Financial advice for special-needs families

Shelly Gigante

By Shelly Gigante
Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites.
Posted on Aug 28, 2018

Families with special-needs children are tireless advocates for their kids. They challenge school districts for equal access, they fight for federal benefits and cutting-edge therapies, and they raise awareness of disabilities through nonprofits that promote research spending.

They also dig deep financially.

Even with health insurance, parents can spend hundreds of thousands of dollars on out-of-pocket fees associated with equipment, medication, and care for their child, depending on the diagnosis. Some disabilities are more costly than others.

A 2014 survey by Autism Speaks, for example, found the average lifetime cost for an individual with Autism spectrum disorder is roughly $1.4 million, while the average cost of caring for autistic individuals with an intellectual disability is $2.4 million.1

“For families, an autism diagnosis can also mean a lifetime of absorbing many of the financial and care-giving burdens associated with the disorder, especially in adulthood when the societal support diminishes,” said Paul Shattuck and Anne Roux of Drexel University, in a joint editorial published in the “JAMA Pediatrics” medical journal.2

Some parents turn to second mortgages, loans, or even credit cards to ensure their child is never denied a medication or service that they need. And many quit work or change careers to make themselves more available for hands-on care, which affects their household income.

Kelly Piacenti, head of SpecialCare at MassMutual and a mother of four, including a son with special needs, said her family is fortunate to have had robust health insurance all along. “But even with that, there are still substantial sums that we pay out of pocket,” she said, noting at least 10 percent of their household net income is spent on copays, medicine, and equipment not covered by insurance for their son, Nicky.

Nicky suffered a serious birth complication that resulted in brain injury and a diagnosis of cerebral palsy. Now 17, he was not supposed to live beyond the age of two. “He can only smile, but that smile says more than most people’s words,” said Piacenti. “He is in a great environment, and my three other kids help to care for him. We all take great pride in Nicky’s will to live.”

Piacenti said she revamped her career to be more available to her son and better advocate for his care. “My husband’s position and direction was changed because of Nicky as well, but he would tell you that it’s not that life knocks you down that matters,” she said. “It’s that you get up and deal with it.”

For families with a special-needs child, she said, the importance of careful planning cannot be overstated. “You are not going to be there forever, but your child may well live beyond your capability of caring for him or her,” said Piacenti. “Be prepared for that by planning ahead.”

Maximize public benefits

Gordon Homes, Jr. , a MassMutual special care financial advisor with WestPoint Financial Group in Indianapolis, Indiana, said planning for most families with a special-needs child begins with the legal process of securing (and appeal for if denied) government benefits.

That includes Medicaid health care coverage and Medicaid Waivers, which allow individuals, children, or adults who need additional help to receive that help in their home and community. In some cases, Medicaid Waiver services may enable a consumer to avoid being cared for in an institutional setting.3

Supplemental Security Income, or SSI, can also be a valuable source of monthly benefits to aged, blind, and disabled individuals with low income and limited resources. Your child, if younger than age 18, may qualify if he or she has a physical or mental condition that meets Social Security’s definition of disability for children, and if his or her income and resources fall within the eligibility limits. The amount of the SSI payment differs by state. Check with your local Social Security office to find out more.4

Special-needs children from working families with incomes too high to qualify for Medicaid, but too low to afford private health insurance, may also be eligible for the Children’s Health Insurance Program . The program, available in all 50 states and the District of Columbia, provides coverage for prescription drugs, vision, hearing, and mental health services. Your state Medicaid agency can provide more information.

Depending on your child’s age and disability, Medicare may also provide benefits. The federal health insurance program is designed to provide coverage for people age 65 or older, and for people who have been getting Social Security disability benefits for at least two years. Two exceptions to the rule exist, however. Your disabled adult child can potentially get Medicare immediately if he or she has a chronic renal disease and needs a kidney transplant or maintenance dialysis, or has Lou Gehrig’s disease (amyotrophic lateral sclerosis).5

Estate planning

Next, Homes noted, parents should consider creating a financial strategy to provide for their loved one with special needs.

“In this day and age, financial success is often equated with not running out of money before you die, but that doesn’t work for parents with a child whose quality of life is in large measure determined by the legacy they leave,” said Homes.

Apart from the traditional estate planning documents — including a will, durable power of attorney, medical power of attorney, health care directive, and beneficiary designations for their retirement assets and insurance plans — many families with a disabled child create a special-needs trust.

(Learn more: Wills and the basics of estate planning )

Such trusts allow a disabled individual to use assets within the trust over the course of their lifetime, without compromising their eligibility for need-based government benefits.

“Special-needs trusts let the government do as much of the heavy lifting as possible, but are there to provide for whatever public benefits can’t or won’t cover,” said Homes, whose 23-year-old son has special needs.

It’s not enough to merely create a trust, however. You must also ensure that it is well funded.

“We tell parents to bring all possible resources to bear for their child while the parents are still here and then to make certain that plans are in place for when the parents are no longer here,” said Homes.

Apart from personal savings, he said many families name their special-needs trust as beneficiary to their life insurance policy. “That can be a practical and affordable way to ensure that your child is provided for long term, and to ensure that their needs do not represent a financial burden to their siblings or other family members,” said Homes.

It’s worth noting, too, that disabled individuals who are old enough and eager to work can now also potentially open an ABLE account, which stands for Achieving a Better Life Experience. Such tax-advantaged savings accounts, which became available in 2017, enable eligible disabled individuals to save up to $15,000 per year for qualified housing, education, personal assistance services, health care, employment training, assistive technology, and transportation needs related to their disability, without jeopardizing their public benefits. Any savings they tuck away now can potentially help provide for their care later on.

(Learn more: A new tool for the disabled: ABLE accounts )

A financial advisor with expertise in special-needs planning can be a valuable resource in helping families develop a long-term strategy to provide for their child.

For parents who have just embarked on the journey of raising a special-needs child, Piacenti offers some comforting words of advice. “Do not be overwhelmed! Take one thing at a time. You will get through it. Once the initial shock is over, you can start planning long term.”

You might even be surprised at how every challenge is met with reward. “My life since Nicky’s birth has had tremendous difficulties and lots of heartaches, but we have managed a wonderful life that includes Nicky, and we have been enhanced by his presence,” she said. “I have him to thank for bringing me to this wonderfully satisfying world. Our other three children have all been positively impacted by having a brother with a disability.”

More from MassMutual…

Estate planning tools for special care

Caring for a loved one with special needs entails SpecialCARE

Need financial advice? Contact us



Autism Speaks, “Lifetime Costs of Autism Average $1.4 Million to $2.4 Million,” June 9, 2014.

JAMA Pediatrics, “Autism: Moving Toward an Innovation and Investment Mindset,” Aug. 2014.

Centers for Medicare & Medicaid Services, “State Medicaid Plans and Waivers,” April 20, 2018.

Social Security Administration, “Supplemental Security Income Home Page 2018 Edition," 2018.

Social Security Administration, “Benefits For Children With Disabilities,” 2018.

The information provided is not written or intended as specific tax or legal advice. MassMutual and its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of MassMutual.