The United States Social Security retirement and disability benefits support thousands of Americans by ensuring a steady financial benefit. To determine eligibility for the disability benefits, medical chart review is an important first step. As important as the benefits are the way in which the money is saved because saving is the foundation of financial stability. People with disabilities/parents of children with disabilities had for a long time found it extremely difficult to save for expenses such as education, housing, and disability-associated services/technologies without losing other benefits. This changed when the ABLE (Achieving a Better Life Experience) Act of 2014 was passed, initiating ABLE savings accounts.
Now let us look at some ABLE facts.
- The beneficiary of an ABLE account is the account owner, and the income earned by the accounts will not be taxed. The contributions to the account can be made by the account beneficiary, family or friends.
- Expenses for which the money can be used include but are not limited to housing, education, transportation, employment training and support, assistive technology, financial management and healthcare expenses.
- A person already receiving benefits under SSI (Social Security Income) or SSDI (Social Security Disability Insurance) is eligible to open an ABLE account. In case he/she is not already receiving those benefits, his/her disability must be certified with a written diagnosis by a licensed physician. The disability must have begun before age 26.
- Each individual beneficiary can contribute a maximum of $15,000 annually to the ABLE account. This contribution limit over time varies from one state to another. Many states have set this total limit at more than $300,000 per account. The ABLE Act sets further limitations for people with disabilities who are recipients of SSI:
- The first $100,000 in ABLE accounts would be exempted from the SSI $2,000 individual resource limit.
- If/when the ABLE account exceeds $100,000, the beneficiary’s SSI cash benefit would be suspended until the time the account falls back below $100,000.
- Though the beneficiary’s eligibility for the SSI cash benefit is suspended, it has no effect on his/her ability to receive or be eligible to receive medical assistance through Medicaid.
- When the beneficiary dies, the state in which he/she lived may file a claim to all or a portion of the funds in the ABLE account equal to the amount which the state spent on the beneficiary via their state Medicaid program (Medicaid Pay-Back provision).
- People with disabilities can typically have only $2,000 in assets at any given time to remain eligible for many federal benefit programs including SSI. However, savings in the ABLE account up to $100,000 will not affect eligibility for SSI and other benefits. Additionally, even if the account exceeds $100,000 the beneficiary may remain eligible to receive Medicaid.
- Each eligible individual can have only one ABLE account.
- Regardless of where a person lives, and whether or not their state has decided to establish an ABLE program, he/she can enrol in any state’s program provided that they accept out-of-state residents. For example, Ohio, Nebraska and Tennessee state ABLE programs accept enrolment nationwide whereas Florida ABLE United program accepts only in-state residents.
- Families can roll over money from a 529 plan to another member’s ABLE account. The 529 account must be for the same beneficiary as the ABLE account or for a member of the same family as the ABLE account holder.
- An ABLE account is different from a special needs or pooled trust because it allows more choice and control for the beneficiary and family. The cost of establishing the account is also likely to be much less than a Special Needs Trust (SNT) or Pooled Income Trust. An ABLE account may be a significant and viable option for many families in addition to rather than instead of a Trust program.
- The earnings in an ABLE account are tax deferred, and withdrawals are tax-free when used for qualified disability-related expenses. ABLE account fees vary among different states. States generally charge a monthly maintenance fee and may also provide discounts to residents or fee waivers, provided the member maintains a certain balance in the account. It is important to understand that each state’s ABLE plan may offer diverse investment choices and may have minimum contribution limits.
- The money in an ABLE account can be used over the lifetime of the beneficiary. It is mandatory that the money is used for qualified expenses.
As a medical record retrieval company assisting social security lawyers, we know that lawyers advise their clients how important it is to understand each state’s regulations around ABLE accounts. States also determine the investment options available to families within the plan. Each state’s ABLE program details can be found at the ABLE National Resource Center that is managed by the National Disability Institute.