The medical treatment required for special needs children can be expensive, often beginning at or shortly after birth. Without insurance, the cost of medical care is staggering!
If you have private health insurance, make certain you understand what the policy will and will not cover, particularly in regard to any specialized services, equipment or therapy. Make sure you obtain prior authorizations, or you could end up paying the bill. If your coverage is provided through a health maintenance organization (HMO) or preferred provider organization (PPO), confirm that the specialists needed by your child are part of the network. Understand when you can seek out-of-network care and what the cost will be to you. If a claim is denied, get a written explanation of the reason…you may want to appeal and resubmit the claim. Finally, a helpful tip is to request that a case manager be assigned to your child, which will then enable you to work consistently with someone who is familiar with your child's situation and needs.
Many private health plans cover students and disabled persons only until their 22nd birthday. By no later than September 23, 2010, however, all young adults under age 27 may be able to continue health care coverage through a parent’s policy. Some health insurance plans will provide extended coverage beyond age 22 (or 26) to a disabled dependent. Check with your benefits department or insurance company!
If your private health insurance stops covering your child at his or her age 22 (or 26), your disabled child may be eligible for Medicaid coverage. Check with your county health or Social Security office. (In some states, disabled children can receive Medicaid coverage as early as age 14.)
If you do not have private health insurance, check with your county social services or Social Security office to determine what assistance may be available. Medicaid is a health care program for people with low incomes and limited assets. In most states, children who get SSI (Supplemental Security Income) benefits qualify for Medicaid. In many states, Medicaid comes automatically with SSI eligibility. In other states, you must sign up for it. Also, some children can get Medicaid coverage even if they don't qualify for SSI. In addition, the State Children's Health Insurance Program (SCHIP) enables states to insure children from working families with incomes too high to qualify for Medicaid, but too low to afford private health insurance. Your state Medicaid agency can provide more information about SCHIP.
Beginning at your disabled child's age 18, Medicaid benefits are payable based on the child's own assets and income, even if your child is still living at home with you.
Jan 15, 2011
Special Needs Planning: Future Needs
Planning for the Future:
Once an initial assessment of the situation is complete, the care and well being of children (be they minor or adult) who are mentally, physically or developmentally disabled can be greatly enhanced by your planning in areas such as:
Legal Planning How will your estate be distributed when you die? Who will care for your special needs child when you're no longer able to do so? How can your estate be arranged to provide for your child, but not disqualify your child from receiving government benefits?
Medical Planning How can you best obtain and pay for the specialized medical care your child may require? Who will oversee your child's medical care when you're no longer here?
Financial Planning What steps can you take to guarantee that your child will have a financial safety net? What financial aid is available? How should your assets be arranged to best provide for your child's future financial needs?
Education Planning What steps can you take to make sure that your child receives the best possible education?
Planning for special needs children is a complex process. Particularly when it comes to legal planning/legal documents, you are strongly advised to consult an attorney with experience in estate planning for families with children with special needs.
Once an initial assessment of the situation is complete, the care and well being of children (be they minor or adult) who are mentally, physically or developmentally disabled can be greatly enhanced by your planning in areas such as:
Legal Planning How will your estate be distributed when you die? Who will care for your special needs child when you're no longer able to do so? How can your estate be arranged to provide for your child, but not disqualify your child from receiving government benefits?
Medical Planning How can you best obtain and pay for the specialized medical care your child may require? Who will oversee your child's medical care when you're no longer here?
Financial Planning What steps can you take to guarantee that your child will have a financial safety net? What financial aid is available? How should your assets be arranged to best provide for your child's future financial needs?
Education Planning What steps can you take to make sure that your child receives the best possible education?
Planning for special needs children is a complex process. Particularly when it comes to legal planning/legal documents, you are strongly advised to consult an attorney with experience in estate planning for families with children with special needs.
Special Needs Planning: Education Planning
Undoubtedly, you want your child to receive the best education possible. To assure this outcome requires that you become your child's advocate and a participant in your child's education plan. Step one is an understanding of the education laws that apply to children with disabilities.
Individuals with Disabilities Education Act (IDEA) The Individuals with Disabilities Education Act requires that special needs children receive:
Individualized Education Plan (IEP) The IEP is a written statement of your child's abilities and impairments. It's developed by a team that includes you, school district personnel and educational professionals who have evaluated your child and his or her abilities. The IEP must be reviewed at least annually.
Due Process As a parent, you have both rights and responsibilities in relation to your child's IEP. Due process provides a mechanism for resolution of any disagreements regarding a child's IEP.
Before your child approaches age 22, you are advised to have a plan in place to address the issues that are sure to arise as your child transitions out of the public education system. Depending on the nature of your child's disability, this plan may include additional educational or vocational services, work, or ongoing rehabilitation and medical services. Planning for these needs requires research done on your part years before your child reaches age 22. Many special needs children are of average or above average intellect. There are many colleges whose programs may be appropriate for your son or daughter. If he or she can obtain a college degree, it will greatly enhance employability.
Individuals with Disabilities Education Act (IDEA) The Individuals with Disabilities Education Act requires that special needs children receive:
- A free appropriate public education from ages 3 through 21.
- Education provided as close to home as possible with children who do not have disabilities.
- Additional services, such as speech therapy, occupational therapy or a classroom aide, which are designed to meet their unique needs and prepare them for employment and independent living.
- An assessment to determine their needs.
Individualized Education Plan (IEP) The IEP is a written statement of your child's abilities and impairments. It's developed by a team that includes you, school district personnel and educational professionals who have evaluated your child and his or her abilities. The IEP must be reviewed at least annually.
Due Process As a parent, you have both rights and responsibilities in relation to your child's IEP. Due process provides a mechanism for resolution of any disagreements regarding a child's IEP.
Before your child approaches age 22, you are advised to have a plan in place to address the issues that are sure to arise as your child transitions out of the public education system. Depending on the nature of your child's disability, this plan may include additional educational or vocational services, work, or ongoing rehabilitation and medical services. Planning for these needs requires research done on your part years before your child reaches age 22. Many special needs children are of average or above average intellect. There are many colleges whose programs may be appropriate for your son or daughter. If he or she can obtain a college degree, it will greatly enhance employability.
Special Needs Planning: Financial Planning
Government Benefits
Supplemental Security Income (SSI) benefits are payable to adults or children who are blind or disabled. SSI supplements a person's income up to a certain level, which varies from state to state.
In the case of disabled children under age 18, the parent's income and assets are considered when deciding if the child qualifies for SSI benefits.
Beginning at age 18, SSI benefits are determined based upon the disabled person's income and assets. As a result, a child who was not eligible for SSI before age 18 may become eligible at age 18. To qualify for SSI benefits, the disabled person cannot have "countable resources" (assets) in excess of $2,000 or "countable income" in excess of the maximum Federal benefit rate.
In addition, financial resources may be available through state and community programs. Consult with the appropriate federal, state, county and/or local agencies for assistance.
Other Financial Considerations
A special needs trust with no assets is worthless in providing for your child's future care and well being. These are some sources that you can consider for funding a special needs trust:
Supplemental Security Income (SSI) benefits are payable to adults or children who are blind or disabled. SSI supplements a person's income up to a certain level, which varies from state to state.
In the case of disabled children under age 18, the parent's income and assets are considered when deciding if the child qualifies for SSI benefits.
Beginning at age 18, SSI benefits are determined based upon the disabled person's income and assets. As a result, a child who was not eligible for SSI before age 18 may become eligible at age 18. To qualify for SSI benefits, the disabled person cannot have "countable resources" (assets) in excess of $2,000 or "countable income" in excess of the maximum Federal benefit rate.
In addition, financial resources may be available through state and community programs. Consult with the appropriate federal, state, county and/or local agencies for assistance.
Other Financial Considerations
A special needs trust with no assets is worthless in providing for your child's future care and well being. These are some sources that you can consider for funding a special needs trust:
- Savings: Based on your estimate of your child's future financial needs, begin a regular savings program.
- Investments and Retirement Plans: You may want to name a special needs trust as the beneficiary of an investment program and/or retirement plan.
- Life Insurance: Many special needs trusts are funded, at least in part, by life insurance. Why? Because life insurance is the only alternative that can produce a stated amount of money exactly when needed…at your death. Life insurance death benefits are generally paid free of income tax and, if ownership is properly structured, can be removed from your estate for estate tax purposes. Another advantage of funding a special needs trust with life insurance is that the rest of your estate can then be preserved for other family members.
Special Needs Planning: Special Needs Trust
The purpose of a special needs trust is to provide financial assets for your child's future care and well being, while maintaining the child's eligibility for government benefits.
Under current federal law, an individual with more than $2,000 in assets is disqualified from most needs-based government benefits. State assistance programs may also be based on need. If your child were to receive an inheritance from you directly, it's highly probable that the inheritance would disqualify your child from receiving needed benefits. Do not leave assets to the child directly.
With a special needs trust, however, you leave assets to the trust. The trust is managed by a trustee, who then can use trust assets on your child's behalf. Special needs trust requirements are stringent, so it's important that you consult with an experienced attorney in setting one up.
In a properly-structured special needs trust, the trust holds title to the property for the benefit of the disabled child or adult. The assets in the special needs trust can then be used to provide for the needs of the disabled individual, as well as to supplement benefits received from government assistance programs. For example, trust assets can be used for:
In order to retain eligibility for government benefits, it's important that wellintentioned family members, such as grandparents, understand that their will should bequeath assets to the special needs trust, and not directly to the disabled individual.
Under current federal law, an individual with more than $2,000 in assets is disqualified from most needs-based government benefits. State assistance programs may also be based on need. If your child were to receive an inheritance from you directly, it's highly probable that the inheritance would disqualify your child from receiving needed benefits. Do not leave assets to the child directly.
With a special needs trust, however, you leave assets to the trust. The trust is managed by a trustee, who then can use trust assets on your child's behalf. Special needs trust requirements are stringent, so it's important that you consult with an experienced attorney in setting one up.
In a properly-structured special needs trust, the trust holds title to the property for the benefit of the disabled child or adult. The assets in the special needs trust can then be used to provide for the needs of the disabled individual, as well as to supplement benefits received from government assistance programs. For example, trust assets can be used for:
- transportation, including purchase of a vehicle;
- training, rehabilitation or education programs;
- equipment;
- medical, dental and eyesight expenses;
- entertainment;
- insurance premiums;
- companion/home health aide expenses; and
- items to enhance quality of life/self esteem.
In order to retain eligibility for government benefits, it's important that wellintentioned family members, such as grandparents, understand that their will should bequeath assets to the special needs trust, and not directly to the disabled individual.
A Role for Life Insurance…The Wealth Replacement Trust
The Problem:
Through a charitable remainder trust (or charitable gift annuity), a charitably-minded person can realize certain income and estate tax objectives, while ultimately providing assets to a favorite charity. In doing so, however, the donor's family will be deprived of those assets that they might otherwise have received.
A Potential Life Insurance Solution:
In order to replace the value of the assets transferred to a charitable remainder trust (or charitable gift annuity), the donor establishes a second trust - an irrevocable life insurance trust - and the trustee acquires life insurance on the donor's life in an amount equal to the value transferred to the charitable remainder trust or charitable gift annuity. Using the charitable deduction income tax savings and the annual cash flow from the remainder trust or gift annuity, the donor makes gifts to the irrevocable life insurance trust that are then used to pay the life insurance policy premiums. At the donor's death, the life insurance proceeds generally pass to the donor's heirs free of income tax and estate tax, replacing the assets that then belong to the charity.
Through a charitable remainder trust (or charitable gift annuity), a charitably-minded person can realize certain income and estate tax objectives, while ultimately providing assets to a favorite charity. In doing so, however, the donor's family will be deprived of those assets that they might otherwise have received.
A Potential Life Insurance Solution:
In order to replace the value of the assets transferred to a charitable remainder trust (or charitable gift annuity), the donor establishes a second trust - an irrevocable life insurance trust - and the trustee acquires life insurance on the donor's life in an amount equal to the value transferred to the charitable remainder trust or charitable gift annuity. Using the charitable deduction income tax savings and the annual cash flow from the remainder trust or gift annuity, the donor makes gifts to the irrevocable life insurance trust that are then used to pay the life insurance policy premiums. At the donor's death, the life insurance proceeds generally pass to the donor's heirs free of income tax and estate tax, replacing the assets that then belong to the charity.
How Can an Irrevocable Life Insurance Trust Be Used
An irrevocable life insurance trust can be put to a variety of uses:
- If your estate is likely to face a federal estate tax liability, an irrevocable life insurance trust can replace funds used to pay the estate tax, without the death proceeds also being subject to the estate tax.
- If your heirs are likely to need additional estate liquidity after your death, such as to continue a family business, an irrevocable life insurance trust can provide that liquidity, again without the insurance proceeds being subject to the federal estate tax.
- If you want to control how death proceeds are distributed, you can do so through the provisions included in an irrevocable life insurance trust.
- If you have children from a prior marriage, but want your current spouse to be the primary beneficiary of your estate, naming your children the beneficiaries of an irrevocable life insurance trust can provide them with a distribution at your death, rather than at your surviving spouse's later death.
- If you want to leave your loved ones a substantial life insurance estate, an irrevocable life insurance trust can be used to pass the full value of life insurance proceeds to your heirs estate tax free.
- If you want to make a substantial bequest to a charity, either during your lifetime or at your death, an irrevocable life insurance trust can play a wealth replacement role, with the proceeds from the trust replacing for your heirs the value of assets given to charity.
- Since the trust is irrevocable, you relinquish control of the life insurance policy and annual gifts made to the trust. In addition, once the trust document is executed, you cannot change the terms or terminate the trust.
- If the trust contains the Crummey withdrawal provision in order to qualify the gifts to the trust for the annual gift tax exclusion, a beneficiary may exercise his or her right to demand a withdrawal.
- There is some expense involved. In addition to possible trustee fees, you should consult with an attorney experienced in estate planning in order to avoid unforeseen tax and distribution consequences.
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