6 Things to Consider When Planning for Special Needs

It’s easy to get overwhelmed with the task of planning for a lifetime of care for a loved one who isn’t fully able to support him or herself. Financial planning for special needs families involves making plans for medical expenses, caretaking, and preserving the child’s government benefits. Ultimately, when it comes to developing a sound financial plan, there is no “one-size-fits-all” strategy or recommendation.


One of the biggest challenges is trying to figure out where to begin. When caring for a child or loved one with special needs, it’s important to understand what steps can be taken to provide quality care and financial security vital to your dependent’s lifetime needs. With proper planning, families can protect their loved ones and help secure their well-being today and tomorrow. It’s also important to understand what resources are available. Here are some big-picture planning steps to consider, with your family.


Carefully consider who is named as beneficiaries

Any funds and assets for loved ones with special needs that amount to more than $2000 could affect their eligibility for means- tested government support. If a person with specials needs or disabilities receives a benefit as a result of death, e.g. for a life insurance policy or retirement plan, that benefit eligibility may be jeopardized. Instead, consider setting up a special needs trust, for the benefit of the family member with disabilities or special needs and naming it as a beneficiary of the policy or retirement plan. Keeping assets in a special needs trust allows their use to pay for goods or services that are in the beneficiary’s best interest, while also maintaining the beneficiary’s eligibility for government assistance programs.


Don’t leave any money on the table

When employers match retirement contributions in an employer-sponsored retirement plan, employees should try to contribute enough to get the employer’s maximum matching amount. It’s potentially more money in your pocket.


Add layers of financial protection with life insurance

Life insurance is often considered a complicated product, but it’s worth it to make sure a person with a disability or special needs is provided for in the event of the caregivers passing.


Plan for the unexpected with long-term disability insurance

This coverage pays a monthly benefit to replace a portion of lost income if an injury or illness prevents an individual from working. This added income can help keep families financially afloat until the injured or ill person can work again.


Extend your support with the employee assistance program

One of the most commonly overlooked and underused employee benefits is the employee assistance program (EAP). These programs may offer helpful assistance, information and solutions for a variety of personal situations. Many times accommodations also are made to serve individuals who have disabilities or other special needs.


Consider saving money in a healthcare spending account

Since insurance doesn't cover all of a family’s health care expenses, you may benefit by applying additional savings into a tax-advantage health savings account (HSA).


Ultimately, the uninformed decision might create a tax burden or render a child with special needs ineligible for government benefits. A trained financial planner with special needs planning experience can help families learn about and understand their options. Putting a financial strategy in place can develop a clear roadmap for a brighter tomorrow.