Caring for those in Need

Achieve the Best Results: Start your Plan Early and Work Step by Step

Better late than never applies just as well in financial planning as in any other field. Many of my clients come to me when their child with a disability is about to turn 18 because their child’s transition team or another parent in their support group has told them that their child should apply for Supplemental Security Income (SSI) and Medicaid. But even though age 18 is an important inflection point, to be really successful, financial planning for your child with a disability must start much earlier, with the following steps at the following points.

BY Alexandra Baig, MBA, CFP® | November 2021 | Category: Financial Planning

Achieve the Best Results: Start your Plan Early and Work Step by Step

At diagnosis you know that there is a possibility that s/he will need services in the future. Because some of those services will have asset and income eligibility criteria, the safest approach is to avoid putting assets in your child’s name until s/he is closer to adulthood, and you have a sense of whether those means-tested benefits will be a necessary part of her/his financial support structure. Explain this to well-meaning friends and relatives to prevent cash gifts going directly to your child on the occasion of birthdays, holidays, religious ceremonies and similar. 

soon after diagnosis it is a good idea for you, the parents, to engage in some basic estate planning. If there are grandparents or other relatives that plan to contribute financially to your child’s future, they should as well. At the least, each responsible adult will want to have a will. If the family is not ready yet to create a stand-alone special needs trust for the benefit of the child with a disability, then the will of each responsible adult should contain language that would cause such a trust to be created if the death of the adult would otherwise result in the child with a disability inheriting assets directly. This kind of trust, which is triggered by the death of the grantor, is called a testamentary trust. Generally, creating a stand-alone special needs trust from the beginning is the most secure way to create your estate plan because it is difficult to embed in a will language complex enough to set up the special needs trust to accommodate a wide range of circumstances. Please consult an estate planning attorney with experience to create your wills and trusts. 

Throughout childhood and adolescence, you may need to invest a considerable amount of energy to master the process for requesting and effectively gaining services within your school district. Ideally, you will still reserve a little learning energy to begin to educate yourself on the workings of the adult service delivery and funding system while your child is still a child. Even the least functional school district is required by law to provide a certain level of services as an entitlement. There is no minimum entitlement in the world of adult services. Moreover, depending on your state, there may be a plurality of methods by which one applies for and manages services as well as more than one way that these services are funded. Each avenue may have its own rules. A complex system, such as the one we have in my home state of Illinois, is difficult to understand without repeated exposure via workshops and lectures. Your local ARC is a good place to start to obtain low cost, quality education.

at the age of 14 and a half your child will become eligible for transition services through your responsible public school district and/or special education cooperative. The transition years, between your child’s age 14 and a half and your child’s age 22 (or older in states that permit youth with disabilities to remain in the school system longer). Your child will make the strongest entry into adult life if her/his transition services are geared towards obtaining employment after high school. 

as your child approaches 18, it is important to amass the evidence that your child’s disability significantly impacts her/his capacity to work because the definition of “having a disability” that Social Security, Medicaid and other government programs use hinges on the applicant’s capacity to work. It is critical, therefore, that your child’s documents present accurately her/his need for supports and accommodations. It is perfectly possible, with descriptive language, to present in these documents, both your child’s strengths and her/his support needs. For example, the IEP may state that:

  • “Joe gets As and Bs in his classes. Joe’s assignments and tests are adapted by reducing the number of questions and Joe is allotted extra time to complete his work.” Or…
  • “Jane generally gets along well with her classmates and follows classroom instructions well. When Jane’s anxiety and sensory processing challenges make her agitated, she moves to the sensory room and uses breathing techniques and listens to waterfall sounds on her iPad to calm herself down.” Or…
  • “Eric follows classroom instructions and completes his work with 2-3 verbal prompts from the instructor or classroom aid.”
  • It is particularly helpful if your child’s school documents include concrete details about the supports your child requires in a work-type environment. To this end, it is extremely helpful for future benefits eligibility if your child’s IEP can provide for on- or off-campus work experience during which an instructor or job coach collects data on both strengths and weaknesses. 

at age 18, then, you will want to help your child apply for benefits. Typically, it is difficult for children under the age of 18 to qualify for disability benefits except in cases where the child is severely impacted by the disabling condition and/or a parent is elderly, disabled or deceased. This is because some of the key benefits are “means-tested,” meaning in addition to having a disability, one must have low income and few assets to qualify. Prior to age 18, a portion of the income and the assets of the parents are “deemed” to the child and this deeming precludes the child’s eligibility. Once the child turns 18, however, s/he can be considered a household of her/his own even if still living with parents. The Social Security definition of “having a disability,” which is also the definition followed by most government programs is this. To be eligible, an applicant must have

  • A medically determinable physical, mental or emotion condition that is expected to last more than a year or end in death and,
  • That condition must prevent the person from performing Substantial Gainful Activity (SGA), which is defined, for 2021, as the ability to earn $1,310/month or more from work activity.
  • Most people are readily able to provide the medical evidence supporting the diagnosis. Where they fail is in demonstrating that the disabling conditions are significant enough to prevent them from performing SGA. This is where school records that accurately depict the supports your child does or would need to work become so crucial.

In 35 states and the District of Columbia, Medicaid eligibility is conferred automatically with SSI eligibility. Nine states use the same eligibility criteria, even though one has to file a separate application. In all states, concurrent SSI and Medicaid eligibility allow a person with a disability to access Medicaid continuation programs even if their income from work or a parental-based benefit (described below) later exceeds the SSI threshold. Even if the SSI cash is not an integral part of the financial plan, the funding for services that comes through Medicaid or Medicaid waiver is generally a critical plan component and worth hundreds of thousands of dollars over the person’s lifetime. 

Between 18 and your state’s end-of-transition age you will want to explore adult services to find out which one’s your child may want to access, which agencies would be a good fit to provide those services, how much of them will be covered by your state’s Medicaid waivers or other government programs and how much you may have to pay out of pocket. 

When you, the parents, retire and begin to collect Social Security or a pension, you will want to understand how your adult child with a disability may be able to receive benefits based on your work history, either while you are still alive or, at least, if you die. Certain claiming strategies may maximize the benefits for the entire family for the remainder of each person’s lifetime, so you will want to work carefully with a financial planner who has experience in this kind of analysis. You will also want to carefully consider how you will fund both your own retirement and long-term care needs and the ongoing support and quality-of-life expenses of your adult child that exceed what government benefits will cover. 

Financial planning for your child with a disability is a lifelong project. Plans are most successful when you know what steps to take at each stage of your child’s life and when you work together with a planner who understands the complex and sometimes state-specific worlds of government benefits and adult services.  


Alexandra Baig maintains her own national financial planning practice, Companions on Your Journey, and also acts as the Benefits Specialist for Clancy & Associates, a Chicago-based law firm focusing on special needs planning. Alexandra has an MBA from the University of Michigan and her CERTIFIED FINANCIAL PLANNER™ designation and is a member of the Academy of Special Needs Planners. In particular, she is well-versed in the government benefits available to people with special needs and the rules governing them. Her goal is to help people with disabilities and their families make the most of public and private money to live the life they chose. 

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