Providing for Your Child with Special Needs After Your Death For Aetna Employees

Healthcare Provider Update: Healthcare Provider Information for Aetna Aetna, part of the CVS Health family, has been a key player in the Affordable Care Act (ACA) marketplace, providing health insurance plans to individuals and families. However, significant changes are on the horizon for 2026, as Aetna will exit the ACA marketplace in 17 states, impacting approximately 1 million members. This withdrawal is attributed to the company's challenges in maintaining competitiveness and providing value in a rapidly evolving healthcare landscape. Potential Healthcare Cost Increases in 2026 As the healthcare landscape shifts, substantial premium hikes are anticipated for those enrolled in ACA marketplace plans, with projections of up to 75% increases in out-of-pocket costs due to the potential loss of enhanced federal subsidies. In some states, insurers have filed for rate increases exceeding 60%, driven by surging medical costs and the expiration of premium tax credits established under the American Rescue Plan. For Aetna's former members, this change further complicates their healthcare landscape as they seek new insurance options amid heightened financial pressures. Click here to learn more

According to a recent study by Fidelity Investments, only 29% of parents have discussed inheritance plans with their children. This lack of communication can lead to misunderstandings and disputes among beneficiaries when the time comes to distribute assets. Therefore, it is crucial for parents to have open and honest conversations with their heirs about their inheritance plans and intentions. This can help to ensure that the beneficiaries understand the wishes of their parents and are better equipped to manage the inheritance they receive.

Why Is Estate Planning Important When You Have a Child With Special Needs?

All Aetna employees with children confront the challenge of preparing for the day when they will be unable to care for their families. However, as a parent of a child with special needs, you have complex estate planning requirements. Your will, and other estate planning documents you prepare, must address your unique concerns. These issues might include:

 Providing sufficient care or assistance for a lifetime
 Appointing a financial manager for your adult offspring
 Maintaining your child's eligibility for public assistance
 Avoiding family disputes

A lawyer and other financial professionals with expertise in planning for children with special needs can assist you in drafting a comprehensive estate plan to ensure that your child will be provided for after your demise. We recommend that our Aetna clients who are parents of children with special needs consult a professional before drafting a plan. For our Aetna clients who already have an estate plan, all existing legal documents should be reviewed (and, if necessary, revised) to ensure that they address your family's requirements.

Wills

A will is essential to any estate plan. It ensures that your assets are distributed in accordance with your wishes and allows you to choose a guardian for your minor children. Without a will, probate assets will be distributed according to the laws of intestacy, which typically allocate a portion to the surviving spouse and a portion to the children. If your child requires more financial resources than other beneficiaries, it is crucial that your wishes are reflected in your will.

Trusts

A trust is a legal entity that allows you to leave your special-needs child (and others) assets outside of your will. You can establish a trust either during your lifetime (a living trust) or through your will (a testamentary trust). As the creator of a trust, you can determine which assets will be transferred to the trust, who will be the beneficiaries, the terms and conditions of the trust, and who will administer the trust. Typically, trusts are used to:

• Avoid probate
•  Manage property
• Provide for infants under age
• Avoid estate taxes
• Protect property against creditors

Special needs trusts can play a significant role in your estate plan. A special needs trust can enable you to provide for your child without jeopardizing his or her eligibility for government benefits, a benefit not offered by traditional trusts.

Why Use a Special Needs Trust?

Medicaid and Supplemental Security Income (SSI) can be crucial sources of support for your child with special needs, particularly if he or she cannot purchase or afford private health insurance. Because these government programs are need-based, however, your child will no longer be eligible for benefits if his or her countable assets (such as cash and other liquid assets) exceed $2,000, which is the limit in most states. A bequest, a gift from a relative, or a settlement for a personal injury may cause your child's assets to exceed the limit, resulting in the loss of government assistance.

Unfortunately, the majority of government benefits only provide minimal support. The portion of assets your child is permitted to retain and the small allowance for personal care he or she receives in accordance with government benefit eligibility rules may not be sufficient to pay for necessities such as eyeglasses and dental care. It is almost surely insufficient to provide the child with 'luxuries' like vacations or gifts for others.

Consider establishing a special needs trust if four Aetna employees want to provide funds for expenses not covered by government benefits while preserving their child's eligibility for those benefits. Because assets deposited into and income generated by a properly drafted special needs trust will not be deemed 'available' to your child, they will not affect his or her Medicaid and SSI eligibility.

In addition, establishing a special needs trust is frequently the best method to ensure that your child's inheritance is used for their benefit. Although disinheriting your child or leaving money to other family members on his or her behalf may initially preserve your child's eligibility for government benefits, if these benefits are reduced or eliminated, your child may be left without adequate support. These Aetna clients should also consider the possibility that creditors may attach money left to a family member if, for example, that family member is held liable for an automobile accident or declares bankruptcy.

Consult an attorney experienced in special needs issues (including Medicaid planning) and your state's laws regulating special needs trusts if you are interested in establishing a special needs trust.

Note:  An additional planning tool you may want to consider is an ABLE account. Money in an ABLE account generally does not count toward SSI and Medicaid asset limits. An ABLE account may be opened by an individual whose disability began before age 26. As a parent, you may also be able to open and oversee an account on your child's behalf. Your child will be the account owner and the account beneficiary. Contributions to the account can be made by you, your child, and others who want to provide financial support. Earnings on contributions accumulate tax deferred at the federal (and sometimes state) level, and distributions will be tax-free if they are used to pay qualified expenses. These include housing costs, transportation, health care, personal assistance, education, and many other types of expenses related to living with a disability. ABLE accounts are intended to supplement, but not supplant, benefits from other sources, and may be used in addition to a special needs trust.

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Letter of Intent

A letter of intent describes how you would like your infant to be cared for after your death. Despite not being a legal document, it can provide essential information to guardians, trustees, family members, and others involved in your child's care. The letter may discuss your child's medical requirements, daily routine, interests, likes and dislikes, religious practices, living situation, social activities, behavior management, and level of independence. Such a letter can be invaluable to your child's attendants after you pass away, and it can also make the transition to a new living situation as easy as possible for your child.

Beneficiary Designations

You must designate beneficiaries and/or contingent beneficiaries for certain assets (including life insurance policies, retirement plans, and annuities). Additionally, you will designate beneficiaries in your will. Your initial inclination may be to designate your child with special needs as your beneficiary, but doing so could compromise his or her eligibility for government benefits. These Aetna clients should instead consider establishing a special needs trust for their infant and naming the trust as their beneficiary.

Guardianship Issues

Who will care for your child with special needs after your demise, even though you are the natural guardian during your lifetime? Choosing a guardian who will act on behalf of your child after your death is one of the most essential decisions you must make. The individual you choose must be capable of handling your child's complex financial, legal, and personal requirements.

Depending on the requirements of your child, you may also need to select a guardian who is willing to continue serving even after your child reaches adulthood. The law does not presume that an adult with special needs cannot manage their own affairs. After attaining the age of majority, which is typically 18 years old, your child is a legal adult. Unless a court determines otherwise, he or she will be deemed competent to manage his or her own affairs. If such a determination is required, the guardian you select now may be required to serve for the duration of your child's existence.

Guardian Defined

A guardian is a person with the legal authority to care for and/or manage the personal and/or financial affairs of another individual. After your death, a guardian can advise your child, manage their assets, and supervise their care. Typically, you will name a primary guardian and several contingent guardians in your will. The court has the final say, but it will generally accept whoever you nominate unless there are compelling reasons not to.

Types of Guardians

There are two fundamental types of guardians: a person guardian and an estate guardian. A guardian of the person is a court-appointed individual authorized to make only personal and medical decisions regarding your offspring. Any medical procedure performed on a minor requires parental or guardian consent. A person's guardian has the authority to consent to medical procedures and determine where your child will reside. Typically, the court explicitly specifies the guardian's authority. (The guardian will be required to submit periodic reports to the court.)

A custodian of the estate (also known as a conservator) safeguards and manages the money and other assets of your child. The guardian is legally responsible for the following:

To acquire real and personal property and administer it for the benefit of one's charge.
 To use the estate for the necessary care and support of the ward.
 To invest estate property productively

You can designate separate individuals as guardians of the person and guardians of the estate, or you can designate a single individual to handle both responsibilities.

Caution:  Each state has its own laws regarding guardianship. Consult an estate planning attorney before choosing a guardian.

Full Guardianship

A plenary guardianship is another name for a complete guardianship. In this instance, the guardian has authority over both your child's personal and financial affairs. The most prevalent variety of guardianship. If your child's issues are so severe that he or she cannot make any informed decisions, you will typically choose full guardianship.

Limited Guardianship

In a limited guardianship, the guardian's authority over the dependent is restricted to certain matters. Other than that, the child with special needs has some autonomy over his or her existence. The court must carefully monitor this type of arrangement to ensure that it remains suitable for the child.

Caution:  One problem with limited guardianships is that your child may encounter a legal situation you haven't considered. You have to anticipate the future when you set up a limited guardianship.

Temporary Guardianship

If the court appoints a temporary guardian, the problem or duration of the guardian's authority is specified. Typically, a temporary guardian is appointed only in situations involving drugs, transient illness, or exceptional medical circumstances.

What to Consider When Choosing a Guardian

These Aetna clients may choose a relative, a close associate, or a reputable legal professional to be their child's guardian. Consider the following factors as you make your choice:

• Does the prospective guardian reside near your child?
• Does he or she have sufficient time for your child?
• Does he or she possess the interpersonal skills required to effectively represent your child?
• Is he or she willing to shoulder the burden?
• Do you believe he or she will act in your child's best interests?
• Does this person have an existing relationship with your child?
• Is he or she willing to remain abreast of new opportunities and programs for your child
• Will he or she acclimate to the changing circumstances of your child?
• Does he or she have the financial means to administer the estate of your child?

Caution:  Make sure to periodically review your choice of guardian. Your child's needs may change, or the person you initially chose may become unable or unwilling to serve as guardian.

What If You Die Before Nominating a Guardian for Your Child?

The court may appoint a guardian for your child if you fail to name one in your will or if you pass away without making other arrangements for a caregiver. If a relative declines or is ineligible to serve as guardian, the court may appoint an unrelated professional guardian. The guardianship procedure can be costly, time-consuming, emotionally draining, and publicly observable. In certain circumstances, however, having a guardian with professional expertise can be advantageous.

Public Guardian

If there is no individual guardian for a child with special needs, the court will appoint a public guardian for the child. Typically, this guardian has many other clients, so he or she may not have as much time as you would like to monitor your child's affairs. A public overseer is compensated with public funds, but since he or she frequently negotiates with public agencies, a conflict of interest may arise. Public or nonprofit organizations may also serve as public defenders.

Caution:  A public guardian is usually considered a guardian of last resort.

Corporate Guardian

Corporate guardians are employed by businesses that sell guardianship services. Your child's care is managed by a staff member or a volunteer. Typically, parents, life insurance policies, or bequests provide funding for this form of guardianship.

Additionally, the United Way and other charities support corporate protectors.

What If Your Child Does Not Need a Guardian?

Even if your child does not require a guardian (for example, if he or she is already a legally capable adult), he or she may still require care, guidance, and support throughout adulthood. You may want to ask a relative, a friend, or another individual to be your child's caregiver or mentor. However, these Aetna clients must ensure that the selected caregiver has the authority to act on their child's behalf should he or she become incapacitated. This can be achieved by having your child sign a durable power of attorney and advanced medical directives.

Conclusion

Estate planning is like a roadmap for retirement. Just as a map helps you navigate and plan a trip, estate planning helps you navigate and plan for your retirement and beyond. Just as you wouldn't set out on a road trip without a map, you shouldn't go through retirement without a plan for your assets and affairs. Estate planning allows you to chart your course and make sure your wishes are carried out, providing peace of mind for you and your loved ones.