As children with special needs age, parents increasingly need to consider their future care needs, which include developing a long-term care plan. Examining long-term care options for adult children with special needs is crucial to protecting their future when parents are no longer able or available to care for them. The projected expense of long-term care can be overwhelming, but by utilizing these tools, parents can determine the best way to plan for their adult children’s long-term care needs.
Maintaining Legal Authority
When children with special needs turn 18 years old, they become adults in the eyes of the law, even if their mental capacity is not that of an adult. As a result, parents need to take steps to ensure that they can continue to assist their adult children in decision-making, and in some cases, make decisions on their behalf.
For instance, some children with special needs lack the legal capacity to make financial, medical, and legal decisions on their own. In this case, parents may need to establish legal guardianship over their now-adult child to ensure that they can continue to make these crucial decisions on their behalf. Parents also need to consider future alternate guardians for their adult children, especially if the children are likely to outlive the parents, and if their legal capacity is unlikely to change.
When children with special needs have legal capacity but still require significant assistance with certain activities and decisions, parents may consider establishing a power of attorney. This legal document can allow parents to continue participating in the decision-making process, while also permitting adult children to make decisions on their own when they are capable of doing so. Likewise, supported decision-making arrangements can also assist individuals with special needs.
Special Needs Trusts
For parents who wish to leave funds in the form of an inheritance to their children with special needs, or who want to continue setting aside funds for their children’s future needs, a special needs trust (SNT) can be a crucial tool. An SNT is a common legal tool that shelters much-needed funds for long-term care while also retaining an individual’s ability to receive needs-based government benefits, such as Supplemental Security Income (SSI) and Medicaid.
Different types of SNTs exist. A first-party special needs trust holds the assets of an individual with disabilities, which may include Social Security benefits or lawsuit awards. With this type of SNT, any remaining assets in the trust at the person’s death must go to reimburse Medicaid. Pooled trusts are another type of first-party trust, except that a non-profit corporation pools the assets of trust beneficiaries and invests them. These SNTs offer the benefit of professional management with lower fees.
Finally, a third-party SNT contains funds that parents (or other relatives) wish to safeguard for their adult children with special needs. Parents can establish these SNTs as living trusts or testamentary trusts through their wills. Other family members can make gifts to these SNTs to benefit the individuals. SNT proceeds can help fund long-term care costs for adult children with special needs.
Public Benefits Programs
Public benefits programs can be essential to the long-term care needs of adult children with special needs. For example, Medicaid is a federal benefits program operated in conjunction with individual states. Medicaid covers long-term care in nursing homes, including room and board, as well as skilled nursing care. However, eligibility for Medicaid requires very few assets, which highlights the need to use SNTs to shelter funds for these individuals while still ensuring their Medicaid eligibility.
Another program, Home and Community Based Support Waivers (HCBS), allows individuals with Medicaid eligibility to receive care in their communities rather than in an institution. HCBS waivers require the cost of care at home or in an alternate setting to be less than the costs of institutional care. Various types of waivers are available for adults with developmental disabilities and persons with brain injuries and other disabilities.
SSI is a federal cash benefits program for individuals who are disabled and don’t have enough of a work history to qualify for Social Security Disability benefits, or, after age 65, Social Security Retirement benefits. If an adult child with special needs lives in a nursing home, then most of their SSI award goes to pay for their room and board and skilled nursing needs.
Achieving a Better Life Experience (ABLE) Accounts
ABLE accounts offer a tax-deferred savings mechanism for individuals with disabilities, similar to 529 college savings plans. The proceeds from ABLE accounts can help pay for long-term care. Annual contribution limits continue to rise in conjunction with the federal gift tax limit, with the 2025 contribution limit set at $19,000.
Long-Term Care Insurance
Long-term care insurance policies operate similarly to health insurance policies, except that they cover care in nursing homes, assisted living facilities, and, in some cases, in-home care. Since the costs of this type of care are significant, long-term care insurance policies can save thousands of dollars.
Nonetheless, the premiums for traditional long-term care insurance policies can be very expensive. Whole life insurance policies are becoming more popular, but those policies are even more expensive. However, a child with special needs often needs this level of care as an adult, so purchasing a long-term care policy can be a necessity.
Frequently Asked Questions
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What does “long-term care” mean for adults with special needs?
Long-term care refers to a range of services that enable adults with special needs to function as independently as possible. Long-term care encompasses a range of services, including daily assistance with activities of daily living, skilled nursing services, supported housing or group homes, and community-based programs.
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How can families pay for long-term care for a special needs adult?
Funding options vary depending on the individual’s circumstances and state programs; common sources include Medicaid, SSI, special needs trusts, ABLE accounts, and long-term care insurance.
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How do families plan for the future care of a special needs adult?
Planning for the long-term care needs of your adult child with special needs can ensure continuity of care and financial stability. Establishing legal protections and financial support through various mechanisms is key. Parents may need to sign up for waiting lists for support housing or waiver services well in advance of the need. As an adult child’s needs may change over time, parents also should adapt their plans to meet those needs.
Contact Us Today to Learn More About Our Legal Services
Rubin Law is the only Illinois law firm to dedicate itself exclusively to providing compassionate legal services for children and adults with special needs. We offer unique legal and future planning techniques to meet your family’s individual needs.
Call us today at 866-TO-RUBIN or email us at email@rubinlaw.com to learn more about the services we can offer you and your family.