Financial Information for Parents who have a Child with Special Needs
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Financial Information For Parents Who Have A Child With Special Needs Introduction Benefits & Allowances Maternity Benefit Child Benefit Carer’s Benefit Carer’s Allowance Domiciliary Care Allowance Respite Care Grant Disability Allowance Tax & Credits Incapacitated Child Tax Credit Home Carer’s Tax Credit Homemaker’s Scheme Disability Passenger Scheme Medical Expenses Tax Relief Vat Relief Employing a Carer Health Expenses Medical Card GP Visit Card Long-Term Illness Card Drug Payments Scheme Free Diapers Scheme Diet Supplement Scheme 2
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Entitlements Early Learning Scheme Free Travel Pass Companion Travel Pass Household Benefit Package Housing Adaptation Grant Mobility Aid Grant Disabled Parking Card
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Financial Guidance Financial Planning Home Lifestyle Saving Plan Budget Retirement Income Protection Wills
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Further Information Useful Contacts About the Author
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From years spent assisting parents who have children with special needs, I can only imagine and try to understand the additional pressure parents are under. If it’s not the stress of getting children to school, consultants, hospital appointments or bringing them to speech or occupational therapy, then we also have the worry of providing for them in the future. If you are a parent who has a child with special needs, you need to be in contact with a number of different organisations and government bodies such as the HSE, Revenue Commissioners, and Department of Social Welfare to name but a few. It is all left to you, to figure out what assistance is out there for your child. I may be able to help and it gives me great pleasure in finally pulling all this information together in one easy to read booklet. Over the years, I have worked with parents who have children with a wide range of special needs. Not a week goes by without me picking up some bit of financial information that can help parents. My area of expertise is in creating tailored financial plans to help parents who have a child with special needs. It is my aim to give parents of children with special needs an understanding of tax, entitlements, and financial planning. This booklet is not a substitute for professional advice but it will help you greatly in your dealings with government bodies, solicitors, accountants, and financial planners. Wishing you and your family well,
Allan M. Cuthbert QFA Senior Financial Planner 3
Benefits & Allowances Maternity Benefit (€225 - €270 per week) Maternity Benefit is a tax-free payment. It is paid to pregnant woman who leave work to have their baby. The amount of money paid to you each week will depend on your earnings and PRSI contribution. Some employers will continue to pay an employee their full salary, while she is on maternity leave. If this is your scenario then you need to redirect all Maternity Benefit to them. You should check with your employer to see if this applies to you. To apply for your benefit without employer assistance, fill in a Maternity Benefit Application Form 6 weeks (12 weeks if self-employed) before you intend to go on maternity leave. Maternity Benefit is paid for a total of 26 weeks. At least 2 to16 weeks leave must be taken before the end of the week in which your baby is due. You can take a further 16 weeks unpaid maternity leave. This period is not covered by Maternity Benefit, but you will be entitled to a credited social insurance contribution for each week of unpaid leave you take (up to the max. of 16). Child Benefit This is a payment to the parents of children under 18-years of age when the child is in full-time education. If your child is under the age of 18, but is not in full-time education then you still will be entitle to Child Benefit if they have a permanent disability. This is one of the few state benefits that is not means tested. It is paid each month and the amount you will receive will depend on the size of your family.
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Child Benefit
Monthly rate 2011
One child
€140
Two children
€280
Three children
€447
Four children
€624
Five children
€801
Six children
€978
Any baby born in an Irish hospital is automatically registered for Child Benefit. When you receive your new baby’s birth certificate you will automatically be given your payment. Carer’s Benefit (€213 per week) A parent who gives up work to look after their child with special needs can receive this payment. It is not means tested but is based on your PRSI contribution. You must have been employed for at least 8 weeks in the previous 26 week period. You will receive your payment for up to 2 years. If you have a second child with special needs, again you could claim Carer’s Benefit for a further 2 years. When you leave your employment temporarily to provide full-time care your job is protected. However, your leave will be unpaid. Carer’s Allowance (€211 per week) This is a payment for those who are looking after a child with special needs. Your child must need additional support because of age, illness, physical or learning disability. The Carer’s Allowance is means tested, it is mainly aimed at Carers on low incomes that live with and look after children, requiring full-time care. In order to receive your payment you must not be engaged in employment or education courses for more than 15-hours a week. During your absence, adequate care for your special needs child must be arranged. The first step in getting the Carer’s Allowance is you must be in receipt of a Domiciliary Care Allowance. You can still receive Carer’s Allowance when your child is over the age of 16, but you will have to prove that your child is so incapacitated as to require full-time care. Domiciliary Care Allowance (€309 per month) Your child must have a disability that he/she requires care and supervision substantially in excess of another child of the same age. If so, you will be entitled to Domiciliary Care Allowance. This care must be provided to allow the child to deal with the activities of daily living. Your child must be likely to require this level of care and attention for at least 12-months. Eligibility is not based on the type of impairment, but on the resulting lack of function of body or mind, which means the child needs extra care. It’s not a means 5
test payment but, as always, there is some criteria. n Your child must be under 16 n Live at home with you for five or more days a week n Meet the medical criteria n Not in receipt of compensation The Department’s Medical Assessor will take the following into account before giving their opinion on whether the child meets the medical criteria: n Review the history of the case n Consider all medical reports received n Have regard to the description of the care required by the child This is one payment that has got incredibly difficult in obtaining over the last few years. Most of my clients are getting refused during their application process unless they have put a very strong case together. Respite Care Grant (€1,700 per year) The pressure of being a Carer is enormous and even the government acknowledges the need for rest for all parties involved in bringing up a child with special needs. The Respite Care Grant is a tax free payment made in June of each year for each child you are a nominated Carer. This payment is not means tested but subjected to the following small print: n You cannot working more than 15 hours per week n You are not in receipt of jobseeker or unemployment credits If you are in receipt of Carer’s or Domiciliary Care Allowance then you will automatically be enrolled for this grant. Around April of each year you will get a letter with a short questionnaire on the back. To maintain your annual payment you must answer the questions and return the letter to - Respite Care Section. An interesting point to note is you can use the grant in whatever way you wish. It’s not mandatory you get respite care for your child. I would suggest you have a defined plan for the grant otherwise it can be quiet easy to waste. Disability Allowance (€188 per week) As your child with special needs grows up your Domiciliary Care Allowance will stop when they reach 16. Then it is time to apply for Disability Allowance. This is a means tested payment for people with disabilities who are unable to work. Unlike the Domiciliary Allowance, the child’s income and capital is taken into account. If your child has received significant compensation, inheritance or has a 6
large amount of money saved, then this will effect their entitlements. If you believe your 16 year old is unable to manage their own affairs, you can be appointed to receive this payment on their behalf. The payment still belongs to your teenager and you are legally obliged to use the money for their benefit.
Tax & Credits Incapacitated Child Tax Credit (€3,300 per year) A credit can be claimed by a parent in respect of a child who is permanently incapacitated. Additional tax credits are available for parents with two or more children with special needs. However, it should be noted that when the incapacity can be treated by the use of a device, medication, or therapy, then the Revenue deems your child’s condition as NOT permanently incapacitated. An example of this would be diabetes, which can be treated with insulin. The following are examples of disabilities that are regarded as permanently incapacitating: n Cystic Fibrosis n Spina Bifida n Fragile X Syndrome n Blindness n Deafness n Down Syndrome n Spastic Paralysis n Certain forms of Schizophrenia n Acute Autism If you are successful in making a claim, remember to back date it 4 years. If your child is less than 4 years old, then you are entitled to back claim it from their date of birth. Home Carer’s Tax Credit (€810 per year) XE “Home Carer’s Tax Credit” One of the most unclaimed credits that I come across is the Home Carer’s Tax Credit. You can claim this tax credit if you are married or co-habiting, and if one of you is a stay-at-home parent. 7
The criteria is you must be in receipt of Child Benefit, and that one of you doesn’t earn over €5,000 per year. If you meet these criteria, then you are entitled to a €810 credit. This tax credit is spread across all sectors and is not exclusively for parent of children with special needs. Like all credit, you can back claim for 4 years. Homemaker’s Scheme Stay-at-home parents often neglect the importance of maintaining their PRSI contributions. However, it is an issue that becomes important down the road. You can claim credits towards your PRSI if you have given up work to take care of a child who is under 12-years old, or an incapacitated person who is 12 or over. Years spent out of the workforce, looking after your child, are credited. Credits are awarded at the same rate as your last paid PRSI contribution. This is important to keep up as it will contribute to your state pension & other social welfare entitlements. Disability Passenger Scheme You can claim tax relief to buy an adapted vehicle for the purpose of transporting your permanently disabled child. This is done under the Disabled Passengers Scheme. The conditions for qualifying are strict and you should get written confirmation before you make a purchase One of the criteria is that your child must meet the residency requirement. Your child must spend a significant part of their time at home with you and must not be in fulltime residency. Additional requirements are that your child must meet the medical criteria and have a Primary Medical Certificate. This is a certificate that confirms that your child is severely & permanently disabled. You will need to contact your Local Health Office to process your applications for Primary Medical Certificates. If successful, then you can claim tax reliefs on: n Vehicle Registration Tax (VRT) n Value Added Tax (VAT) on the purchase of a vehicle n Repayment of VAT on the cost of adapting a vehicle. n Up to a maximum of €15,875 for a disabled passenger. n Refund of excise duty on fuel - maximum of 2,728 litres per year. n Exemption from annual motor tax. Other points to note are that relief is limited to a vehicle that has an engine size of less than 4,000cc. The cost of the adaptation must be 10% of the net cost of vehicle.
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These tax concessions do not apply for children under five. A car which qualifies for tax relief cannot be sold for at least two years. So don’t try get in to the car sale business! Medical Expenses You can reclaim some of the medical expenses you and your family incur. This is done through a tax refund at standard rate on money you spent on medical bills such as: n Doctors & Consultants visits n Educational psychological assessments n Hospital or nursing home costs n Medication costs n Physiotherapy n Speech & language therapy n Medical or surgical appliances If your child has a permanent disability, you may claim additional tax relief on the following under the heading of health expenses: Telephone – If a child is treated at home, you may claim a flat rate of €315 for telephone rental and calls where the expenses are directly connected with the treatment of the child. Hygiene products – If you have to use gloves or aprons for your child’s care, you can claim up to €500 per year. Travel – You can claim tax relief on the costs of travelling to and from the hospital. If you use your own car, the cost of travel can be claimed at €0.23 per kilometre. Overnight accommodation – You can claim for payments made for overnight stays in a hospital, hotel or B&B near the hospital where your child is a patient. You can only claim for medical expenses if you have receipts to prove your claim. All receipts must be kept for 6 years. VAT Relief You may claim a refund on VAT for certain aids and appliances used by your child to help with independent living. It does not include goods designed for leisure purposes. Find below some examples: n Braille books n Commode chairs n Communication aids 9
n n n n
Domestic aids Hoists and lifts Stair lifts Walk-in baths
This list can be expanded especially if an Occupation Therapist prescribes a piece of equipment such as a computer. Employing a Carer You can claim a tax allowance for up to €50,000 (at your top rate) when you employ a carer for a person with a disability. You may employ the carer directly or through an agency. This relief may be claimed by a family member or divided among a number of family members if they are contributing towards the cost of the carer. If the employed person is a relative, the taxpayer cannot claim a Dependent Relative Tax Credit or an Incapacitated Child Tax credit for this relative.
Health Expenses Medical Card One major entitlement that I always get my clients to apply for is a Medical Card. A Medical Card allows you and your family to receive certain health services free of charge such as: n Doctor visits n Prescribed drugs and medicines (€0.50 per prescription) n Public hospital services n Dental, optical and hearing services n Some personal and social care services The criteria is that you will have to qualify under means testing but there are some exceptions. The weekly income limit for married couples with two children is approximately €342 per week. Reasonable expenses incurred in respect of childcare costs, travel to work and rent/mortgage payments will also be deducted. All savings and investments below €72,000 for a couple are disregarded.
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GP Visit Card If your income is above the threshold for a Medical Card, you should still apply. If you don’t get a Medical Card, you may still be entitled to a GP Visit Card because the income limits are generally 50% higher than for the Medical Card. This entitles you to free GP visits but you will have to pay for any subsequent medication. Long Term Illness Card If your family is not eligible for a Medical Card or a GP Visit Card, your child with special needs may still get an individual Long Term Illness Card. This has nothing to do with income but is based on your child’s medical condition. This allows your child to get medicines directly related to the treatment of their illness, free of charge. Drugs Payment Scheme The last item on the list of medical schemes is the Drugs Payment Scheme. This is not means tested and is solely based on a family not having to pay more than €120 per month on all prescriptions. Don’t forget to keep all medical receipts to claim it back against your tax bill each year. Free Diapers Scheme This scheme provides nappies free of charge to children who have special needs and are of age 3 years and upwards. The supply is restricted to 62 nappies per month and is administrated by your local Health Nurse. Diet Supplement Scheme If your hospital consultant has prescribed a special diet to your child with special needs, then it may be possible to claim an allowance from your health board. As usual, this scheme is means tested and you must be in receipt of a social welfare payment. The following diets qualify for the diet supplement: n Low-lactose, milk-free diet n Gluten-free diet n High-protein, high-calorie diet n Altered consistencies diet
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Early Learning Scheme This scheme provides a free year of pre-school education. In general, children are eligible for the scheme if they are aged between 3 years 3 months and 4 years 6 months on the 1st September of the year that they will be starting. There are exemptions given in certain cases, such as when your child has special needs. If you feel you might be entitled to such an exemption, contact the Minister for Children and Youth Affairs on 01 635 4000 or visit www.omc.gov.ie for further clarification. A lot of my clients struggle to get a second year free, so carefully consider when to claim the free year. The government will pay for your child’s playschool or day care direct. The general guideline is a free placement for 3 hours a day, 5 days a week, over 38 weeks. If your child attends for more than 3 hours, you will be charged for the extra time separately by your playschool or day care centre. You should contact your local playschool or day care centre for clarification of opening hours that qualify for the free sessions. Your childcare services provider must also furnish an appropriate pre-school educational programme. Don’t forget to get your child’s name down early for the scheme and visit a number of different childcare providers to assess which one suits your family best. Free Travel Pass If you are receiving Career’s Allowance then you should also apply for a free Travel Pass, even if you do not intent to use it in the near future. Not everyone is entitled to the Free Travel Pass and I have clients who fought tooth and nail before they were eventually given the Pass. Free travel is available on all State public transport (bus, rail & Dublin’s LUAS). You can travel on a number of services that are operated by private bus companies, but you need to check this out for yourself. There are no restrictions on the times at which you can use your Travel Pass. Companion Free Travel Pass If your child is blind or vision impaired, they may be entitled to a Companion Free Travel Pass. With this pass, your child can travel free (alone or accompanied by one other person over the age of 16) on Dublin Bus, LUAS, Bus Éireann and Iarnród Éireann services.
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Household Benefits Package If you are entitled to Carer’s Allowance, then you may also be entitled to the Household Benefit Package. This is made up of: n n n n
Electricity Allowance Natural Gas / Bottle Refill Allowance Telephone Allowance Television Licence
Electricity Allowance – The Electricity Allowance covers normal standing charges and up to 2,400 units of electricity each year. Following approval, the Department notifies the ESB, who will apply the allowance, including any backdated credit, on your next or subsequent bill. The allowance is paid directly to the ESB. You must pay in the normal way for any electricity you use over and above the allowance. If your electricity provider is not the ESB, your Electricity Allowance will be paid directly to you to use towards your electricity bill. Natural Gas Allowance – You are entitled to get €52 deducted from your gas bill every 2 months from June to November and €111 deducted from your gas bill every 2 months from December to May. If you don’t use your full allowance you can carry up to €150 to your next bill. If your home is not connected to an electricity/natural gas supply but you satisfy the conditions of the scheme, you can avail of the Bottled Gas Refill Allowance of €40.70 each month, instead. Telephone Allowance – The Telephone Allowance is a payment towards your mobile phone or landline phone bill. You can get only one Telephone Allowance per household which can be used for either a mobile phone or landline but not both. Your payment will be €21.41 plus VAT of 21% each month Television Licence – When you qualify for the Household Benefits Package, the Department issues you with a free TV licence, and also notifies An Post of your entitlement. Housing Adaptation Grant The scheme is administered by local authorities and is means tested. The grant will pay for necessary building works to render a house more suitable for the accommodation needs of a person with a disability. A maximum grant of €30,000 (covering up to 95% of works), is available to applicants with gross household incomes of up to €30,000 per annum. A grant is
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still available to applicants with incomes above €30,000 but this reduces on a sliding scale. The types of works allowable include the provision of access ramps, stair-lifts, downstairs toilet, accessible showers, adaptations to facilitate wheelchair access and extensions. Other works, which are reasonably necessary for the purposes of rendering a house more suitable, are also allowed. Mobility Aids Grant The Mobility Aids Grant Scheme provides smaller grants up to €6,000 and can cover the full cost of works. It is sometimes easier and quicker to go down this route. You cannot apply for both the Mobility Aids Grant Scheme and the Housing Adaptation Grant at the same time. The grant can be used to buy and install grab-rails, a level access shower, access ramps or a stair lift. To apply for either grant contact your local authority. Disabled Parking Card The Disabled Person’s Parking Card is for drivers or passengers with disabilities. Card holders can park in disabled parking spaces. The card is for people whose disability affects their mobility and who currently hold a Primary Medical Certificate. Generally, the card is not issued to anyone under five. The parking card scheme is administered by the Disabled Drivers Association. Apply in writing for an application form, stating your child’s disability, their age and how their disability affects their mobility. You have to get the form completed by the Gardaí and by your doctor unless you have a Primary Medical Certificate. It costs €25 and applies to the person rather than the car. I encourage you to apply even if you think you may not use it often. For more information contact Disabled Drivers Association of Ireland Tel: (094) 936 4266/4054 or www.ddai.ie
Financial Guidance Financial Planning As parents we all need to create a financial plan for our family. As a parent who has a child with special needs, your plan is all the more crucial. It’s natural to worry about your child’s future and long term care. You also want to ensure your child will have 14
the financial resources necessary to live a comfortable life. The best way to address these concerns, and allay some of your worries is to develop a thorough and realistic financial plan. The first step in developing your plan is obtaining a reasonable estimate of your child’s lifelong financial needs. You will need to speak to other parents in your situation, as well as consultants or charity organisations, in order to assess your child’s future needs. What you must assess is whether your child will become financially independent or dependent on you in later life. If your child has a disability but you believe they can grow up and develop independence, find work and maintain a salary then your focus should be providing the finance to help them achieve this. If, however, your child has a disability that will prevent him/her from earning a salary, the most likely outlook is for your child to grow up to be dependent on social welfare payments. In this case, your plan needs to reflect this scenario. Home This is one of the cornerstones to independent financial living. In Ireland today if a person has an intellectual disability then they can not get a mortgage. You will need to make an assessment of your child future potential in raising finances. If they can’t do it themselves then the main options left are: n Parents to purchase a second home n Living in the family home all their life n Build a Granny Flat n Social housing n Residential care Early in your financial planning, you need to make a decision on the route you want for your child. You will then need mortgage advice on releasing equity, purchasing a new property or remodelling your current property. Most importantly you need professional advice on how much mortgage debt you can safely take on and how best to repay the loan early. Lifestyle Debt free living is a must and fundamental to a solid financial plan. Credit cards, personal loans - even a mortgage - is a financial burden on your family. Each of these 15
debts needs to be settled and the sooner the better. Irish society at the moment is burdened with debt and financial difficulties. Many people from different backgrounds are struggling to cope. The reality is that people need to take personal responsibility and spend less than they earn. It doesn’t matter if you earn €10,000 per year or €100,000 per year, if you spend more than you earn you will always have financial difficulties. Saving Plan You need to plan out your family’s short, medium & long term saving needs. Every family will have the usual saving plans for cars, holidays, furniture and children’s education. Besides this, you may have the additional expense of paying for consultants, speech or occupation therapy, etc. The golden rule is - always pay for everything out of savings. If you want to purchase an item great, buy it. If you need to borrow money for this purchase, then don’t buy it, because you cannot afford it. Don’t kid yourself that it is worth taken out a loan, and sure, it is only €50 a week. If you cannot buy it out of savings, then wait. Instead set up a good saving plan with the money you are receiving for your child. Start saving a percentage of your income each week, and before you know it, you have the money to purchase all items going forward. Budget Make a budget plan. As I say to my clients if you fail to plan, then you plan to fail. Before you set on your journey to provide financial security for your family, you first need to find out were all your money is going each week. A budget has an amazing effect in showing you how easy it is to waste your money. Each month you must look at your bank statement and figure out if you are living within, or beyond your means. Retirement Income If you don’t have a good pension plan, then you will struggle to keep your head above water when you get older. A pension is a great way to save for the future when you have a child with special needs. Pensions have got a poor image at the moment but the core benefit can’t be over looked. n Tax free growth n Reclaim tax n 25% tax free cash at retirement
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Most public sector occupational pension schemes, and some private sector schemes, have provisions that allow for pension arrangements for dependent children to continue for the lifetime of a child who is permanently incapacitated. Check with your pension provider to see if this applies in your case. Protection Having your life adequately insured and having your income protected in the event of death or serious illness is critically important. It allows you the peace of mind knowing that you have secured your family’s financial future against unforeseen events. You must get good advice on what products best suits you and your family make up. There are a few good protection policies in the market place that are suitable for parents who have children with special needs. But you must get good advice from a competent financial planner who understands the market. Wills The best way to ensure your children are cared for after your death is through a good will. This is where you can make extra financial provisions for your children and in particular your child with special needs. This should always be done under the guidance of a solicitor. Don’t ever put this on the long finger because there can be very upsetting consequences due to the lack of foresight in having a will. Also, be aware that the financial provision you make might jeopardise your child’s entitlements to means-tested supports, such as Disability Allowance. I always recommend my clients to use trusts to provide for their child with a disability. This allows parents to leave assets to their child with special needs without affecting entitlement to benefits.
Further Information Useful Contacts If you require further information, you should contact the relevant government agencies for application forms, advice and progress reports on your case. The Department of Social Protection gives information on: n Maternity Benefit 17
n n n n n n n n n
Child Benefit Carer’s Benefit Carer’s Allowance Domiciliary Care Allowance Respite Care Grant Early Learning Scheme Disability Allowance Free Travel Pass Companion Travel Pass
You can phone the Department of Social Protection on 01-704 3000, or visit www.welfare.ie. The Revenue Commissioners gives information on: n Incapacitated Child Tax Credit n Medical Expenses Tax Relief n Home Carer’s Tax Credit n Homemaker’s Scheme n Disabilities Passenger Scheme n Allowances for Employing a Carer You can phone the Revenue Commissioners on: 1890 222 425 or visit www.revenue.ie. The HSE gives information on: n Medical Card n GP Visit Card n Drug Payments Scheme n Long-Term Illness and Disability Scheme n Free Nappies Scheme n Diet Supplement Scheme n Mobility Allowance n Motorised Transport Grant You can phone the HSE on 1850 24 1850 or visit www.hse.ie.
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About The Author Allan M. Cuthbert QFA is a qualified Financial Planner who specialises in guiding parents through the maze of financial issues that surround a family raising a child with special needs. Allan’s in depth knowledge and insight on how best to secure a family’s financial future gives parent enormous peace of mind. Allan charges a fee of €150 to create a detailed financial plan for parents who have children with special needs. He also gives presentations to companies, organisations, government bodies & Charities in the area of financial planning. You can contact Allan by using the details below: Direct: Mobile: Email:
021 234 8990 086 335 3013 allan@financialwellbeing.ie
Web: www.financialwellbeing.ie Address: Financial Wellbeing, 34 Rivergrove, Glanmire, Co Cork
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Financial Information For Parents Who Have A Child With Special Needs Direct: 021 234 8990
Mobile: 086 335 3013
Email: allan@financialwellbeing.ie
Web: www.financialwellbeing.ie
Address: Financial Wellbeing, 34 Rivergrove, Glanmire, Co Cork 20