Improve Your Special Needs Financial Planning

Improve Your Special Needs Financial Planning

The Hidden Financial Costs of Having a Child with Special Needs: Part Two

It costs around $15,000 a year to raise the average child in the United States. You can expect this number to nearly double if you have a child with complex medical needs and typical insurance coverage. How can families survive and prevent bankruptcy or foreclosure when dealing with such high costs? While financial ruin due to your child’s medical condition is not always preventable, it can be minimized with proper planning. This article will provide some general tips to decrease current expenses and prepare for future expenses for children with special needs.

The best strategy for preserving your financial security is to plan ahead. Consider contacting a special needs financial planner or check out a book such as The Special Needs Planning Guide by John W. Nadworny and Cynthia R. Haddad. Another useful strategy is to “audit” your child’s monthly expenses, evaluating your child’s costs in a checklist like the one found below to help prepare for future expenses.

Medical-Financial Audit Checklist

Monthly Cost

Insurance Premium

Insurance Deductible

Physician Copays


Prescription Copays

Therapy Copays

Home Health Copays

Other Medical Copays

Medical Supplies

Diapers/Personal Care

Medical Food

OTC Items







Most importantly, always expect the unexpected. Have contingency plans in place so you can survive if you lose your job, if you get sick or injured, if your child needs to be in the hospital long term, or if you lose your home. Set a budget and have a back-up fund that can provide six to eight months of cash if possible. Make sure you have adequate life insurance and disability policies, whenever possible.

Maximize Benefits

In order to minimize out-of-pocket expenses, it is important to maximize the benefits available to your child with special needs. First off, determine what public benefit programs are available in your area. All states have a variety of programs available to serve children with special needs, including Medicaid waiver programs, SSI, Early Intervention, Title V programs, SCHIP, and WIC, as well as many local and state-funded programs. See Federal and State Assistance Programs for Children with Special Needs for more information.

It is important to apply for all programs even if you are not sure your child qualifies, and even if a counselor says you don’t qualify. You may find that your child qualifies for or can buy in to one or more programs, even if you are a middle or upper class family. Apply for programs that you may need in the future but don’t need yet, since many programs have long waiting lists. If services are denied, definitely appeal, as many of these programs deny the majority of applicants the first time around.

It is also important to maximize your current health insurance benefits. Many insurers use the “hassle-factor” approach to approving claims–they deny everything on the first pass in hopes that you will not go through the hassle of appealing. When you do appeal, more often than not you will win. You are now permitted to request an unbiased external review even if insurance denies your initial appeal.

Remember that most medical expenses, including insurance premiums, are potentially tax free. You may be able to open a Flexible Spending Account or Health Savings Account to pay for non-reimbursed medical expenses tax free. If your expenses are more than 7.5% of your income, you can deduct them from your taxes directly.

Seek Out Free, Low-Cost or Charity Services

Free or low-cost services are available more often than you might think, even for families with middle or upper incomes. Here are a few suggestions:

Contact your state’s Family-to-Family Health Information Center, Parent Training and Information Center, or another advocacy organization for advocacy assistance.

Determine if your state has a Medical-Legal partnership program to help you obtain benefits.

Find local or state programs that provide free services to people with disabilities.

Contact a charity that provides funding, equipment, or other services.

Borrow equipment from an equipment closet, Easter Seals, UCP, or Lekotek.

Exchange, donate, or purchase used equipment and supplies from other families.

Visit a free legal clinic, often through the Legal Services Corporation or local law schools.

Contact a newer lawyer at a law firm, who may be happy to take your case pro bono for the experience.

Use a free hospital, such as Shriners Hospitals or St. Jude.

Visit a city, county or state-based free or sliding-scale medical clinic.

Use a food bank or soup kitchen.

Seek out donation programs for clothing and household goods, or buy used goods.

Take Stock

The time to get in control of your financial situation is now, especially in these difficult economic times. Make sure you plan ahead, minimize expenses, and maximize benefits. While even the best planning sometimes is not successful, more often than not you can preserve your family’s financial stability with just a little forethought.

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