Budgeting Basics
Caring for Your Family Member with Special Needs

Caring for a family member with special needs can be a large financial burden. This burden may include out-of-pocket expenses for items such as prescription medications, therapies, home modifications, equipment and supplies, to name just a few.

Wise financial planning can go a long way to help ease these burdens. In order to make a good financial plan, you must give careful consideration to both current and future needs of your loved one and available resources to meet those needs.

Martin Weil, a registered investment advisor from Sonoma County, Calif., and parent of a daughter with cerebral palsy, believes there are steps you can take to minimize the long-term drain on your finances. "You need to evaluate the situation and try to look ahead," Weil says.

Here are some tips for easing your financial picture:

People with special needs generally have considerable health care requirements. In fact, parents of children with disabilities spend on average two to three times more for out-of-pocket medical expenses than those parents without children with special needs.

While some lower income families are eligible for government-funded health care, most family members who have special needs receive health insurance through one or more employment settings. Therefore, it’s important to look closely at all family members’ health insurance policies to determine what services are provided through each.

If you’re thinking about reducing work hours or changing jobs, consider what these changes will do in terms of health insurance before making a decision. "Be clear about your health care coverage through work," Weil says. "If it’s good, do everything you can to keep your employment."

"You should always be aware of what resources may be out there," says Gale Flandreau, senior vice president at Bryn Mawr Trust Company in Bryn Mawr, Penn.

Examples of available resources include government services such as early intervention services and free and appropriate public education, which are available for all families with a disabled child, regardless of income, under the Individuals with Disabilities Education Act. In addition, depending on family income, supplemental income through Social Security and health insurance for your loved one with special needs may be available.

A good place to begin your search for government services is the U.S. Department of Health and Human Services. Another helpful resource is www.statelocalgov.net, a directory of state, county and city government Web sites.*

There are many other publicly funded resources to help with expenses, many of which are specific to certain conditions. Some examples are The Arc, an organization committed to those with intellectual and developmental disabilities, the Muscular Dystrophy Association and United Cerebral Palsy.

If possible, join with other families who are caring for family members with special needs. They can be a source of information and support. Others may have found resources that you have not yet heard of, and you might be able to help them with your knowledge, too.

Families who have a loved one with special needs have the same need to save money for future needs as those who do not. But planning for a family member with special needs who may outlive you means you must look farther ahead than most families. "The critical difference between planning for a child with special needs and other financial planning needs is that you’re planning beyond a lifetime," says Weil.

This means you must balance your goals between saving for retirement (ideally in tax-deferred plans) and saving for the college education of other children in the family, all while making sure that your family member with special needs will be provided for in the event of your death.

A professional financial advisor can help you invest your money wisely and protect your assets as best possible. He or she also can review your budget with you and suggest changes and help you consider future needs. Flandreau recommends looking for an advisor who has specialized training and experience working with families who care for a loved one with special needs. The professional Advocates at Protected Tomorrows are a great place to start. For more information, visit www.protectedtomorrows.com.

It’s very important, particularly if your loved one has reached age 18, that he or she have as few assets as possible. At this point, only his or her own income and assets (rather than parental income and assets) will be considered when determining eligibility for public benefits. In addition, well-meaning family members can jeopardize these benefits by giving the individual with special needs monetary gifts or bequests. That’s why it’s important to work with a financial planner with experience in this area.

According to Flandreau, a special needs trust (SNT) is an important way to protect eligibility for public funds while providing care above and beyond what is provided through these public resources. There are several kinds of SNTs, and it’s important to seek the help of a qualified disability attorney to find out how a trust would work in your own situation.

Editor’s Note: See the article "Planning Around Government Assistance Programs," for more information about what government benefits your loved one with special needs may be eligible for.

• Quick Glance at Government Benefits
• Planning Around Government Assistance Programs
• What’s So Special About Special Needs Planning?
• Special Needs Trust: Put Money Aside Without Jeopardizing Benefits