Special Needs Children and Health Spending Accounts

Special Needs Child: Child with a physical or medical condition which limits the ability to provide and maintain living standards without input by other individual(s). Most often, the primary caregivers are the parents of the affected child.

Concerns for Parents of Special Needs Children:

• Financial capability
• Potential inability for both parents to work outside the home
• Total household income limitations
• Single parent challenges
• Impact upon other siblings
• Impact upon financial plans for the future (limits on RRSPs, pension deposits, other savings/asset building)
• Financial Security of all family members (impact of a parent’s illness or premature death)
• Assistance from grandparents or others

Solutions While Parents Are Alive

• Tax deductible Health Spending Account: Maximizes the use of the Income Tax Act regarding deductibility of medical expenses.
• Caregiver Disability Insurance: Tax free income replaces earning capacity
• Caregiver Critical Illness Insurance: Lump sum tax free capital paid upon confirmed diagnosis of numerous conditions
• Life Insurance: Payable on a first parent to die or last to die basis. Important to have a proper beneficiary designation.
• Professional Investment Planning: Maximize the growth of available assets.
• Segregated Fund Investments for the special needs child.
• Proper Will design:
  • Power of Attorney for Property
  • Discretionary Trust (Inter vivos Henson Trust can provide tax relief for parents)

At the Death of the Parents

• Critical Illness Insurance Premiums can be refunded (tax free)
• Will directions take effect for the special needs child and others.
• Tax free life insurance payments are directed to the named beneficiaries
• Life Insurance Payments can provide capital:
  • To create capital for Will distributions
  • To offset taxes on registered savings residue
  • To offset other estate costs
  • To provide capital for siblings of the special needs child.
  • To provide capital to fund a Henson Trust for the special needs child.
  • See Henson Trust

For information on how YOU can save with a Health Spending Account, click here to get started.

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