Understanding financial benefits and health insurance for special needs children
Tuesday, 4 February 2020
Families with special needs children face many challenges: physical, emotional, and financial.
In many cases, providing care for the child is the top priority, leaving little time to figure out what benefits they are entitled to, and how to maximize the resources they have. However, having access to this information can potentially make a dramatic difference in a family's financial situation and quality of life.
Supplemental security income, Medicaid for special needs children
Families with disabled minor children can receive monthly SSI payments, but the eligibility requirements are quite strict.
First, the child must meet the Social Security Administration's (SSA) definition of disabled, which is having "marked and severe functional limitations" for at least 12 months. Families are required to provide extensive documentation, and the child might have to undergo testing before the agency determines the child is in fact disabled. This process can take up to five months.
Second, the income threshold for receiving benefits is quite low and often difficult to determine. According to the Social Security Administration, the family's monthly income cannot exceed $1,070. But this number varies by what state you live in, due to different contributions each one makes to the monthly payment. Additionally, the formula for figuring out what counts as income can be very complicated.
Needless to say, a family's monthly income must be low to be eligible for monthly SSI payments. But according to the SSA, a child who qualifies for SSI will automatically qualify for Medicaid in most states as well. And while Medicaid benefits also vary from state to state, all states are required to cover many medical expenses for individuals on Medicaid.
The Social Security Administration provides a detailed, step-by-step guide for starting an application for SSI. Prior to starting the lengthy process, families might want to consult an attorney who specializes in special needs benefits, or local non-profit agency for advice.
After reaching adulthood
Once a disabled individual reaches the age of majority, they are considered an adult and the eligibility rules change. Again, the Social Security Administration will have to determine whether the individual is disabled, and the process is as detailed and lengthy as before.
The primary difference in determining eligibility for an adult versus a child is financial. Instead of considering the assets or income of the family, the SSA only considers the assets or income of the individual. Again, the asset threshold is low. In fact, an individual will not qualify for SSI and Medicaid if they have more than $2,000 in assets.
This is why families with special needs children should never put assets in the child's name. Most financial and legal experts recommend establishing a Special Needs Trust with the child as the beneficiary. It is also highly recommended this trust be written by a lawyer with expertise in this area to ensure the child and the assets are protected.
If the disabled individual is able to work, it is important their wages are carefully allocated in order to protect benefit eligibility. Again, a lawyer or special needs financial planner can help in this situation.
Recently, the ABLE Act was passed, which allows families to set up tax-advantaged savings plans for their disabled children, and the majority of these funds will not disqualify the child from receiving government benefits.
Health insurance for disabled child
Navigating the complicated healthcare system can be difficult enough for families and individuals who don't have special needs. When children need to see specialists, receive regular therapy, or use adaptive medical equipment, the task becomes even more daunting and expensive.
In fact, one mother with a daughter with a multifaceted genetic syndrome that affected the child both physically and developmentally said she spent as much time fighting with her insurance company as she did caring for her child.
The need to see specialists or receive ongoing therapy can cause significant problems for families with disabled children. Many insurance companies require referrals before a specialist can be seen, and don't cover all types of therapy.
By the end of 2014, all but two states had passed legislation requiring insurance companies to cover autism spectrum disorders. However, some coverage mandates are minimal.
Prior to these recent legislative changes, parents had to pay for even the most basic therapies for their autistic children, such as speech, behavioral, occupational, and physical. And many expensive specialists like pediatric neurologists were not covered at all. Even today, visits to specialists often require the referral of the child's pediatrician, which means parents have to pay for two visits, and take the child to multiple appointments.
But parents of special needs children can maximize their healthcare coverage and hopefully minimize out-of-pocket expenses by understanding the details of their health insurance policy. First, they should know which physicians and providers are in-network, which should reduce out-of-pocket expenses. Knowing the details about referrals to see specialists is essential as well.
It's also important to know the out-of-pocket limit for your policy. For most policies, there is a maximum amount an individual or family can spend out of pocket annually. This number can be large, but families with children who have complicated medical needs can often reach that limit quickly each year. Knowing what that amount is and when you reach it can reduce out-of-pocket costs for many medical services.
Finally, don't be afraid of insurance companies. Parents should not hesitate to challenge them when payment or services are denied. In many cases, a few phone calls or letters can result in the approval of previously denied claims or requests.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
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