Able account
I’ve researched this a lot and not only do I think it’s a great idea, I also think that too few people have even heard of it or know the facts.
It’s basically like a bank account for the disabled that can’t be counted as income or assets by ssi, Medicare, Medicaid, disability, FAFSA, HUD SNAP/food stamp benefits…..
As with any great thing, it’s not perfect. One drawback is that it limits eligibility to those with an eligible diagnosis before age 26. This is something that I’ve been working on changing so I will include a digital petition. I’d greatly appreciate any support & will send it to all relevant officials. Thank you so much in advance! I believe everyone should have the privilege of saving for their future, having dreams, giving peace of mind to parents of a disabled child by knowing that their child will be safe and secure, etc….
An ABLE Account will provide more choice and control for the beneficiary and family. There is a cost of establishing an account which is usually considerably less than either a Special Needs Trust (SNT) or Pooled Income Trust. With an ABLE account, account owners will have the ability to control their funds and, if circumstances change, still have other options available to them. Determining which option is the most appropriate will depend upon individual circumstances. For many families, often times the ABLE account will be a significant and viable option in addition to, rather than instead of, a trust program. If you have a special needs trust, maybe inquire about being able to set up regular deposits into the able account to cover monthly expenses.
This is the Wikipedia definition of an able account:
ABLE account
An ABLE account, also known as a 529 ABLE or 529A account, is a state-run savings program for eligible people with disabilities in the United States. Rules governing ABLE accounts are codified in Internal Revenue Code section 529A, which was enacted by the Achieving a Better Life Experience Act in 2014. With limitations, funds in ABLE account are exempt from the Supplemental Security Income and Medicaid asset limit, and earnings are exempt from federal income tax
Pros and cons:
PRO: A person with disabilities can set up his own account with his own money instead of relying on a parent, grandparent or court to establish a first-party special needs trust for him.
CON: ABLE accounts can only be established for the benefit of people who developed their disabilities before turning 26 years old. By contrast, if a special needs trust is established with funds from the trust beneficiary, it does not matter when the person developed the disability.
PRO: A person with disabilities can manage the funds in her own ABLE account, making the person less reliant on others for assistance and making it easier to access funds.
CON: Some people with disabilities can be taken advantage of if they have control of their own funds. If a special needs trust was utilized to hold the funds instead, a trustee has a legal obligation to safeguard the funds.
PRO: Funds in ABLE accounts grow tax-free and are not subject to gift tax restrictions.
CON: Contributions to ABLE accounts are limited to $16,000 per year and can hold up to $100,000 without hurting a Supplemental Security Income (SSI) beneficiary’s eligibility, whereas there is no limit on contributions to special needs trusts (although gift taxes could apply). (However, ABLE account owners who work may contribute up to an additional $13,590 (in 2022) of their gross income into their ABLE account if they do not have an employer sponsored retirement plan.)
PRO: ABLE accounts are theoretically easy to set up with a local financial institution.
CON: Without the assistance of a qualified special needs planner, use of an ABLE account could seriously affect government assistance.
CON: If there are funds remaining in an ABLE account upon the death of the account beneficiary, they must be first used to reimburse the government for Medicaid benefits received by the beneficiary, and then the remaining funds will have to pass through probate (an often onerous court process) in order to be transferred to the beneficiary’s heirs. If a special needs trust is used, there will be no probate and, in the case of a special needs trust established with funds that don’t belong to the beneficiary, there will be no Medicaid payback.
As you can see, ABLE accounts will be useful tools in a variety of circumstances but they are not the only, or in some cases, the best solution when a person with special needs wants to save money. Before setting up an ABLE account, talk with your special needs planner to determine if you are eligible to use one and whether other instruments, like special needs trusts, may be more useful.
A consumer can research & open an account anywhere in the country. Many of them are very different. Some invest your money and take a certain percentage, some high risk\profit, some low risk, some don’t invest your money at all but charge a fee, some offer a bank card, some don’t…. So it’s important to know who offers what you want.
You are limited to what you can spend it on without penalties. A “qualified disability expense” means any expense for the designated beneficiary as a result of living a life with disabilities. These may include education, food, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management, administrative services and other expenses which help improve health, independence, and/or quality of life. That’s most things. You can put money in there as well as can family and friends. If someone leaves you an inheritance, they can request that it be deposited in the account.
The amounts allowed- yearly contributions allowed are a maximum of $16,000
Total balance allowed varies by state and is between $235,000 and $550,000 but if you receive any type of ssi or ssdi, the limit before funds are suspended is around $100,000. This lower limit only applies to ssi or ssdi and doesn’t apply to any other state programs. The ssi funds reinstate once your account is under the limit again. I’m definitely not an expert on this so please find out all of the details before committing. You can transfer to a different account but each person is limited to one account at a time. I just want to pass on some good information that could help someone.
able account remove the age restrictions petition:
https://chng.it/2CGLgGJy
Please help support this worthy cause and sign this petition. Let the government know how powerful we can be together!
Here’s a few links to assist with your research:
https://www.ssa.gov/ssi/spotlights/spot-able.html
https://specialneedsanswers.com/able-accounts
