Government Benefits Available to Families of Children With Special Needs

B Tax Information

Caring for a child with a significant disability can be a resource-intensive — and, sometimes, lifelong — commitment for parents. The government has made certain benefits available to help these families offset the costs associated with their child’s care today and plan for their care in the future.

Program Benefits

Supplemental Security Income. This federal benefit is available to children younger than age 18 who meet Social Security’s definition of disability for children, and whose family income and other resources fall within the eligibility limits. Disability is defined as a physical or mental condition (or a combination of conditions) that results in “marked and severe functional limitations.” Families must provide information about their child’s condition and their financial resources. More information is available at ssa.gov/pgm/ssi.htm.

Medicaid. This health care benefit, overseen in North Carolina by the Department of Health and Human Services, is available to children who are blind or disabled and whose family meets certain income eligibility requirements. Children who have qualified for SSI are automatically eligible for Medicaid in North Carolina. Families must provide their monthly income and information about their child’s condition. More information is available at ncdhhs.gov/dma/medicaid.

Income Tax Credits. Parents of children with disabilities may also qualify for a number of federal tax credits. Visit irs.gov for more information. These benefits include:
• Gross income adjustments for certain disability-related payments and SSI.
• Earned income tax credit: The age limit may be waived for severely disabled children who live with their parents.
• Child or dependent care credit: The age limit may be waived for children who are physically or mentally incapable of self-care.
• Medical and related expenses incurred as a result of a child’s disability, which may include:
    – Diagnosis, prevention and treatment of physical and mental conditions.
    – Tutoring and special schooling.
    – Transportation to and from therapy/treatment; lodging expenses and parking fees associated with such travel.
    – Adaptive equipment and home modifications.
    – Expenses incurred due to dietary restrictions.
    – Legal fees incurred to legitimate a method of medical treatment.

In addition, the implementation of the federal Affordable Care Act has brought about changes to health care policy, insurance coverage requirements and related benefits. For example, the limits on medical expenses that may be deducted by most taxpayers have been increased. Contact a qualified tax professional to determine whether your family qualifies for any of these credits or related benefits.

Special Needs Trusts. Many families of children with disabilities face the added challenge of planning for their lifelong care, which may involve setting aside assets to provide future income and financial stability. The government has established a legal vehicle that benefits individuals with special needs, known as a special needs trust (also called a Supplemental Needs Trust). A special needs trust allows a person with a disability to have assets held for his or her benefit without jeopardizing eligibility for government benefits such as SSI, Medicaid and other benefits based upon need. According to the nonprofit PACER Center (pacer.org), these trusts may be funded in a number of ways, including:
     – Life insurance payouts.
     – Government benefits, such as Social Security survivor benefits and military benefits.  
     – Savings and investments, including money in retirement funds.
     – Gifts, assistance and inheritances from friends and family members.
     – Property, such as the family home.

Need professional guidance? View our list of local and national resources for financial, legal and insurance planning in our Exceptional Child directory listings. Listings of government agencies and services can also be found there.

Karen Lewis Taylor is a writer, editor and mother of two. She and her family live in Apex.

Categories: Exceptional Child