Matthew Troncone spent the first few years of his daughter Brittany's life in doctors' offices and hospital waiting rooms. From birth, Brittany showed signs of developmental delay, but it took many consultations and months of testing to determine the cause. "My main focus was making sure I understood everything," says Matthew. "I said I'd worry about the finances later."
Children with special needs require so much immediate attention, including managing their health care and navigating the social-services maze, that parents often find it hard to make time to plan for their finances. And many parents with financial resources assume that they won't qualify for assistance to help care for a disabled child, says Gordon Homes, a certified financial planner with MetLife's division of estate planning for special kids.
But if you have a special-needs child, you are entitled to benefits and programs that can help relieve the crushing costs of your child's care. And long-term financial planning is essential to make sure that your child receives the benefits you've worked so hard to secure, even when you can no longer care for him or her yourself.
Get aid you're entitled to. After Brittany's problem was finally diagnosed -- she was born without the bridge that connects the left and right hemispheres of the brain -- Matthew applied for Medicaid. As an employee of Sony Electronics, he earns too much to qualify for himself. But Brittany's condition makes her eligible for coverage. Matthew's health insurance provides primary benefits, and Medicaid fills the gaps.
Even with good health coverage, Matthew had to pay about 15% of Brittany's medical costs himself before Medicaid kicked in. (Now, almost 100% of Brittany's health care is covered.) But he was able to deduct nonreimbursed medical expenses on his tax return. You are entitled to write off such medical costs after they exceed 7.5% of your adjusted gross income. With co-payments and out-of-pocket costs for tests and travel, the Troncones quickly crossed that threshold.
Schooling for special-needs kids is also subsidized. The federal Individuals With Disabilities Education Act requires states to provide free and appropriate education for children with disabilities until age 18 (most states continue services until age 21) -- potentially saving parents tens of thousands of dollars. Brittany started receiving physical and occupational therapy at age 3 through an early-intervention program in Dutchess County, N.Y., where she and her father live. The county now covers the cost for her to attend a special-needs school, and her father meets with the school district every year to renew her Individualized Education Program.
When local budgets are strapped, however, families with special-needs kids may need a lawyer or advocate to obtain the best educational program available, says Bernard Krooks, a special-needs attorney in New York City. "Parents may not know what their rights are."
Open a special-needs trust. When Adrienne Arkontaky counsels families with disabled children to make an estate plan, she speaks from personal experience. Her daughter, Jordan, now 15, was born with cerebral palsy, and Arkontaky went to law school to become a special-needs attorney so she could help other families make the most of their benefits.
The biggest mistake families make, says Arkontaky, is to put off estate planning or to use standard strategies that could actually put a special-needs child at risk. For example, in order to qualify for Medicaid and other benefit programs, special-needs children may not have more than about $2,000 in their own name. Parents and well-meaning relatives who give a disabled child money -- either now or in their wills -- could make the child ineligible for some benefits, and he or she would need to spend down the money and re-apply.
Some parents think they can solve this problem by disinheriting their disabled child and giving the money to a sibling or family member who promises to provide the child's support. But such a solution puts enormous stress on the sibling and still doesn't guarantee that the child's needs will be met.