Providing for Your Child's Needs Now and In the Future

The Basics
How to provide for a disabled child

Raising kids with disabilities can be financially challenging, says the writer, a financial planner and parent. Fortunately, there's government help available.

By Randy Neumann

She discovered with great delight that one does not love one's children just because they are one's children, but because of the friendship formed while raising them.
--Gabriel Garcia Marquez

More than 5 million American children between the ages of 3 and 21 suffer from serious disabilities -- from learning disorders to debilitating diseases.

But talk to the parents of most of these kids and it's not their disabilities that they worry about so much, if they're not life threatening. Kids have an amazing capacity to cope, and treatments are constantly improving.

What often troubles parents even more is whether they can afford to pay for the special needs of their kids, and how they can provide for their kid's needs when they themselves are no longer around.

Financial planning for a child with disabilities is especially tricky, not only because of the child's unusual needs -- he or she may never be self-sufficient, for example -- but also because of Uncle Sam. The tax code was not written with their needs in mind. And public programs aimed at helping kids can sometimes backfire on them and their parents.

Take a simple thing like funding the child's college education, for example. For the ordinary child, the parents or grandparents might want to put money aside in a trust. Laws such as the Uniform Gift to Minors Act or the Uniform Transfer to Minors Act encourage such gifts.

The main advantage of these trusts is that the income produced belongs to the child, and is taxed at the child's (usually lower) tax rate. But the law stipulates that the income cannot be used for the child's support. It also stipulates the assets in the trust must become the child's at age 18 or 21, depending on the state.

But for the child with disabilities, income from the trust might be needed for support. What's more, the young man or woman might not be able to manage his or her financial affairs at 18 or 21.

Frank L. Brunetti, an attorney in Hackensack, N.J., warns of another problem with trusts: If the child could qualify for government programs, the assets in the trust might disqualify him from receiving benefits.

Brunetti also notes that if the child has been receiving benefits from government programs, the money in trusts could now be considered fair game for the government. So, if you have a child who has a handicap that could qualify him for government aid, do not fund trusts for them, he advises.

There is plenty of help available. Don't be shy about seeking government help. There is a lot available for children like yours. Start with your local school system. Federal laws mandate programs to meet the educational needs of kids with disabilities. It's the school districts responsibility to identify individuals with such needs. If you are new to the school district, or have a child younger than school age, you should initiate a meeting.

This was the case with my youngest son, Ryan Charles Parker. At 3 years old, he had a vocabulary of six words, well below the norm. We advised our school district of his problem, and school specialists set up an Individual Education Plan, or IEP. A child study team creates an IEP. The team usually consists of a learning disabilities teacher, a psychologist, a nurse and one or both parents. If necessary, other players are added. (For more information on IEPs, check out the British Columbia Ministry of Education, Skills and Trainings Special Education site at left.)

The team performs a multi-disciplinary evaluation. The objective of the IEP is to develop a program that meets the child's educational needs. What if the system doesn't have a program that meets your child's individual needs?

According to John Campion, director of special programs in Ridgewood, N.J., They can't say no because they don't have it. If that's the case, they must create it. Failing that, the district will transfer the child to a school system that does have it.

Social Security isn't just for seniors. The big daddy of government benefits is the Social Security Administration's Supplemental Security Income Program. For 2003, it pays per month (supplemented by some states) to someone who has a qualifying disability.

What conditions qualify? The Social Security Web site has a "listing of impairments" which includes common physical and mental conditions, such as attention deficit hyperactivity disorder, cerebral palsy, sickle cell anemia, spina bifida, mental retardation, autism, eating disorders, anxiety disorders, schizophrenia and many other conditions severe enough to disable a child or adolescent.

But the Social Security Administration recently tightened its rules. Specifically, recipients with emotional or behavioral problems or mental retardation may no longer be eligible. For more information, call up the Web site for the Bazelon Center for Mental Health Law, a nonprofit legal advocacy organization.

Life after school. OK, you got your child through school and she's reached the age of majority (18 or 21 years). What now? Well, things are a lot better than they used to be. There was a time when these young adults were hidden in a closet. Now many live on their own or in group homes, and start careers. Some work in sheltered workshops.

After the age of majority, while we may consider them our children, the law does not. Legally, they do not have to listen to our advice or prodding or even anything we say.

Sometimes, however, these young adults cannot fend for themselves in the financial world. They can become involved in transactions that aren't in their best interests, yet can be held legally accountable because they are legally adults. In these cases a parent or other family member or friend must petition the court to become a guardian or legal protector.

Just because you are the parent doesn't mean you are automatically named as guardian. You, like anyone else, must go through the legal system. The process is time-consuming and expensive. You have to pay court costs and attorney's fees for both the incompetent (the child) and the guardian (you), as well as physician's fees for affidavits. It often makes sense to name co-guardians so if one dies or cannot continue for any reason, you have a backup without going through the process all over again.

When you are no longer around-

The final area of planning to be considered is trust and estate planning, which requires some artistry. Here's why.

In routine trust and estate planning, wills and trusts generally specify what is to be paid to whom and when. Planning for people with disabilities is very different because if you use standard wills and trusts, the money can easily fall prey to the government and other creditors.

Normally, a trust document will pay out money to the beneficiary(s) for such needs as health, maintenance and support. If you do this with a person with disabilities, the government can say, Hey, you use up your trust money before I contribute anything.

The government can also say, I've been paying benefits to this person for many years. That person now has some money. I will take it as repayment for past benefits, X amount of dollars now, and will require the trustee to pay out Y in the future.

Special trusts for special kids

There is a way around this problem. It's called a special needs trust and many lawyers don't know about it. (If yours doesn't, get another attorney).

The difference between a traditional trust and a special needs trust is what the money pays for.

In the traditional trust, the trustee is instructed to pay for things like health, maintenance and support. But if this language is in a trust and the beneficiary is disabled and receiving other government benefits, the government can compel the trustee to pay for health, maintenance and support.

A special needs trust should not instruct the trustee to pay for basics like health, maintenance and support. The trust can pay for vacations, traveling companions, additional therapies or medical procedures, an advocate, etc.

The special needs trust is the only estate planning document that enables parents to provide the extras for the special needs child, after they have gone.

You can get a lot of information about these trusts on the Web -- from financial institutions, law firms and others. Try, for example, the National Special Needs Network. There are also sites listing publications and videotapes that deal with issues related to disabilities and self -advocacy.

Finally, be sure to talk to your team. Someone is going to be the guardian and someone is going to be the trustee for the child when you're gone. Talk to them so they know what you want them to do. In addition to your will, which is a stilted legal document, write letters to those whom you care for, or need to instruct. Do it now; tomorrow might be too late.


It is a little known fact that children with kidney failure can be covered by Medicare as long as a parent has paid SS taxes for at least 40 current quarters. The Medicare End Stage Renal Disease Program pays for dialysis from the first treatment, if done at home, and after three months if done in a center. It pays for kidney transplantation, pre-transplant evaluation and immunosuppressive drugs for up to the life of the graft depending on circumstances.

Many parents have private health insurance through employment, which for the first 30 months on Medicare remains primary,  but Medicare can cover co-payments or deductibles depending on the plan. Some families, due to tremendous medical costs find they are eligible for Medical Assistance. Others rely on the State's Children's' Health Plan. Work with your renal social worker to ascertain what is the best combination of coverage for your circumstance.

If your child is on dialysis and you find that health insurance premiums are out of reach have your social worker contact the American Kidney Fund which has a program that will cover insurance premiums for those who cannot afford them.

Social Security Benefits for Children

This information is primarily for the parents and caregivers of children with disabilities and adults disabled since childhood. It illustrates the kinds of Social Security and Supplemental Security Income (SSI) benefits a child with a disability might be eligible for and explains how children are evaluated.

Millions of children already get benefits from Social Security. This information will help you decide if your child, or a child you know, is eligible for Social Security or SSI.

Social Security's
Internet Website:
Toll-Free Number
TTY Number

There are three ways a child might be eligible for benefits from Social Security or SSI. The three kinds of benefits are:

SSI Benefits For Children-- These are benefits payable to disabled children under age 18 who have limited income and resources, or who come from homes with limited income and resources.

Social Security Dependents Benefits-- These are benefits payable to children under the age of 18 on the record of a parent who is collecting retirement or disability benefits from Social Security, or survivors benefits payable to children under the age of 18 on the record of a parent who has died.

Although children under age 18 who are eligible for these benefits might be disabled, we do not need to consider their disability to qualify them for benefits.

Social Security Benefits For Adults Disabled Since Childhood-- Dependents benefits normally stop when a child reaches age 18 (or 19 if the child is a full-time student). However, those benefits can continue to be paid into adulthood if the child is disabled. To qualify for these benefits, an individual must be eligible as the child of someone who is getting Social Security retirement or disability benefits, or of someone who has died, and that child must have a disability that began prior to age 22.

Although most of the people getting these benefits are in their 20s and 30s (and some even older), the benefit is considered a "child's" benefit because it is paid on the basis of a parent's Social Security earnings record.

SSI Benefits For Children With Disabilities
Non-Medical Rules

SSI is a program that pays monthly benefits to people with low incomes and limited assets who are 65 or older, or blind, or disabled. Children can qualify if they meet Social Security's definition of disability for SSI and if their income and assets fall within the eligibility limits.

As its name implies, Supplemental Security Income supplements a person's income up to a certain level. The level varies from one state to another and can go up every year based on cost-of-living increases. Your local Social Security office can tell you more about the SSI benefit levels in your state.

Rules For Children Under 18

The parent's income and assets are included when deciding if a child under 18 qualifies for SSI. This applies to children who live at home, or who are away at school but return home occasionally and are subject to parental control. This process is called "deeming" of income and assets. Check with your Social Security office for information about your child's specific situation and for a full explanation of the "deeming" process.

Rules For Children 18 And Older

When a child turns age 18, the parent's income and assets are no longer considered when deciding if he or she can get SSI. A child who was not eligible for SSI before his or her 18th birthday because the parent's income or assets were too high may become eligible at age 18. If a disabled child getting SSI turns 18 and continues to live with his or her parents, but does not pay for food or shelter, a lower SSI payment rate may apply. It is thus beneficial to charge your disabled child room and board.

While your local Social Security office decides if your child's income and assets are within the SSI limits, all documents and evidence pertaining to the disability are sent to a state office, usually called the Disability Determination Service (DDS). There, a team, the State Review Team, consisting of a disability evaluation specialist and a medical or psychological consultant, reviews your child's case to decide if he or she meets our definition of disability.

If the available records are not thorough enough for the DDS team to make a decision, you may be asked to take your child to a special examination that Social Security will pay for. It is very important that you do this, and that your child puts forth his or her best effort during the examination. The results of the examination will not be considered valid unless your child puts forth his or her best effort. Failure to attend the examination, or invalid results due to poor effort, could result in an unfavorable decision.

The law states that a child will be considered disabled if he or she has a physical or mental condition (or a combination of conditions) that results in "marked and severe functional limitations." The condition must last or be expected to last at least 12 months or be expected to result in the child's death. And, the child must not be working at a job that we consider to be substantial work.

To make this decision, the disability evaluation specialist first checks to see if the child's disability can be found in a special listing of impairments that is contained in Social Security's regulations. Most renal conditions are and ESRD is considered a presumptive disability. These listings are descriptions of symptoms, signs or laboratory findings of more than 100 physical and mental problems. If the symptoms, signs or laboratory findings of the child's condition are the same as, or medically equal in severity to the listing, your child is considered disabled for SSI purposes. They assess the effects of the condition or combination of conditions on your child's ability to perform daily activities by comparing your child's functioning to that of children the same age who do not have impairments. To do this, they consider questions such as:

What activities is your child able or not able to perform? Which activities are limited in comparison with those of same-age peers? What type and amount of help does your child need to complete age-appropriate activities?

To determine whether your child's impairment causes "marked and severe functional limitations," the disability evaluation team obtains evidence from a wide variety of sources who have knowledge of your child's condition and how it affects his or her ability to function on a day-to-day basis and over time. These sources include, but are not limited to, the doctors and other health professionals who treat your child, teachers counselors, therapists and social workers. A finding of disability will not be based solely on your statements or in the fact that your child is, or is not, enrolled in special education classes.

The disability evaluation process generally takes several months. However, the law includes special provisions for people (including children) signing up for SSI disability whose condition is so severe that they are presumed to be disabled. End stage renal disease qualifies someone for disability based on the medical condition.

In these cases, SSI benefits are paid for up to six months while the formal disability decision is being made. (These payments can be made only if the child meets the other eligibility factors.)

After a child starts receiving SSI, the law requires that the child's disability be reviewed to verify that he or she is still disabled. The continuing disability review (CDR) must be done:

At least every three years for children under 18 whose conditions are expected to improve; in the case of ESRD sometimes this is waived.

At the time a CDR is done the representative must present evidence that the child is and has been receiving treatment that is considered medically necessary and available for the child's disabling condition. This requirement applies to all cases unless it is decided that such evidence would be inappropriate or unnecessary.

Under the law, children who are eligible for SSI benefits in the month before they turn age 18 must have their eligibility  redetermined. The redetermination will be done during the one-year period beginning on your child's 18th birthday, or in place of a CDR whenever we determine the individual's case is subject to a redetermination. We will use the rules for adults filing new claims when making the redetermination.

Although children under 18 who are eligible for benefits might be disabled, their disability when deciding if they qualify for Social Security dependent's or survivor's benefits is not considered.

When a child who is getting a dependent's or survivor's benefit form Social Security reaches 18, however, those benefits generally stop unless one of the following conditions is met:

The child is a full-time student in an elementary or high school. In this case, benefits continue until age 19; or the child is disabled. In this case benefits can continue as long as the child remains disabled, even into his or her adult years.

Applying For Social Security Or SSI Benefits... And How To Expedite The Process

You can apply for Social Security or SSI benefits for your child by calling or visiting your local Social Security office. You should have your child's Social Security number and birth certificate available when you apply. If you're signing up your child for SSI, you also will need to provide records that show your income and your assets, as well as those of your child.

The medical evaluation specialists at the DDS need thorough and detailed medical records to help them decide if your child is disabled. You can speed up the claims process by providing the child's medical records or helping us get them. When you file, we will ask you to provide names, addresses and telephone numbers of all doctors, hospitals, clinics and others specialists your child has visited.

In addition, if your child is under age 18 and applying for SSI, they will ask you to describe how your child's disability affects his or her ability to function on a day-to-day basis. Therefore, they may ask you to provide the names of teachers, day care providers and family members who can give us information about how your child functions. If you have any school records, you should bring them with you to the interview.

Be as specific and thorough as possible when you answer these questions. This means that you should give the dates of visits to doctors or hospitals, the account numbers and any other information that will help to get your child's medical records as soon as possible. If you do not have all of this information, tell the interviewer as much as you know.

In many communities, special arrangements have been made with medical providers, social service agencies and schools to help us get the evidence we need to process your child's claim. Most DDSs have Professional Relations Officers who work directly with these organizations to facilitate this process. However, your additional cooperation in obtaining records and evidence will help us decide your child's claim faster.

Medicaid & MEDICARE

Medicaid is a health care program for people with low incomes and limited assets. In most states, children who get SSI benefits qualify for Medicaid. In many states, Medicaid comes automatically with SSI eligibility. In other states, you must sign up for it. And some children can get Medicaid coverage even if they don't qualify for SSI. Check with your local Social Security office or your state or county social services office for more information.

Medicare is a federal health insurance program for people 65 or older, and for people who have been getting Social Security disability benefits for two years. Because children, even those with disabilities, do not get Social Security disability benefits until they turn 18, no child can get Medicare coverage until he or she is 20 years old.

The only exception to this rule is for children with chronic renal disease who need a kidney transplant or maintenance dialysis. Children with chronic renal disease can get Medicare if a parent is getting Social Security or has worked enough to be covered by Social Security.

State Children's Health Insurance Program (CHIP)

Legislation passed in 1997 created a new Title XXI of the Social Security Act, known as the State Children's health Insurance Program (CHIP). This new program enables states to insure children from working families with incomes too high to qualify for Medicaid, but too low to afford private health insurance. The program provides protection for prescription drugs, vision, hearing and mental health services and is available in all 50 states, and the District o Columbia, Your state Medicaid agency can provide more information about CHIP. Or go to

Other Health Care Services

If the child is disabled and eligible for SSI, he could be referred for health care services under the Children with Special Health Care Needs (CSHCN) provisions of the Social Security Act . These programs are generally administered through state health agencies.

Although there are differences, most CSHCN programs help provide specialized services through arrangements with clinics, private offices, hospital-based out- and in-patient treatment centers or community agencies.

CSHCN programs are known in the states by a variety of names, including Children's Special Health Services, Children's Medical Services and Handicapped Children's Program. Even if your child is not eligible for SSI, a CSHCN program may be able to help you. Local health departments, social services offices or hospitals should be able to help you contact your CSHCN program.

You might go to Youthlink, the website for young people, children, their parents and teachers at This is a work website for young people with disabilities interested in working.

You can get recorded information 24 hours a day, including weekends and holidays, by calling 1-800-772-1213. You can speak to a service representative between the hours of 7 a.m. and 7 p.m. on business days. Our lines are busiest early in the week and early in the month, so, if your business can wait, it's best to call at other times. Have your Social Security number handy when you call.

People who are deaf or hard of hearing may call our toll-free TTY number,  1-800-325-0778, between 7 a.m. and 7 p.m. on business days.