Save Money, Keep Benefits, Maintain Control
Achieving a Better Life (ABLE) is now the law of the land and qualifying individuals might benefit. ABLE accounts are tax advantaged for people with disabilities and their families. ABLE accounts can be opened for individuals of any age, but the onset of the disability must have been prior to age 26 and continued for 12 months or be expected to continue for at least 12 months or indefinitely.
What is an ABLE Account?
ABLE accounts are new savings accounts that are designed similarly to the 529 college savings account. The money within these accounts (see limitations below) is not considered part of an individual’s assets taken into consideration when determining eligibility for public benefits such as Social Security and Medicaid.
The beneficiary of the account is the account owner who must be the person with a disability. (These accounts, however, can be managed by another person through a Power of Attorney.) The income earned by the account will not be taxed as the money is utilized for qualified expenses; contributions are not taxed, and some states give tax deductions for contributions. ABLE Accounts were designed to be utilized to support independence, avoid stress from having to pay spend downs, to save for future expenses while avoiding going over the funding limit for benefits, and to ease access to funds for qualifying expenses.
If the criteria is met to receive benefits under SSI/SSDI, candidates are automatically eligible to establish an ABLE Account. If SSI/SSDI is not received, eligibility for ABLE is still an option, although a disability that meets Social Security’s disability definition must be present and a letter from a licensed physician verifying this disability is required.
What are the Limitations?
ABLE accounts can have no more than $14,000.00 total contributions per year. Anyone can contribute, but when $14,000.00 is reached, no more money can be added to the account until the next January.
Stocks and bonds cannot be contributed, only cash. An account can have up to $100,000.00 in it without affecting Social Security benefits. If the account exceeds $100,000.00, Social Security benefits will be suspended until the account goes back to $100,000.00 or below. Medicaid benefits are never suspended.
What are Qualified Expenses?
Qualified expenses include some specified items in the following domains; housing, education, transportation, personal support, assistive technology, health, employment support/training, legal/financial services, and basic living expenses.
How do I Open an ABLE Account if I am a Missouri Resident?
Although Missouri is not opening ABLE accounts at this time, Missouri qualifying residents can open ABLE accounts in Nebraska, Tennessee, and Ohio. A person does not have to be a resident in the noted states to open an ABLE account, and it is safe and easy. (Tennessee is known for low fees, and Ohio has a debit card option. (Future state based tax advantages might not be available if am account is opened outside one’s home state.)
Can the funds be transferred?
The funds can be transferred to an ABLE account in another state, but the specifics vary from state to state. In the case of a person with an ABLE account passing away, funds can be transferred to the estate of the deceased (sibling with qualifying disability) – BUT states are allowed to file a claim against the account to recoup Medicaid expenses since the opening of the ABLE account.
Is an ABLE Account Right for me?
Below are contacts who can provide individualized assessments to see if an ABLE account is right for you. ABLE accounts can be organized electronically without having to travel outside of Missouri.
For more information contact Adam Hartz and Joshua Meacher or visit ablenrc.org.