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The ABCs of ABLE Accounts
Milestone Consulting, LLC
(716) 883-1833

For people with special needs and/or their caretakers, securing a financial future is particularly critical. The Achieving a Better Life Experience (ABLE) Act allows qualified individuals and/or their families to create an ABLE savings account without impacting their eligibility for needs-based public benefits programs like Supplemental Security Income (SSI) and Medicaid. It’s the financial footing many individuals need.

At the time of ABLE’s passing, individuals with more than $2,000 in assets were not eligible for those benefits. For people who obtained a personal injury lawsuit or received another lump sum of money like an inheritance, this rule posed a problem. Some individuals turn to a special needs trust, a pooled trust, an ABLE account, or another solution to comply with the programs’ rules. Many of these choices come with tax advantages. With an ABLE account, beneficiaries and their families will have more choice and control over the account. In addition, the cost of establishing an ABLE account will likely be less than that of a trust. Determining which option is best depends on the individual’s unique situation.

What Does an ABLE Account Pay For?

An ABLE account can pay for what’s known as qualified disability expenses (QDEs), which are related to the blindness or disability of the beneficiary. A QDE includes (but is not limited to) an expense for:

  • Education
  • Housing
  • Transportation
  • Employment training and support
  • Assistive technology and related services
  • Personal support services
  • Health
  • Prevention and wellness
  • Financial management and administrative services
  • Legal fees
  • Expenses for ABLE account oversight and monitoring
  • Funeral and burial, and
  • Basic living expenses.

When a beneficiary with an ABLE account passes away, funds remaining in the account will be used to finish paying all outstanding QDEs and may then reimburse the state for Medicaid benefits that he or she received.

Who Can Establish an ABLE Account?

One of the following conditions must be true for an individual to be eligible for an ABLE account:

  • He or she must be eligible for SSI based on disability or blindness that began before age 26,
  • He/she must be entitled to disability insurance benefits, childhood disability benefits, or disabled widow’s or widower’s benefits based on disability or blindness that began before age 26, or
  • He/she must certify that there is an impairment meeting the specified criteria or is blind, and the disability or blindness must have occurred before age 26.

A person with “signature authority” can also establish and administer an ABLE account for a beneficiary who is a minor or an adult who is incapable of managing the account. The person with signature authority must be a parent, legal guardian, or someone acting under power of attorney.

Anyone can contribute to a person’s ABLE account, but there are federally-mandated annual contribution limits. In 2019, the total annual contributions that an ABLE account can receive from all sources is $15,000.

A comprehensive settlement planner can assist with the application process and ensure all steps taken are in the beneficiary’s best interest. Qualified individuals can complete the application process online with assistance over the phone or via email.

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