Financial Help For Families With Special Needs Children

Estimates are that parents of disabled children need 17.8% more income a year to care for their child, and Autism Speaks estimated it can cost as much as $2.4 million to raise a child with a disability over a lifetime. Those costs often last into adulthood.

Most parents don’t have that money, and find themselves getting farther into debt as they try to cover medical and care costs.

Personal assistance and health care are the most expensive parts of caring for a disabled child, with medical equipment, hospitalizations and doctor visits also adding up. Medical costs overall are paid out of pocket at twice the rate they are for those who don’t have a disability.

More than three million children in the U.S. are classified as having a disability – about 4.3% of the under-18 population. The numbers are higher for families of color and those living in poverty, because they lack access to pre-natal and other health care and can’t afford added costs of caring for a child with disabilities. Some 6.9% of children living in poverty have a disability, as opposed to 3.8% of those above the poverty line.

The good news is that there are many benefits available, both government and private, to help make ends meet.

Government Financial Assistance Programs

The biggest indirect cost of having a disabled child is loss of income when a parent stays home to care for the child.

Government benefits that provide money to supplement the income of families who have children with special needs include:

Supplemental Social Security Income (SSI)

Supplemental Security Income provides financial assistance for low-income families who have children who meet the Social Security Administration definition of disabled. Income must not exceed a certain limit, which changes every year, depending on cost of living. The federal base rate (some states add to this) also increases every year; in 2022 payments were $841 a month. The child must have “marked and severe functional limitations,” established by medical evidence. Disabilities that qualify include Down syndrome, cerebral palsy, autism, intellectual disabilities, visual impairment and more.

Supplemental Nutrition Assistance Program (SNAP)

SNAP benefits, once known as food stamps, is administered through state governments, and provides money for food for income-qualifying families. A family with a disabled child can qualify for SNAP even if their income exceeds the limit.

Temporary Assistance for Needy Families (TANF)

Temporary Assistance for Needy Families (TANF), also administered by states, provides emergency financial help to families and pregnant women that meet income limits and pays for immediate needs like food, rent or mortgage and medical expenses. Some states also provide child care assistance or other benefits.

Health Care Assistance for Special Needs Families

There are several healthcare programs that help parents of children with disabilities pay medical costs.

Medicaid

Medicaid provides health care coverage to people with disabilities who are below a certain income level. Children must require a certain level of care to qualify. Medicaid can pay for medical appointments, hospital services, prescriptions, medical equipment and more. States have different eligibility rules. In 44 states, those who don’t qualify can apply for a Medicaid waiver for a child with a disability to get benefits. Visit kidswaivers.org to check what’s available in your state.

Children’s Health Insurance Program (CHIP)

Children’s Health Insurance Program (CHIP) provides financial assistance for families who have a disabled child and make too much money to qualify for Medicaid, but not enough to qualify for private insurance. Benefits differ depending on state of residence, but all states provide well-baby and well-child care, dental coverage, behavioral health care and vaccines.

Private Insurance

Families that have a disabled child and have private insurance learn what their policy covers – and doesn’t cover. Things like long-term care, mental health services and physical, occupational or speech therapy are often not covered. If your insurance company denies a claim, challenge it. Some insurers will listen to an appeal. If your insurance doesn’t meet your child’s needs, shop around for an insurer that does. You may want to opt out of the insurance you have and pay insurance yourself, if you can afford it and it provides better coverage.

Tax Breaks for Parents with Special Needs Children

There are tax breaks for parents of disabled children both in the form of credits, which lower the amount of tax to pay and deductions, which lower the amount of taxable income.

Parents may deduct:

• Home improvements to accommodate a disability.
• Medication
• Trips related to medical care
• Medical equipment

Tax credits for parents or others who care for disabled children are more stringent. The child can be any age, including adult, but must meet the Internal Revenue Service definition of a dependent child — permanently and totally disabled and cannot engage in any substantial gainful activity because of a physical or mental condition. Tax credits for caring for a disabled child are:

• Dependent with a Disability Working at a Sheltered Workshop. Gross income can’t include the child’s income from the workshop.
• Adoption Credit. For parents who adopt a child with special needs.
• EITC for Parents of Children with Disabilities. For parents who care for a permanently and totally disabled child in the home, regardless of age.
• Child or Dependent Care Credit, For parents who hire a home caregiver for their child.

Achieving a Better Life Experience (ABLE) Act

The Achieving a Better Life Experience (ABLE) Act of 2014 allows states to create savings programs for people with disabilities. Deposits to the 529A accounts can be made by family members, friends, or other individuals, and the money pays for qualified disability expenses. Money withdrawn for qualified expenses is not taxed. The account-holder can also deposit their income, tax-free, up to the poverty level, into the account, as well as income from other 529 savings accounts. The IRS has information on eligibility and more.

Special Needs Grants

Many nonprofits provide grants — money that doesn’t have to be repaid — to cover costs of caring for a child with special needs. Some are specific, covering medical equipment, hospital visits or at-home care. Others provide support that’s more general. There are also grants for children with certain conditions, like autism or spinal conditions.

Keep in mind that there is a lot of competition for money, so be sure to find out everything that’s required before you apply.

National organizations that offer a range of grants:

• Easter Seals provides services for children and adults with disabilities and has an online tool to find local assistance.
• The M.O.R.G.A.N. Project connects parents with resources and provides financial assistance for medical equipment, travel related to care and more.
• The Federation for Children with Special Needs provides support, resources and assistance.
• Autism Care Today SOS Program provides financial assistance for immediate and emergency care needs for a child with autism.
• Autism Speaks has an extensive list of grants.
• United Spinal Association has a list of grants for children with spinal conditions and other disabilities.

Special Needs Trusts

There are three types of special needs trusts — financial accounts administered by a third party (a trustee) for people with disabilities.

• A first-party trust holds assets that belong to the disabled person. If the disabled person is getting SSI, the trust allows them to have assets beyond the SSI income limit. When the beneficiary of the trust dies, any balance goes to the federal government to compensate paid benefits.
• A third-party trust holds assets from contributors, usually parents and family members, that are used to pay the disabled person’s needs. It doesn’t affect SSI income and when the beneficiary dies, the money goes back to the family.
• A pooled trust holds money for several beneficiaries – the money is invested, with each beneficiary having their own account.

Education Financial Aid for Students with Disabilities

There is money available from government and private sources for students with disabilities to attend school, including college. Much of it is in the form of scholarships and grants.

For information on government assistance for students with disabilities, visit studentaid.gov.

Students with disabilities can also find lists of public and private scholarships and other resources at:

• The National Directory of Financial Assistance Programs for Post-Secondary Students with Disabilities is an extensive list of financial support for students with disabilities.
• The National Center for College Students with Disabilities Clearinghouse has information on scholarships, college resources, legislation and more.
• College Funding for Students with Disabilities, provides strategies and resources.
• Scholarships.com/financialaid has an extensive list of scholarships for students with disabilities.

Scholarships for Students with Specific Disabilities or Conditions

Some organizations award scholarships to students with specific disabilities or conditions, or for specific career goals. Many of these are competitive, meaning they’re awarded to a small amount who apply.

• Lighthouse Guild awards scholarships to students with visual impairments.
• Microsoft DisAbility Scholarship is awarded to high school students with financial need who plan to seek a career in the technology industry.
• The National Center for Learning Disabilities has several different types of scholarships and awards for students with learning disabilities.
• The Organization for Autism Research awards annual scholarships for students on the autism spectrum.

Housing Loans for Parents with Disabled Children

Parents and other caretakers who have low incomes, but who want to buy a home to accommodate a child’s disability or parents who want to buy a home for a disabled adult child, have options.

Some of the options for parents of a disabled child who want to buy or renovate a home:

• Fannie Mae’s HomeReady mortgage allows a non-occupant, co-borrower on the mortgage, which means someone who has a good credit history can co-sign the loan, but doesn’t have to live in the home. Disability and Social Security benefits also count as income sources when applying, as does roommate or rental income. The program is backed by Fannie Mae and administered through a bank or credit union
• VA mortgages. Backed by the Department of Veterans Affairs, the program does not require a down payment and comes with low interest and no closing costs. While there’s no minimum credit score required, some lenders may require one, and the only co-signer can be a spouse. Any veteran with a service-related disability is eligible without the time-of-service requirements that other veterans must meet. Other requirements vary depending on extent of disability and more.
• USDA Single Family Housing Direct Loans are designed for low-income families who live in unsafe or unhealthy housing and want to buy, or renovate, a home. The program helps subsidize mortgage payments for a designated period, depending on income. It is administered through state USDA Rural Development offices rather than traditional lenders. The USDA has other housing programs that for those who don’t qualify, from mortgages to helping renovate a home to accommodate a disabled family member.
• HUD Housing Choice Vouchers, the U.S. Department of Housing and Urban Development program is administered by state housing authorities or agencies, and helps people with disabilities buy a home or make one accessible. There are income and other requirements.

Financial Help for Disabled Adults

Parents of children with disabilities well know that the child’s needs don’t end with adulthood. There are many programs that offer financial assistance for individuals with disabilities of all ages. Some of the government benefits for children with disabilities mentioned above, like SSI, Medicaid, SNAP and TANF, also apply to adults.

Other sources of benefits for adults with disabilities are:

Social Security Disability Insurance (SSDI) is emergency health insurance for people who don’t qualify for Social Security because they haven’t worked enough to have paid into the Social Security system and need income assistance because of a medical condition or disability.

VA Disability Benefit monthly payments are available for veterans who have a service-related disability. The amount depends on the severity of the disability and and whether the veteran has qualifying dependents. The VA, as well as veteran-related nonprofits, also offer resources, financial support and more.

Disability.gov and benefits.gov are online resources for information and resources for individuals with disabilities, ranging from employment and education assistance to household and medical needs and more.

State and local government and nonprofit agencies have grants and other benefits for adults with disabilities, particularly those who need help paying emergency costs like food and utilities, and provide services like transportation and skills training. Assistance may be as close as your town hall or state house, so check your municipal and state websites.

Debt Relief

Parents of a child with a disability often struggle to pay the bills. Studies show that even a family that’s financially stable can be plunged into poverty because of the high cost of caring for a child with a disability. Medical bills are only part of it, as families frequently use credit cards to cover even basic living costs.

Parents struggling to make ends meet may want to contact a nonprofit credit counseling agency, like InCharge Debt Solutions, where they can get free advice about budgeting, managing expenses and reducing debt.

Nonprofit credit counselors are required by law to give advice that’s in the client’s best interest. They may recommend a range of debt relief options, including a debt management program or Credit Card Forgiveness program.

Debt management programs are a way to consolidate credit card payments into one fixed monthly payment. The counselor works with creditors to get lower interest rates, the nonprofit makes the credit card payments, and you make a monthly payment to the counseling agency. The program takes 3-5 years to complete, and has a $40 monthly fee that’s included in the monthly payment.

A counselor may suggest the Credit Card Forgiveness program. Those who qualify pay 50%-60% of their credit card balances in fixed payments over 36 months, after which, what’s left is forgiven. There are qualification requirements,  and those who participate will have to pay income tax on the forgiven balance if it’s more than $699.

Finding a good strategy to reduce debt will also help reduce stress and free up money for bills, medical costs and caring for your child.