Building Blocks of Special Needs Financial Planning

Helping clients create a lifetime of continuous care for a child with special needs

Oct 16, 2017 @ 12:01 am

By Heather Lavallee, President, Tax-Exempt Markets

Long-term special needs financial planning can be challenging, especially with the complex legal and governmental issues surrounding disability. The wrong decision might create a tax burden or render a child with special needs ineligible for government benefits. However, as a financial advisor with knowledge of government benefits and legal instruments, you can help ensure clients are thinking long term for their children or other loved ones with special needs.

Thinking ahead

How can you help clients be sure their plans for their child with special needs are carried out as intended? Just as your clients save and plan for their retirement, you can help them strategically map out their vision for the future. In special needs situations, a will and letter of intent are both important tools to help plan for the future.

Although not legally binding, a letter of intent is a written document that serves as a personal roadmap of wishes and expectations for whoever assumes responsibility for a child with special needs. This important document can serve as a syllabus or guidebook to guardians and caregivers. At a very minimum, the letter of intent should include information about family and medical history as well as details on the daily schedule, food, education, benefits, employment, living arrangements and behavior management. The letter of intent is a critical first step toward ensuring the wellbeing and care of a child with special needs.

Navigating government benefits

In addition to employer benefits, such as life insurance, health insurance, and retirement plans, individuals with special needs may qualify for certain government benefits. A few examples of key government benefits to consider include:

  1. Social Security Income (SSI) provides income benefits to individuals with qualifying special needs or disabilities if they fall below a certain income level. To qualify for SSI, their assets cannot be more than $2,000 and their monthly income generally cannot exceed the Substantial Gainful Activity income limits.
  2. Social Security Disability Insurance (SSDI) is a program designed for people with disabilities or special needs that have a work history and have contributed to Social Security, but have been unable to work for at least a year.
  3. Medicaid is a federally-funded, state-administered health insurance program for low income families, qualified pregnant women and children, and individuals receiving SSI. As a means-tested benefit, Medicaid is offered to those whose income fall below a certain level. Some individuals are exempt from the income eligibility requirements, including those whose eligibility is based on disability or age (65 and older). In contrast, Medicare is an entitlement offered to anyone who meets the eligibility requirements.
  4. Medicare is a federal program that provides medical care to people age 65 or older and individuals with certain disabilities. Keep in mind that if under age 65, an individual with special needs must receive SSDI for more than 24 months to be eligible.

Individuals with Disabilities Education Act (IDEA) is a law designed to ensure appropriate educational services are delivered to children with special needs or disabilities. This federal law governs how public agencies and states provide special education and related services to children, infants and toddlers with disabilities beginning with early intervention programs and the development of an Individualized Education Plan (IEP). The IDEA act insures appropriate education services for individuals with special needs through age 22 (age may vary slightly by state).

Special needs trusts

The special needs trust acts as a way to preserve an individual's eligibility for needs-based government benefits. To continue to receive benefits programs such as Medicaid and SSI, a special needs trust helps individuals remain eligible for programs with asset limits. Funds from a trust generally supplement government benefits to cover financial needs such as sitters and out of pocket medical expenses.

Creating a lifetime of continuous care for a child with special needs requires careful consideration and planning. As a financial advisor, you can play a pivotal role in helping your clients who are caregivers to children with special needs achieve long term financial security.

Serving the special needs community is a natural extension of Voya's vision to become America's Retirement Company®. Voya CaresTMprovides personalized financial and retirement planning solutions to help clients plan for the retirement future they envision and create a lifetime of continuous care for their loved one with special needs. For advisors, Voya Cares presents a unique opportunity to grow and differentiate your business through special needs financial planning. Through Voya Financial Advisors, a group of advisors who are a part of Voya Cares provide financial wellness solutions focused on the unique challenges faced by people within the community. Voya Cares helps advisors gain proficiency in special needs planning through training, educational resources and support.

Current video link for quick reference

A special needs planning "newbie" soars

Additional Content:

  1. Special needs planning checklist
  2. Roadmap to government benefits for special needs financial planning
  3. Case study: Special considerations for beneficiary designations

About the Author

Heather Lavallee is president of Tax-Exempt Markets for Voya Financial. As an integral part of the company's Retirement operations, the Tax-Exempt Markets business is focused on guiding Americans to greater retirement readiness through employer-sponsored savings plans in the healthcare, education, government and nonprofit sectors. Lavallee also leads Voya Cares, a program that shines a light on the issues that people living with special needs and disabilities and their families face. In addition, she serves on the board of the National Down Syndrome Society.

In her role, Lavallee is responsible for all aspects of the Tax-Exempt Markets business, including product, distribution, financial management, strategy and operational performance. She is a part of the Retirement executive leadership team, as well as a member of the company's Operating Committee, helping to drive overall business strategy and key corporate-wide initiatives.

Lavallee has more 20 years of experience in the financial services industry and is a collaborative leader who excels in building high-performing businesses. Most recently, she served as the president of Employee Benefits at Voya Financial, where she oversaw all aspects the group and voluntary insurance business — including strategy, product development, underwriting, actuarial, distribution and marketing. Lavallee's achievements have been recognized through her receipt of a 2012 Women in Insurance Leadership award by Insurance Networking News.

Before joining the company, Lavallee worked at Mutual of Omaha as a regional vice president of the Group Insurance Division for their Western Region, and at Sun Life New York Insurance and Annuity Company, where she was responsible for marketing group life, short-term and long-term disability, and medical stop-loss insurance through insurance brokers and third-party administrators.

Lavallee holds a bachelor's degree in psychology from Colby College and a Master of Business Administration from Pepperdine University's Graziadio School of Business.


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