CMP Financial Planning

Estimating Expenses for Your Special Needs Financial Plan


One of the more difficult tasks in establishing your special needs financial plan is estimating expenses of your adult child after he or she begins living independently from you. Much of the difficulty is the result of the uncertainty of not knowing precisely what kind of support will be needed when your child is living outside the family home. Adding to the uncertainty is not knowing what kind of support will be available by Medicaid through its waiver system. This article discusses how to begin making estimates of the costs of your adult child living independently.

Ohio Medicaid Waiver Basics

In estimating future expenses, it is important for individuals and families to understand their potential to obtain services through the Medicaid program.   Medicaid waivers are one way to pay for services for a person with developmental disabilities.  Your local county board can help find and coordinate resources that might be available to your loved one, either through a waiver or some other resource. To find out more about Ohio’s waivers available for persons with developmental disabilities go to http://dodd.ohio.gov/IndividualFamilies/ServiceFunding/Pages/WaiverTypes.aspx.   If your child currently does not have a waiver, you will want to understand the new waiting list process.  For more information regarding waiting lists see:  http://dodd.ohio.gov/IndividualFamilies/ServiceFunding/Pages/Waiting-Lists.aspx.

Costs without a Waiver

Whether or not the adult child with a disability is currently living outside the family home, you will need to gather information related to the cost of caring for your child: room & board, medical, personal care, clothing, entertainment, etc. For those families whose child is currently living outside the family home this is a straightforward exercise of isolating all the out-of-pocket costs that are being directed toward the care of your child. Families who have a child with a disability who is currently living at home will have to estimate how many hours of supervision will be needed to support the child and apply some hourly rate in order to estimate what these costs will be when both parents have died. If you have hired some caretaker in the past, you could use that hourly rate. If not, you can apply a rate of between $15.00 and $25 per hour, depending on the area where you live. Regardless of your child’s living situation, it is necessary to consider all the informal care provided by the parents since at a portion of the care will not be provided for free upon their death.

Life Expectancy

Next, families will need to estimate their son or daughter’s life expectancy. Meaningful life expectancy estimates by diagnosis are difficult to obtain; however, for many persons with disabilities, life expectancies are increasing and getting closer to the general population, particularly for those persons who are ambulatory, not severely cognitively impaired, and lacking specific medical issues. Depending on the parents’ age when the child with a disability was born, it is not unreasonable to assume that the adult child could survive the parents by 20 to 30 years.
Your estimate of all living costs needed to care for your adult child could easily exceed $50K a year depending on the level of your child’s disability. These costs, however, can be significantly reduced if your loved one is able to live with roommates who can share in paying for household and caregiver support expenses.

Costs after a Waiver is Obtained

Depending on the needs of your adult child with a disability and the local resources available, they may obtain a waiver at some point. Given the new waiting list process, for planning purposes a conservative estimate would be not to count on your child obtaining a waiver until the death of both parents. Waivers typically cover such expenses as:
• Homemaker person care
• Transportation
• Respite
• Adaptive equipment and more

Put more succinctly, the waiver tends to cover the basics needed for a person to live on. Importantly, the waiver will not cover room and board costs. These costs will need to be paid for out of your child’s SSI or SSDI and supplemented by their own assets (e.g., ABLE account, SNT) or child’s work earnings. The costs of providing for expenses outside the waiver, such as entertainment, travel, and additional medical care costs, will have to be estimated. You can use your current budget expenses to help estimate what these costs might be.

Estimating the cost of care for your adult child with a disability is a challenging exercise. It is important that you don’t get bogged down in needing to be perfect when establishing your estimates. Voltaire was right in saying that “the perfect is the enemy of the good.” Have a mindset that your cost estimates in your special needs financial plan will need to be regularly updated as you get more information. Work with a financial planner who understands the financial tools available to you, such as ABLE accounts and Special Needs Trusts, so that your resources can be managed in the most efficient way. Putting cost estimates into your special needs financial plan will give you added confidence that you are on track to meet your as well as your child’s needs into the future