Financial and Planning Options for Parents of Children with Disabilities

If you are a parent, or if you are planning to become a parent or have another child, the scenario of having a child with a disability has probably crossed your mind. Disabilities can form before birth or after birth because of accidents or illnesses. According to the U.S. Census Bureau, there were over 3 million children living with disabilities in the U.S. in 2019. That translates to 4.3 percent of the under-18 population.

Parents of children with disabilities often face extra financial challenges, including the need for specialized medical care, therapy, and educational support, as well as the need to ensure their child will be financially taken care of for the rest of the child’s life. Understanding the available government benefits and planning options are crucial to ensuring that children receive the care they need throughout their lives.

Government Programs

Various state and federal programs offer financial help for families with children with disabilities:

• Medicaid: Medicaid is a federal and state program that provides health coverage to low-income families, including those with children who have disabilities. Medicaid offers a broad range of services, including long-term care, home health services, and various therapies.
• Children’s Health Insurance Program: The Children’s Health Insurance Program (CHIP) provides health coverage to children in families with incomes too high to qualify for Medicaid but too low to afford private insurance. CHIP benefits often mirror those of Medicaid and include essential services for children with disabilities.
• Supplemental Security Income: Supplemental Security Income (SSI) is a federal needs-based program that provides monthly payments to eligible children with disabilities. These funds can go toward medical expenses, educational needs, and other essential supports.
• Social Security Disability Insurance: Social Security Disability Insurance (SSDI) is a federal assistance program that primarily benefits disabled adults who have worked and paid into the Social Security system. Children with disabilities can also receive SSDI benefits in some instances if they have a parent who is disabled, retired, or deceased.
• Individualized Education Program: Under the Individuals with Disabilities Education Act (IDEA), public schools must provide free and appropriate education to students with disabilities. This may include developing an Individualized Education Program (IEP) tailored to each child’s unique needs.
• State-Specific Programs: Many states offer additional programs and benefits for families with children who have disabilities, but these programs vary widely, so it is necessary for parents to research and connect with local agencies to understand the full range of available resources.

Planning Options

A number of planning options are available for parents of a child with disabilities, but some of the most common and essential include supplemental needs trusts.

• Inter vivos Supplemental Needs Trust: This is a trust set up during a parents’ lifetime for the benefit of a disabled child. The trust is set up with assets belonging to the parents that they wish to be used as “quality of life” funds for the child. These trusts allow parents to set aside assets for their disabled child that will be used for expenses not covered by governmental programs, without jeopardizing the child’s government benefits.
• Testamentary Supplemental Needs Trust: This is a trust that is activated only upon a parent’s death. The trust is set up with assets the parent wishes to leave to the child as “quality of life” funds, which will supplement – not supplant – the government benefits they receive.

If you have a child with a disability and need assistance figuring out how to provide for their care, a special needs planning attorney can help.

If you would like to speak with an experienced elder law attorney regarding your situation or have questions about something you have read, please do not hesitate to contact our office at 1 (800) 680-1717. We look forward to the opportunity to work with you.