Switched Insurance Coverage? Your Special Needs Plan May Need Updates

If you recently switched health insurance plans during open enrollment or because of a job change, you might feel relieved that the decision is behind you. But for parents of children with special needs, a change in insurance coverage is not the final step—it is the beginning of an important review process within your broader special needs plan.

In this article, I’ll explain what needs review, why it matters, and how to protect your child’s long-term care strategy when insurance changes occur.

A properly drafted special needs trust (SNT) instructs and empowers the trustee to pay for a broad array of supplemental needs, including medical and healthcare-related expenses, without jeopardizing eligibility for benefits like SSI or Medicaid. The first step is to create or review the SNT and ensure its provisions are up to date.

Even if your SNT itself does not need to change, your care coordination, communication with successor trustees and other fiduciaries, and financial planning must be addressed with any insurance change.

Your child’s special needs trust is only one component of a comprehensive special needs plan. That plan also includes public benefits, private insurance, financial projections, care instructions, and the people who will someday step into your role. And when health insurance changes, the coordination between private coverage, government benefits, and family and trust resources can change as well.

Your Letter of Intent is the primary roadmap for future caregivers. In our practice, we use a comprehensive Letter of Intent form, provided as a fillable PDF, sometimes accompanied by free-form Letters of Intent written by the parents or other loved ones of the supported individual.

Regardless of format, these documents must be promptly updated whenever insurance changes.

Be sure to revise:

• Insurance company name, policy number, and group number
• Member services contact information
• Online account access details and card locations
• Pre-authorization, referral, or appeal procedures

Also, document any provider changes caused by the new plan. If you had to switch doctors, therapists, or specialists, future caregivers and trustees need clear guidance on who provides care and why those providers were chosen.

If your new insurance does not cover services your child relies on, your Letter of Intent should clearly explain:

Which services remain essential

What insurance and government benefits, if any, pay toward these services, and

When should the trustee expect to supplement coverage with private payment

The goal is simple: no one should be trying to decipher insurance rules during a medical or personal crisis.

Even the best planning fails if the right people are not informed, and that requires clear conversations now – not just in the Letter of Intent. Keep in mind that during a period of your incapacity from an accident or medical event, your child’s trust may not yet be funded, so your child’s temporary guardian, your attorney-in-fact under General Durable Power of Attorney (POA), and your successor trustee of any Revocable Living Trust also need access to this updated information.

Each of these fiduciaries must understand:

• That the trusts and POAs authorize medical and supplemental expenses, where necessary
• How new insurance coverage may change what the family or SNT is likely to pay for
• Where to find updated financial projections and care instructions

This is not just an administrative update. It is fiduciary education.

You should also share updated insurance information with backup caregivers and support coordinators. If you previously executed HIPAA authorizations or medical releases, confirm whether new providers or systems require updated forms. This attention to clear communication can make a big difference for your child and future caregivers.

In addition to clear communication, insurance changes risk that your financial assumptions and guidance could become outdated. Future trustees and caregivers rely on your planning documents to understand how to support your child. You will serve them best by reviewing the financial planning assumptions underlying your special needs plan in association with these changes.

Compare your new insurance coverage to your prior plan:

• Are deductibles or co-insurance higher?
• Are certain therapies now capped or excluded?
• Have prescription drug prices changed?
• Is coverage for durable medical equipment or assistive technology different?

With any of these potential changes, the projected cost of care may change significantly, along with how much flexibility you need in your cash flow, savings strategy, or funding priorities. This review is best done collaboratively, working with both your special needs planning attorney and your financial advisor as a coordinated team. Your plan should reflect realistic, current numbers so that funding decisions remain sound over time.

This is especially important if your child is expected to need:

• Long-term therapies
• Residential or supported living services
• Ongoing medical or behavioral interventions

Outdated projections can lead to underfunding or poor decision-making later, long after you can no longer course-correct.

If your insurance change is tied to retirement or disability, this transition deserves special attention and, where possible, should be explored well in advance.

These life events often trigger multiple planning shifts at once, including:

• Changes to employer-sponsored coverage
• Early Medicare eligibility plus dual Medicaid eligibility
• Impact on income-based benefits
• Adjustments to long-term funding strategies for the SNT

In these situations, I strongly encourage families to seek a comprehensive review. Looking at the transition holistically, from a special needs planning and public benefits perspective, can help prevent unintended consequences and ensure continuity of care.

While a change in insurance may not require amending your special needs trust, it often does require updating your overall special needs plan. Financial assumptions, care instructions, and fiduciary guidance must align with your current reality, not an outdated policy.

I help families navigate these transitions with clarity and confidence. Together, we can review your plan, including your SNT, update your Letter of Intent, and ensure that your child’s future caregivers and trustees have deeply considered the current guidance.

And if you face an upcoming insurance change connected to retirement, disability, or another major life transition, now is the time to schedule a planning review.

Schedule a complimentary 15-Minute Discovery Call to learn more.

This article is a service of Ralston Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love.

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own, separate from this educational material.