Bruce Helmer and Peg Webb

Overall, there are about 42.5 million Americans who live with disabilities, making up 13% of the population, according to 2021 Census data. This group includes people who have hearing, vision, cognitive, walking, self-care, or difficulties living independently.

Not surprisingly, older Americans are significantly more likely than younger adults to have a disability (45% of Americans 75 and older vs. 12% of adults ages 35 to 64); their most common disabilities include difficulties with walking, independent living, or cognition.

Families with special needs can be hard-pressed to set long-term goals, create a plan, and implement it. For family members with more severe conditions such as autism, many parents find themselves in a race against time to create a plan to cover health care, living expenses, and therapies that can last the special-needs family member’s lifetime — from childhood to after the parents have gone.

This article is intended to provide an overview of how to plan for special needs situations using a broad array of available public and private resources.

Elements of a special needs financial plan

The biggest challenge for most families is transitioning a special-needs child from high school, where benefits are readily available, to early adulthood and beyond. When such support abruptly ends, many parents don’t know what planning questions to ask or know where to turn.

We believe the main goal for parents of special-needs kids is to create a long-term vision for the future — a life plan. The plan should include financial planning and considerations, and directions regarding all of the benefits that may be available to your loved ones. It should break down all family members’ goals into discrete, manageable buckets.

In our experience, the special-needs buckets will often look very different given the uncertainty of the time horizon. In terms of financial support, we believe families should turn to readily available public resources as their first resort. Here are some common approaches (among others):

Government assistance: The most readily accessible support for special needs families may come from Supplemental Security Income (SSI), which provides a monthly income stream to any qualifying person. To qualify for SSI, an individual must be elderly, blind, or disabled, and recipients must follow strict guidelines around other types of income earned and assets owned or risk losing benefits. SSI can provide crucial support to people with special needs, as they often lack the work or other experience required to be eligible for Social Security Disability Insurance (SSDI). The maximum SSI monthly benefit in 2024 is modest: $943 for individuals and $1,415 for a couple; it’s reduced by factors such as other income, living situation, and so on. Many state programs provide additional benefits that can increase the monthly payment to more than the federal maximum (subject to income and asset testing).

Health care benefits: Raising a child to age 18 in the U.S. costs $240,000, on average, but people with disabilities or special needs have greater health care costs and usage than an average person. For example, according to Autism Speaks, the average lifetime costs of care for an autistic individual range from $1.4 million to $2.4 million. Furthermore, 38% of individuals with disabilities have 10 or more annual doctor visits, compared to only 6% of individuals without disabilities, according to the National Disability Navigator Resource Collaborative.

People with disabilities generally have three available healthc are options: (1) Medicaid covers individuals who cannot pay for health care independently, including children, older adults, the blind, and anyone eligible to receive federally assisted income maintenance payments. (2) Medicare primarily covers Americans over age 65, but also individuals who are under 65 and receiving SSDI benefits (there are qualifying tests for eligibility, and the cost of Medicare Part B will be deducted from the SSDI monthly benefit).

There’s also coverage for adult children incapable of self-support. (3) The Affordable Care Act (ACA) allows young adults to stay on their parents’ health insurance until age 26 — including married and unmarried children. For an adult child incapable of self-support due to a physical/mental disability that existed before turning age 26, they can continue to receive coverage under their parent’s health care plan after age 26.

Life Insurance: For families facing a long-term funding gap, life insurance may be an option. Parents can buy a policy that will pay a death benefit upon the death of the policy owner or at the second spouse’s death. This strategy can be helpful for young families, who can buy more coverage when it’s less expensive.

Special needs trust: In certain cases, families may want to restrict the beneficiary’s access to trust assets. By setting up and funding a special needs trust, the trust assets will not be considered legally available to the beneficiary, and won’t jeopardize Medicaid, SSDI, or SSI benefits. In addition, there’s no asset limit to what can be held in the trust. In these more often complex situations, families retain a financial adviser to advise on trust assets and see that the donor’s wishes are carried out.

Having the right team in place is critical

Families navigating this world barely have time for their own personal, emotional, and financial well-being. Parents may name a close friend or trusted aunt or uncle as trustee for their special needs child. But are they up to the task and the responsibility? We think families need to consider selecting a fiduciary to help handle their child’s care over their lifetime; many of the advisers at Wealth Enhancement Group have helped ease this burden for numerous families around the country. The advantage of working with an adviser is that parents may gain comfort knowing that their child’s day-to-day living needs will be provided for long after they’re gone.

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO 830 AM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Securities offered through LPL Financial, member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.