The Bottom Line: Reduce the High Cost of ADHD Treatment
Learn how three families got the best ADHD treatment possible despite high costs.
If you’re raising a child who’s been diagnosed with ADHD, you know how quickly the bills pile up.
First, there are the costs of the initial psychological testing and diagnosis. Then there may be the expense of psychological or behavioral counseling, doctor visits, and sometimes ADHD medication. Hiring educational tutors, a child advocate, or even a paying for a specialized private school may also be critical to getting your child on the path to success.
Between the challenges of negotiating accommodations at school and reimbursements with their health insurance provider, many families can’t find the time to research ways to finance ADHD treatment. In fact, 63% of the families who responded to a recent poll conducted by Schwab Learning did not know that tax benefits for LD and ADHD exist.
And when we queried our own readers about these cost-cutting strategies, we heard back from you: “Tax benefits? FSAs? Tell me more!” We say, Read on!, and find your way to fiscal relief.
Pamela: Finding her way in Florida
“I’ve looked at my son’s ADHD-related expenses as I would any medical expense, including his braces or those we had when he broke his thumb skateboarding,” says Pamela, a 47-year-old single mother, whose 15-year-old son, Jared, was diagnosed with ADHD before first grade. “I knew there were going to be financial obstacles, but I was determined not to let him slip through the cracks,” Pamela says.
Until Pamela and her husband divorced three years ago, Jared’s father’s health plan covered most of Jared’s medical needs. Since then, it quickly became too costly to cover both Jared and his sister, Dana, now 13, under the plan offered by the Florida nonprofit for which Pamela worked.
She explored her options and found that Jared qualified for Florida Healthy Kids, a public-private initiative that helps uninsured kids gain access to affordable health care, which Pamela admits causes a few headaches but ultimately helps. The biggest annoyance: The insurance covers only 30 pills a month, though Jared’s prescription stipulates that he takes Strattera twice a day. “Every 30 days I have to go through a lengthy ‘override,’ because it does not carry from month to month,” Pamela says. In order for the pills to be approved, Jared’s doctor must get involved every month.
Education accounts for the family’s most significant ADHD-related expense. Jared has attended both public and private schools, but neither was able to meet his needs. So this year, Pamela made the tough (and expensive) decision to send him to the Vanguard School, a specialized boarding school, about two hours away.
At Vanguard, Jared has a college-preparatory curriculum tailored to his needs. Pamela accessed every resource — including funds from a trust and borrowing from her parents — to cover tuition. She’s responsible for room and board fees and appointments with an on-campus psychologist. Due to the nature of the institution, the entire cost of attending Vanguard (including room, board, and tuition) qualifies as an expense taken against the medical deduction according to the IRS, so Pamela anticipates a refund on this year’s tax return. In the meantime, she is certain that, despite the financial concessions she needs to make, Vanguard is worth it.
“He has small classes and learning accommodations and assistance,” she says. “Now he’s regularly getting As and Bs. Four years of positive achievement is worth any price.”
Pamela’s Smart Moves
- Took advantage of Florida Healthy Kids, a state program for the uninsured and under-insured.
- Enlisted the help of family members in order to fund a specialized boarding school for her son.
- Pursues monthly overrides, so that her insurance covers her son’s entire prescription.
- Found her son a school for which all associated costs count toward the medical tax deduction.
Mary: Managing a Texas-sized burden
“Some months, our medical expenses surpass our house payments,” laments Mary, a 41-year-old mother of four children, two of whom have ADHD along with other conditions. It’s estimated that 65 percent or more of children diagnosed with ADHD will have one or more comorbid conditions at some point in their lives.
Despite the comorbid conditions, Mary estimates that 70 percent of her family’s medical expenses are ADHD-related. From the time of David’s diagnosis five years ago until Joe’s diagnosis two years ago, the family’s insurance covered fully 70 percent of their expenses. But due to a series of work-related changes, the family, who lives about an hour outside of Houston, no longer has such coverage.
After much consideration, Mary left her full-time teaching job at the beginning of 2004 and began tutoring in the afternoons and evenings instead. The move allowed her to be more available to her kids. Unfortunately, it also meant the family could no longer take advantage of the Flexible Spending Arrangement (FSA) offered by her school district, which they had utilized to its full extent annually ($2,500). Under her former employer’s plan, “the pre-tax dollars we elected under the FSA were placed into an account, and we were given a debit card to use with that account as we incurred medical expenses,” Mary says. “It was an excellent thing.” The family decided not to take advantage of the FSA that husband John’s employer offers because it requires that the family pay medical expenses upfront before being reimbursed from the FSA account.
To complicate matters, John’s employer changed its health insurance options that year. “We are learning what will be paid for and to what extent it will be paid as we go, because we did not find out about the change until the end of December,” Mary says. “Two HMOs were offered, and we chose the one that covered our pediatrician and our daughter’s asthma specialists.”
David and Joe see a psychiatrist every three or so months, an expense that is not covered under the family’s new medical plan. After Mary’s husband explained their situation, however, the psychiatrist agreed to give the family a 20 percent discount on each appointment. Mary reports. “He was very responsive to our situation.” The boys’ therapist, whom they see every other week for both individual and group therapy, accommodates the family by accepting their insurance, a plan her office has discontinued otherwise. “She does this out of the goodness of her heart,” Mary says, “because she also has children with ADHD.” Unfortunately, under the new HMO, the family has a higher co-pay for the therapist ($25) than for its other doctors ($15).
Medication is another headache. The boys do best while taking Concerta; their HMO favors a generic medication. The result: Not only do they need a doctor’s note each month stating that Concerta is medically necessary, but the co-pay for Concerta is higher than that for other ADHD medications.
Yet, like many families in their position, Mary and John have found ways to manage. Thanks to a tax-preparation computer program, they learned that the costs related to their children’s conditions bring the family’s total medical expenses to more than 7.5 percent of their adjusted gross income annually, meaning they qualify for the Medical Expense Tax Deduction. As a result, they are able to lower their taxable income, and thus their taxes, by a significant amount.
Private schools in their area are cost prohibitive, so the boys attend public school. Their parents fill in the educational gaps with private tutors. To pay for tutors, Mary has devised money-saving arrangements such as employing the services of an astute high school student or swapping tutoring sessions with her son’s teacher.
While Mary’s decision to step away from full-time work initially seemed risky, the family now knows it was a wise move, financially and otherwise. “By eliminating work expenses and child care, and by adding the income from tutoring, we are taking home nearly the same amount as when I was working outside the home,” Mary reports. Even better, “After a year of being at home, my children take less medication and do not go to therapy as often. The emotional and academic benefits of my presence has been substantial.”
Mary’s Smart Moves
- Carefully considered HMOs, and chose the one that would reduce their medical expenses most.
- Asked specialists for special arrangements to reduce the cost of office visits.
- Took advantage of the medical expense deduction on the family’s federal income tax return.
- Hired high school students to tutor her kids; offered to tutor teacher’s kids in exchange for extra help for her son.
- Eliminated work expenses (transportation, child care, etc.), by leaving full-time teaching job; part-time tutoring now nets nearly the same amount.
Donna: Considering all her options in Connecticut
“At one point, I was shelling out $1,000 a month for various services, not including medication,” says Donna, a 45-year-old, stay-at-home mother of three boys, ages 7 to 10, living in Connecticut. “Ouch, that hurt!” That was two years ago. Back then, Donna’s oldest, Scott, who was diagnosed with ADHD at age 5, saw both an occupational therapist and a psychiatrist weekly.
Even with the unusually generous health plan provided by husband Stephen’s employer, a teaching hospital, the family’s out-of-pocket medical expenses are at least $500 a month. Middle son, Aaron, 8, has not been formally diagnosed with ADHD, but due to a speech/language disability that presents similar symptoms, he, like his brother, Scott, is now being treated with Concerta. Each boy visits a psychiatrist monthly and takes part in weekly social-skills boosters overseen by either a psychologist or a social worker. “We’re managing,” reports Donna. “Luckily, my husband makes a good living. I often wonder what we’d do if it weren’t for his salary and benefits.”
Taking advantage of an FSA is one way the family manages to save. (Under the provisions of an FSA, the money isn’t taxed, but must be used by year’s end to cover medical expenses incurred.) This year, they set aside $4,000.
They also choose to keep their boys in public school, where they are entitled to speech and occupational therapy, as well as other services stipulated by the Individuals with Disabilities in Education Act (IDEA) and Section 504 of the Federal Rehabilitation Act. Donna and Stephen constantly reevaluate how their sons’ ADHD is managed, but Donna says that the cost of their care never keeps the family from focusing on what’s best for the boys. “I would rather eat bread and water for a year,” she says, “than not give them some service that would help them with their disabilities.”
Donna’s Smart Moves
- Sets aside pre-tax dollars in a Flexible Spending Arrangement (FSA).
- Opted to keep their sons in public school, to take advantage of services provided for them under the Individuals with Disabilities in Education Act (IDEA) and Section 504 of the Federal Rehabilitation Act.
All names in this story have been changed to preserve privacy.
More ADHD Treatment Resources
Unsurance by Ellen Kingsley
Tax Strategies for Parents of Kids with Special Needs, by Regina M. Levy, CPA
5 Tax Deductions & Credits For Special Needs Families, by Bernard A. Krooks, J.D., CPA, LL.M, CELA
Making the System Work for Your Child with ADHD, by Peter S. Jensen, M.D. (The Guilford Press)
Don’t Let Your HMO Kill You, by Jason Theodosakis, M.D., and David T. Feinberg, M.D. (Routledge)