News & Views, 10/1994 - Financing Special Purpose Schools And Treatment Centers

Almost every client expresses some kind of "sticker shock" when I first speak of the cost of special purpose schools and treatment centers. While the best of the best will probably always remain an expensive proposition, there are some approaches to defraying some of the expenses of these schools. In this article, I will name those which occur to me, and review each in depth in a follow up article in a future issue.

It is important as you read this article that you do NOT take this as final information on any particular case. In some cases a person in a licensed professional capacity should review the facts and make a final determination as to what action is or is not appropriate. What follows should be taken as ballpark suggestions to explore, not as bottom line assertions as to what works.

The most common form of financial assistance among my clients is application of benefits from a basic health care plan. The applicability of this approach is conditional on the type of health care coverage and the flexibility of the person(s) making judgments about how it might apply in a specific case. However it is usually worth exploring. In the next issue, I will write in more detail about this, but for now, note the following. Most health care plans, whether insurance, HMO or PPO plan, direct employer benefit package or some type of government benefit, have a lifetime maximum benefit for psychiatric care, substance abuse treatment, behavioral medicine, of mental and nervous disorders, depending upon the wording. You should have literature describing your benefits, and the lifetime maximum amount should be in that literature.

Most plans also govern the use of the plan through a managed care company. This company may or may not be identified by name in your benefit plan literature, but you can nearly always contact this company by telephoning the number you have been told to contact prior to any hospital admission or prior to certain surgical procedures. With some HMOs and PPOs, you can contact the managed care people only through your primary care physician. However, when there is a high lifetime benefit, there is often the possibility of getting authorization from managed care to use part of that allowed benefit for a special school or treatment center if they can be convinced that doing so will limit the potential for the company to be forced to pay more to a psychiatric hospital later. Sometimes a sympathetic Employee Assistance Program or Human Resources officer in a large corporation will authorize payment in excess of the company's usual obligation, just to be helpful or to retain a valuable employee.

There will be more detail on this next issue. For now, explore these alternatives, before assuming there is no coverage. The second most common is some kind of financing. Consult an expert in each of these areas before proceeding, but these are some places to look: (1) Financing through the school or treatment center. Many won't touch this, but some will, and it is worth the question. Special finance companies now assist treatment centers in offering loans. Also, consider (2) a second mortgage on a home or business, (3) borrowing against a retirement plan, or (4) relatives.

The third most common is public school funding. As a matter of federal law, all public schools are liable for the cost of educating the residents of their school districts up to the age of 21 or until graduation regardless of handicap. Schools almost always deny that they have any responsibility and will use what you say to prevent you from making an effective claim, so get professional advice when approaching this source. Remember these points: (1) You need advice from someone who is familiar with procedures in YOUR state. While federal law sets basic standards, actual practices vary tremendously from state to state, and what works in one state is not indicative of what will work in another. (2) The fact that your child has been attending non-public schools is not relevant to the school liability, and the fact that s/he is within a year or two of grade level is only relevant if the only basis of your claim is learning disability. (3) If the school does not want to cooperate, the process of forcing them to do so is costly with respect to both dollars and emotion, so don't take it on lightly. (4) Do not give up on this without consulting with an attorney highly experienced in such cases, or a very highly skilled professional advocate (do not rely for this purpose on volunteer advocates identified by your public school). (5) In some states, placement in a special school or treatment center automatically qualifies a student for aid equivalent to the cost of education. (6) This benefit may be available in some placements and not others. Explore the possibilities BEFORE you select a placement. Fourth, and usually overlooked are government sources including Medicare, social security, and Medicaid programs. Some states, counties and municipalities have social service and corrections based programs which help some people in some districts. However the important thing to check out is eligibility for disability under social security for a student with any kind of emotional disturbance. Again, you need advice on this from an attorney specializing with disabilities cases. Social security always denies eligibility unless challenged. However, once disability is established, the youngster is generally eligible for medical assistance or Medicaid from the home state regardless of family income. With this in hand, some of the most expensive residential care is in reach.

Fifth, remember tax deductibility, covered in several prior Woodbury Reports articles (Insurance As a Resource #11; Working With Insurance #19; both by Larry Stednitz; and Medical Deductions #21, copies of memos written to Tom Bratter of John Dewey Academy)

Don't forget consultant's fees. If the placement is tax deductible as a medical expense, the consultant's fee probably is, too. One placement I have made resulted in my fee being reimbursed by insurance as an outpatient psychiatric benefit. And if the place to which you are referring pays "headhunters" (many do), should they not reduce their charges to parents by the amount they usually pay a headhunter, since you have done that job for them at no cost to them? Stay tuned, more detail in the months to come.

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