, they have other options and working with a professional in the special needs planning field will help to ensure their best quality of life,” Smith says.

Can middle-class families benefit from such assistance? Yes. For a child older than 18, parents’ assets are not a factor for government benefit eligibility. “Therefore, if the person can qualify medically and financially as an individual, they will receive benefits,” Smith explains.

His company helped that father whose daughter had Down syndrome apply for Medicaid coverage for her. “His daughter was approved for over $800 per month of Social Security benefits and also covered by Medicaid,” Smith says. She also received a $14,000 back payment that Smith’s firm helped to transfer to her father and then gift into a special-needs trust for her. “In addition,” Smith says, “we assisted with Dad’s petition for legal conservatorship, which granted him the authority to make medical and legal decisions critical to her quality of life.”

Getting Started

If your child has been diagnosed with a disability, there are several things you can do to help keep your family on sound financial footing and to secure your child’s financial future. Smith and other experts recommend that you:

  • Find a support group dedicated to your child’s disability so you can share information and ideas with other parents.
  • Quickly get a handle on your finances and set up an organized system for dealing with the new scenario, including creating a budget.
  • Explore your health insurance plan and find out what it offers your child.
  • Consider available assistance programs such as Medi-Cal and Social Security.
  • Set up medical savings accounts.
  • Keep documentation in one folder so that you can take it with you when visiting your financial planner or lawyer.
  • Save for other children, setting up college funds or 529 College Savings Plans if possible.

This might seem like a lot of work if you are already coping with the demands of caring for a child with a disability, but taking these steps now could mean a more secure future for your child – and less stress for you on the road ahead.

Kaumudi Marathé is a Glendale writer and mom who frequently contributes to L.A. Parent.

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