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Family Finances

Financial Planning for Special-Needs Children

A patchwork of benefits and programs can help relieve the crushing costs, but planning for the long term is essential, too.

Jessica and Nathan Pugh have two special-needs kids: Conlan (left) and Lachlan. Chad Kirkland

Jessica and Nathan Pugh's 5-year-old son, Lachlan, has a rare brain malformation that affects his motor skills, but that doesn't seem to slow him down much. Lachlan enjoys zipping around in his motorized wheelchair, and he is content to spend hours in the toy aisle at Target. "He's a very stable, happy and super fun kid," says Jessica. "He loves Spider-Man and Disney and is full of surprises."

SEE ALSO: Estate Planning for Parents of Special-Needs Children

Lachlan also needs constant care. His condition impairs the development of the skeletal and muscular systems, and he also has difficulty with speech and swallowing. Lachlan gets around in a wheelchair or with a walker, and he has to use a feeding tube. He spent his first 104 days in the neonatal intensive care unit. "They thought it was likely he wouldn’t make it," says Jessica.

The cost of raising any child is steep, but for a child with special needs, it's astronomical. It can cost more than $250,000 to raise a child (not including college), but the cost can be more than twice that for a child with disabilities—and much more if lifetime care is needed, says Adam Beck, di­rector of the MassMutual Center for Special Needs at the American College, which teaches financial professionals about special-needs planning. Insurance doesn't come close to covering all of the expenses, but you are entitled to benefits and programs that can help. As the Pughs discovered, it often takes patience and persistence to find them—especially when you’re managing your child's health care. Meanwhile, long-term financial planning is essential to make sure that your child continues to receive the best possible care, even when you can no longer provide the care yourself.


The Pughs, who live in Salt Lake City, have spent countless hours navigating the system to take advantage of benefits. They have researched special programs, scoured the internet for extra sources of financial assistance and in general advocated for as much help as they can get for Lachlan.

Many families with a special-needs child are overwhelmed by the day-to-day care, let alone the struggle to pay for it. But after learning how to steer through the special-needs world with Lachlan, the Pughs decided to help another child with special needs. Last April, they adopted 2-year-old Conlan from China.

Dealing With the Unexpected

Even with good health insurance through Nathan's job as a cartographer with the U.S. Department of Agriculture, the Pughs have had a lot of unreimbursed expenses, such as deductibles and co-payments as well as the costs of therapy and other care. They budget as if they're going to spend the out-of-pocket maximum for their insurance every year, and they put one-twelfth of that total into savings each month.

That advance planning has helped them cover the cost of care for both of their sons. Conlan has microtia and aural atresia, which causes severe hearing loss. He also has limited use of his left arm as well as heart and gastrointestinal issues. Conlan's two hearing processors cost $18,000. The Pughs' insurance covered 70% of the bill, leaving them responsible for $5,400. Conlan will wear those hearing processors on a soft headband until he’s at least 7 years old, when he'll be ready for surgery to anchor the processors to his skull.


Caring for her sons is Jessica’s full-time job. Her persistence, creativity, networking and perpetual research help the boys get what they need while staying within the family’s means. "I'm constantly Googling 'special-needs grants,' " she says. "We've had to be advocates for both children and figure out all of the best resources."

Recently, Lachlan's pulmonologist recommended a $16,000 vest that breaks up mucus (he isn’t able to cough) and helps him breathe. But the Pughs' insurance covers the vest only for children with cystic fibrosis, and it denied the claim. Jessica asked the vest manufacturer if it offers financial assistance (it does), which reduced their cost to about $4,000. She then applied for a grant offered by the United Healthcare Children's Foundation (which isn't limited to United Healthcare customers) that picked up the remaining charges.

The Pughs moved out of a three-level townhome to a ranch house with hardwood floors so that Lachlan has more space to maneuver his motorized chair. Such chairs can be expensive (and kids quickly outgrow them), so Lachlan is using a loaner from the local Shriner's Hospital.

Families with special-needs children under age 18 generally aren't eligible for Medicaid unless they have very low assets and income (cutoffs vary by state), or their child qualifies for a special program in their state. The Pughs got a big financial boost when the Utah legislature approved a "medically complex child waiver" program last year, which provides Lachlan with Medicaid coverage to supplement the Pughs' private insurance. The program only covers up to 250 children.


"That's been a life-changer for us," Jessica says. Not only does the program fill the gaps in their insurance coverage, but it also provides three hours of respite care every week. Lachlan needs nursing-level care at all times, and that gives Jessica a break. "Now I can go to appointments or on a date with my husband," she says.

Benefits for School-Age Kids

A big expense for families with special-needs kids is the cost of ongoing therapies, but federal and state benefits can offset some of the cost. Lachlan received speech therapy, physical therapy and occupational therapy through Utah's early-intervention program. Such programs are available nationally for children until they turn 3 and may be free or have a sliding-scale fee based on the family's income (the Pughs paid about $30 per month for the services). Conlan receives speech therapy, occupational therapy, physical therapy and hearing therapy through the program, but he is turning 3 soon and will no longer be eligible.

After that, the Individuals With Disabilities Education Act (IDEA) requires school systems to provide free and "appropriate" education for children with disabilities until they graduate from high school or to age 21, 22 or 26, depending on the state. The school system must pay for private services if it is unable to provide the special education a child requires. Many parents don't realize they can receive these benefits before their child starts attending school, says Shawn Ullman, director of TheArc@School, a program that helps families navigate school-based benefits programs. Lachlan, for example, receives about 20 minutes per week of physical therapy and speech therapy through the school system.

Families often supplement government programs with private therapy, which may be covered by their own insurance—but often with limits. The Pughs hired a private speech therapist for Lachlan to supplement the early-intervention services; now that he's older, they've added more private services. Their insurance covers up to 50 visits per year for occupational, physical and speech therapy combined. The co-pay for each visit is $30, and Medicaid helps cover it. Once they reach the maximum number of therapies allowed under their insurance, they will have to pay out of pocket (some providers give an out-of-pocket discount) or search for grants.


Denise Sikora, an insurance claims specialist in Monroe Township, N.J., says that families often have trouble getting insurance to cover therapy because they fail to request preauthorization or submit the required paperwork. The insurer usually asks for a detailed report from the pediatric developmental specialist who did the initial evaluation and an explanation for why the therapy is needed, she says.

Many families also end up with large unreimbursed expenses from providers who aren't in their insurer's network. "When they get a diagnosis, parents often feel as if they have to do something fast, and they start going to providers with no idea what their insurance requirements are," says Sikora. Your insurer may have a care coordinator who can help find in-network providers. If an in-network provider can’t furnish appropriate care, your insurer may cover an out-of-network provider at in-network prices.

Advocacy groups can help you learn about the benefits available and laws governing coverage. The internet is a good place to start your search for resources. Ask your doctor and the staff at your doctor's office, as well as other families you meet there, about local organizations that focus on children with similar needs.

Preparing for Adult Benefits

After your child leaves the school system, the benefits landscape changes. At that point, benefits are no longer required under IDEA but may be available through a variety of other sources, such as nonprofit organizations and your state or county department of developmental disabilities (see for links to your state agency). Some programs, especially for housing, may have long waiting lists.

IDEA provides a third level of benefits, which many families overlook, that can help prepare for the next step. Starting at age 14 or 16, depending on the state, the school system must offer transition benefits to help families learn about the options for their child after high school. Contact the school's resource coordinator to talk about your goals after your child leaves school, and ask about vocational, recreational and housing options, says Terry Smith, a resource coordinator in Portland, Maine. Those transition benefits are only available while your child is still in school.

Mary Ellen Mayo's son, James, 27, received physical, occupational and speech therapy when he was in public school in Massachusetts, but Mayo needed to find new programs after he graduated. Whenever Mayo and her husband, Charles, relocated, her first call was to the local Arc chapter ( to find out about resources and programs for James. "James loves being around other people, he likes music, and he likes being outdoors," says Mayo. Now living with his family in Michigan, he attends a full-day program that includes music therapy. Another program takes him out into the community and provides wheelchair transportation.

Once your child turns 18, the government considers his or her assets separately from the family's when determining eligibility for programs such as Supplemental Security Income, which provides a monthly stipend, and Medicaid, which provides health insurance. To qualify, applicants cannot have more than $2,000 in assets in their own name. For more information, go to the "Supplemental Security Income" section on the Social Security website. You'll need to apply in person at your local Social Security office.

Before you sign up for SSI and Medicaid benefits, work with a lawyer who focuses on special-needs planning to set up a special-needs trust (you can find a lawyer at or The trust can hold assets for the child without counting as the child's assets for Supplemental Security Income or Medicaid. The Pughs set up a special-needs trust for Lachlan when he was 2 years old.

You'll also need to decide whether you'd like to petition the court to become your child's guardian at age 18. Otherwise, in most states, he or she will legally become an adult. "Consider whether they're competent to keep themselves safe and make decisions about their medical needs and education and where they're going to live," says Karen Mariscal, a special-needs attorney with Margolis & Bloom in Boston. Parents can petition the court to become the child’s guardians and can also name a successor guardian. But you may not need to have full guardianship. If you're concerned primarily about medical decisions, you can designate yourself or another adult you trust to be a health care proxy instead.

See Also: The Basics of ABLE Accounts for Disabled Savers