Receiving a child’s autism diagnosis can be one of those moments in life when a raft of old notions shatters, and you are swept away by a tumultuous new reality. It can be hard to get your bearings and find a way to move forward after your world is turned upside down. You may need to grapple with medical or educational issues initially, but eventually, you will also wonder how providing for your autistic child affects your financial well-being and what you can do to be sure you provide the financial support they will need for the long term.
Families that include an autistic member typically require more robust and complex financial plans than families without an autistic member. In what follows, I outline public benefit programs that act as cornerstones of most special needs plans and a few specific tools often used in the process. Finally, I suggest how you might choose a professional planner capable of providing the most appropriate guidance for your family’s situation.
Retirement for three: The key element in most financial plans is the retirement plan, a set of detailed inputs and complex calculations meant to give you “your number,” that is, how much you need to accumulate before you can stop punching a timeclock. If you have an autistic child, their need for ongoing support must be considered too. In effect, you are now planning a retirement for three, one of whom will likely take early retirement. Not surprisingly, your revised plan will result in a bigger number. You probably need to accumulate more, and that means saving more of your income along the way.
Fortunately, there are other supports for autistic adults, so you don’t have to bear the financial burden alone.
These four public benefits programs are often incorporated into special needs plans.
Social Security and Medicare: These are insurance programs. You qualify for them by paying premiums, in the form of payroll taxes, during your working life. If someone is disabled before turning 22 and never earns much income through employment, they may be eligible for Social Security benefits based on a parent’s work history instead of their own. For example, an autistic adult may apply for Social Security Disability Insurance (SSDI) benefits if one of their parents becomes eligible for SSDI benefits themselves or when a parent starts receiving their Social Security retirement benefit. After receiving SSDI for two years, an individual becomes eligible for Medicare as well.
Supplemental Security Income and Medicaid: These are entitlement programs, meant only for individuals with very low incomes and limited financial resources. Parental income and assets keep many autistic children from qualifying for these programs until they reach the age of 18. Supplemental Security Income (SSI) is a cash benefit of roughly $900 per month. Medicaid provides basic health insurance as well as access to waiver programs that can help with residential expenses, respite care, and other benefits, which vary a good deal from state to state.
Taken together, the economic value of these public benefits can be more than a million dollars. That’s significant, but not sufficient to provide the secure and meaningful life many parents would like to give their autistic children. You need to be aware of how you can preserve access to essential public benefits and provide additional support as well.
Means-Tested Benefits Gotchas: To qualify for means-tested public benefits, a person can have no more than $2,000 in financial assets. That requirement must be met to start getting benefits as well as to keep getting them. Earned income, gifts, and inheritance can all make a recipient lose their eligibility for SSI and Medicaid. In addition, if a person who has received means-tested benefits for many years should win a lottery prize or receive a significant inheritance, the state may claim those assets as repayment for the benefits previously paid. That may or may not strike you as being fair, but that’s how the system works.
Special Needs Trusts to the Rescue: Certain types of trusts allow you to leave assets for the support of your autistic child in a way that will not disqualify them for their means-tested benefits. In many cases, these supplemental needs or special needs trusts can also provide for other beneficiaries after the death of the autistic person. The key to making this work is leaving assets in a trust that is neither owned nor controlled by the autistic beneficiary. When properly drafted and administered, a special needs trust maintains eligibility for public benefits and protects personal assets accumulated to provide supplemental support for the autistic member of the family.
The Role of Life Insurance: The principal function of life insurance is to protect dependents against the loss of income resulting from the premature death of a breadwinner. For a typical family, the need for life insurance lasts as long as it takes for dependent children to become self-supporting—maybe two to three decades. If you have an autistic child who may need support from you throughout their life, then you may have a permanent life insurance need. A little-known form of permanent life insurance may be especially useful in special needs planning. Survivorship life, also known as a second-to-die plan, pays its death benefit after both parents are deceased. That may be the ideal time to fund a special needs trust. In addition, survivorship policies have some of the lowest premium costs among various forms of cash value plans, and they may be available even if one spouse has medical underwriting issues.
There are, of course, other aspects of special needs planning and specific tools to help, but they fall outside the scope of this introduction. Please feel free to forward suggestions for topics you’d like to learn more about to CCurrin@merceradvisors.com.
Building a Winning Team: You may have already gathered from reading the outline above that you will need to draw upon the expertise of more than one legal or financial professional to develop the customized plan you need. Consider building a team with:
You will want both generalists and specialists to play different roles as needed. Ideally, the wealth advisor or financial planner would be your first choice because they are most likely to be involved in every decision. If you find a CERTIFIED FINANCIAL PLANNER™ professional with special needs experience, they may also be able to introduce you to many of the other specialists you will need. Awareness of special needs planning has grown over the years, but only a fairly small number of professionals are actively engaged in serving the needs of this community.
AARP recently published an insightful article about choosing financial professionals in many fields and created an online interviewing tool to help with the process. Another source to review is “Know Your Financial Advisor,” from the Consumer Financial Protection Bureau.
Christopher Currin is a senior wealth strategist with Mercer Advisors, Inc. He began his financial services career in 1984 and has been providing comprehensive wealth management to clients since 2000. He also has a deep affinity for creating plans customized for the unique needs of individuals with disabilities. He is a CERTIFIED FINANCIAL PLANNER™ professional and is a Chartered Special Needs Consultant®.
The opinions expressed by the author are his own and are not intended to serve as specific financial, accounting, or tax advice. They reflect the judgment of the author as of the date of publication and are subject to change. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Mercer Global Advisors Inc. is registered with the Securities and Exchange Commission and delivers all investment-related services. Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services.
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