There can be many challenges for families with medically complex or special needs children: emotional, physical, and financial. Some considerations include increased medical and care costs, an inability to qualify for certain types of insurance or social programs, and planning for their life as an adult if they are unable to financially support themselves or live independently. This blog is a follow up from a Gimme Some Truth podcast request and looks to touch on some of the aforementioned topics.

Raising children is expensive; the USDA estimates that middle-class, married couple families can expect to pay close to $240,000 per child by the time the child becomes an adult (that number is excluding college!). It may be more expensive to raise a special needs child. Autism Speaks estimates a lifetime cost for a person with autism, for example, can be $1.4 – $2.4 million.

Insurance Coverage for Special Needs Children

About half of US children with special health care needs are covered by private insurance while another half are covered by Medicaid (with 4% uninsured). In many cases, Medicaid covers medical and long-term services that private insurance does not. There are a number of families that find themselves unable to qualify for Medicaid while their private insurance may not provide the coverage that they need for their special needs child. There are programs such as the Katie Beckett Program that helps these types of families “fill the gap”. The Katie Beckett Program allows families that have too much assets or income to qualify for Medicaid still have access to Medicaid programs while their child still lives at home, even if they have private insurance.

Guardianship Plans

If a special needs child has an inability to work or live independently, there will have to be a plan in place for the care and financial wellbeing of the child. Establishing a plan for guardianship (if the parents were to die) of children is highly recommended whether there is a special needs child involved or not. However, additional care and planning for someone with special needs can go beyond childhood and last their entire lifetime.

Setting Up a Special Needs Trust

There are a number of strategies on how to protect someone with special needs financially. One way to support someone with special needs financially without putting them at risk of not qualifying for programs such as Medicaid is a special needs trust. The trust is set up to benefit the person with special needs; the funds in the trust can be used to pay for their needs such as medical, equipment, rehabilitation services, and much more. Special needs trusts can be funded from gifts by the family or even from life insurance proceeds. One thing to note is that the trust should be administered in a way that the trust pays the service providers directly, not the beneficiary (otherwise the beneficiary may be at risk of losing public assistance). Engaging with an estate attorney with experience in special needs and disability planning is a good place to start. One resource is Wispact, which has compiled a list of attorneys that have a focus in this area. 

Each family is unique; some concepts mentioned may apply to their needs, but they might not. This blog post is meant to cover a high-level, informational overview of special needs planning and to include links to some resources that were mentioned in the podcast. If you or someone you know would like to have a more in-depth discussion around their specific scenario, please reach out. We welcome the conversation.


– Mitch DeWitt, Certified Financial Planner™, MBA