When I first watched the movie Rain Man in the late eighties, I remember the scene of Tom Cruise driving through the gates of Walbrook Institute, past the manicured grounds and up to the large brick building to see a brother he had never met. Walbrook was an institution for individuals with intellectual disabilities and while I was in fact watching a Hollywood movie, Walbrook Institute is most likely what much of the public could relate to when talking about housing for individuals with special needs. While many of us can relate to the movie Rain Man in some way, fast forward thirty plus years and one thing is for certain: Housing options for individuals with special needs is still a major concern for parents, primarily due to the cost and limited options available.
In today’s environment, advisors like myself advocate that all of our clients implement a comprehensive plan for their retirement years based on their lifestyle and their wishes. We cover a lot of different topics that everyone should address with their own advisor, including contributions to retirement accounts, subsequent withdrawals from those accounts, when and how to file for social security, income protection, asset protection and legacy planning. When an individual or family has a child with special needs, an additional area of planning is required and typically should include a housing plan for the child when the parents or other family members are no longer able to care for them.
The facts support the need to implement a plan for a special needs child as early as possible. According to the National Down Syndrome Society (NDSS), approximately 1 in 700 babies born today will have down syndrome. NDSS also states that a child born with a cognitive disability in 1983 had a life expectancy of 25 years. Today, that life expectancy has increased dramatically to 60 years. More important, the facts go on to say that quality educational programs, a stimulating home environment, good health care, and positive support from family, friends, and the community enable people with Down syndrome to lead fulfilling and productive lives.1 According to the CDC, approximately 1 in 59 children will be identified with Autism Spectrum Disorder (ASD).2 A 2014 Study published by JAMA Pediatrics found that an individual in the United States with ASD who lives to age 67 will experience a lifetime cost of care of $2.4 million. The study also noted that during adulthood, residential care or a supportive living arrangement contributed the highest costs to that number.3 This reinforces a need to address future living arrangements when planning for your special needs child.
If you are caring for a child with special needs, housing is just one of the areas that needs to be addressed and should be completed with a qualified attorney that can help you with drafting the proper documents. According to Megan Selvey Esq., a special needs planning attorney with Bivens & Associates in Scottsdale, AZ, “Often when meeting with families to discuss planning for their special needs loved one, a main point of concern is how to pay for costs of living. A properly drafted special needs trust is a valuable planning tool. The funds of a special needs trust may be used to pay for, or supplement, costs of living for the trust beneficiary, above and beyond what a public benefits program may otherwise cover. This may include rent payments, or the purchase of a more permanent residence.” Selvey also states, “If a person receives Supplemental Security Income (SSI) or Medicaid benefits, it is important to discuss with a special needs planning attorney how distributions from a trust for costs of living may affect those public benefits. Distributions for housing or cost of living may have an effect on those public benefits.” Selvey’s statements reiterate the need for a plan to be put in place for the individual with special needs to ensure they receive the proper level of care, their benefits will be protected, and they can live a fulfilling life in a comfortable and safe environment. While each state may be different, these are some of the most common housing options available when the child becomes an adult.
Continuing to Live with Parents or Caregivers: This is the most common living situation seen. While there are benefits to continue to live with the people that know your needs best, what happens when they are no longer able to care for the individual appropriately or if the parents pass away at an early age? Most likely, the longer that the individual lives in the same surroundings the more difficult the transition will be when they are required to move to a new living arrangement.
Group Homes: These options vary depending on where you live. It may be difficult to find availability or there may be a wait list. The home may be far from the parents and/or family’s primary residences. However, they can provide social interaction for the individual as well as limited support for the residents to live semi-independently. Cost of group homes range anywhere from $1,500-$5,000 per month, depending on the location and type of home.
Nursing Homes: When an individual requires 24-hour medical care with ongoing supervision, this may be the best option. According to the 2018 Cost of Care Study by Genworth, the annual median cost of care for a private room in a nursing home is in excess of $100,000 per year.4 Depending on your assets, Medicaid may be an option to help cover the cost of this type of care.
Permanent Residency: This option has been around for a long time with families sometimes pooling their resources to purchase an additional home. Other options, like Luna Azul in Phoenix, AZ, offer a new community of 30 privately owned homes with a clubhouse and a 24-hour staff for adults with specialized needs. This new concept allows individuals to live independently in a community with other residents that have specialized needs as well. The community also permits the owner to rent out their additional rooms to others who may not have the ability to purchase a home.5
In summary, implementing a proper plan for your loved ones with special needs is more important now than ever before. As Baby Boomers continue to live longer and often require long term care themselves, so do individuals with special needs. Advancements in medicine contribute to the longer life expectancy and health care costs continue to rise. Housing costs continue to increase, and there is a shortage of quality options for individuals with special needs. If applicable, government benefits can be an extremely difficult landscape to navigate. Cost and time are often barriers for families to start the planning process. If your clients haven’t explored their options yet, urge them to reach out to their attorney, a ChSNC, financial advisor, and tax professional to address their individual situation. Creating a plan sooner rather than later and reviewing that plan often, rather than never, will help provide peace of mind for your clients and their families.
Dan Mullen is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC OSJ address 17550 N Perimeter Dr. Ste 450 Scottsdale, AZ 85255 480-538-2900. DFG Advisors is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies. The views expressed here are those of Dan Mullen. Dan Mullen’s views are not necessarily those of MML Investors Services LLC. or its affiliates and should not be construed as investment advice. They are subject to change. CRN202011-255718