ABLE Account

Achieving a Better Life Experience

Everything You Need To Know About ABLE Accounts

ABLE Accounts help individuals with disabilities save money to pay for qualified expenses, without being taxed on the earnings – and in most cases, without losing eligibility for specific means-tested benefit programs.

The Overview Of ABLE Accounts

ABLE accounts are specialized bank accounts That are easily set up online and allows a person with a disability to accumulate up to $100,000 and not jeopardize their government benefits. in Most states these accounts are not taxed federally or by the state. They also can be a convenient mechanism toDeposit money from accounts that do count against SSI to ensure that the person with a disability’s accounts do not exceed the $2,000 limitation under many governmental benefits.

Things To Know About ABLE Accounts

These accounts are a must for any person with a disability.
This accounts should be used in addition to a Special Needs Trust.
ABLE accounts can be a place to put monetary gifts from Grandma or Grandpa or other relatives, to ensure those dollars are not counted against governmental benefits.

These Accounts are savings accounts that come with tax benefits for individuals with disabilities
Establishing an ABLE Account will not affect the individual’s eligibility for SSI, Medicaid, and other means-tested public benefits.
The account owner is the beneficiary.

The Purpose of The LOI for Those With Special Needs

The purpose of the letter of intent is to make sure whoever is now supporting your child with a disability, understands your vision for the child, as well as your child’s vision for their future. This ensures, your vision, for the child will continue after you are gone. The letter of intent will contain important contact information for your child, i.e. family members, friends, doctors, neighbors, care providers, and every other person important to your child’s life, including names, addresses, and phone numbers. It should also contain things like your childs government benefits (social security & special education) and hobbies and other interests that are important to your childs future. You should also include religious and holiday traditions that are important to your child.

A Letter Of Intent Aids In Preparing For The Future

The letter of intent is a critically important document regarding special needs estate planning for allowing someone (such as a family member or guardian to step in and provide supports for your child with a disability immediately. This task can be overwhelming for someone who is not involved with your child’s day to day life. Whoever is required to step in to support your child with a disability after you are gone will feel confident about being able to support them with this instruction manual.

When An ABLE Account Comes In Handy

Real Examples Of ABLE Uses

Susie has a disability and has been collecting SSI for a number of years. because she has not spent a lot of money recently, her checking account now has nearly $2,000 in it. to make sure she doesn’t run a foul with the $2,000 limitation of assets and still collecting ssi, Susie can take money from her checking account and deposit into her ABLE account to lower the amount of her checking account and still qualify for SSI.

The Achieving A Better Life Experience Eligibility

Things To Check For

Individuals are eligible for an ABLE account if they are already receiving benefits under Supplemental Security Income (SSI) and/or Social Security Disability Insurance (SSDI).
If not, they may still be eligible if they certify that they are blind or disABLEd and have a written diagnosis of their condition by a licensed physician.
The onset of the disability must have begun prior to age 26.
These accounts are to be established by or for a person with a disability.
If the person with a disability meets the age criteria and receives SSDI and/or SSI, they are automatically eligible to establish an ABLE account.
ABLE accounts can be set up either by the he person with the disability, or that person’s parent, legal guardian or another person with power of attorney.

Contributions and Limits To ABLE Accounts

In 2023, the maximum amount individuals can contribute towards a single tax year, including contributions from family and friends, is $17,000.

Each state has its limit for 529 savings accounts, which also applies to the total contributions that can be made to an ABLE account. Many states have set the limit for ABLE accounts at over $300,000 per account. Moreover, in addition to the annual contribution limit of $17,000, an ABLE account holder who is employed and not enrolled in an employer-sponsored retirement plan may also contribute an amount equivalent to their compensation up to the federal poverty level (FPL) for a one-person household. The FPL amount for 2022 varies between $13,590 for individuals living in the continental US, $15,630 for individuals living in Hawaii, and $16,990 for individuals living in Alaska.

For SSI eligibility purposes, the initial $100,000 in an ABLE account is excluded from asset calculations. But if the account balance surpasses $100,000, the beneficiary’s SSI payments will be paused until the balance falls below the $100,000 threshold. Nevertheless, regardless of the account balance, the beneficiary remains eligible for Medicaid coverage.
It is important to note that the account includes a provision for Medicaid Pay-Back. This means that if funds remain in the account when the owner passes away, Medicaid may claim reimbursement of expenses incurred from the time the account was established.

Practical Example Of When An ABLE Account Is Important

ABLE Uses

Johnny has a disability and has been collecting SSI for a number of years. Johnny’s grandmother wants to give him a gift of $5,000. since Johnny has an ABLE account, Johnny instructs grandma to deposit the $5,000 into his ABLE account. Johnny now has $5,000 that he can spend on what he wants or needs, and still qualify for SSI benefits.

Opening & Investing an ABLE Account

As long as a state’s ABLE program allows enrollment by out-of-state residents, you have the freedom to enroll in any state’s ABLE program regardless of where you reside and whether or not your state has established an ABLE program.

State ABLE programs that are open for enrollment nationwide are Ohio, Nebraska, and Tennessee. On the other hand, the Florida ABLE United program is an example of a state ABLE program that only allows enrollment for residents within the state.

Similar to 529 college savings plans, states are expected to provide various options for eligible individuals and families to establish ABLE accounts with different investment strategies. It is crucial to choose an investment option that aligns with your planned use of the ABLE funds and your risk tolerance. You have the flexibility to modify your investment selections within your account twice per year.

Determine Which ABLE Programs Are Accepting Out Of State Programs

View this website to refer to the individual state pages.

Benefits Of ABLE Accounts

Cover the cost of housing and related expenses

ABLE accounts can be used to cover the expenses of the person with a disability. These may include expenses related to:
Education

Food
Housing
Transportation
Employment training and support
Assistive technology
Personal support services
Health care expenses
Financial management and administrative services

Allow Your Money To Grow Tax-Free

Most states do not tax the interest earned on ABLE accounts at the federal or state level.

Protect Your Government Benefits With An ABLE Account

You can have up to $100,000 in your ABLE account and still qualify for governmental benefits. the Assets in this account do not count when determining governmental benefits.

The Impacts ABLE Accounts Have On Government Benefits

An ABLE account will allow you to have more than $2,000, actually up to $100,000, and allow you to still collect SSI and other governmental benefits. The biggest challenge when getting government benefits is to make sure that you do not accumulate more assets that will disqualify you from collecting SSI, or other governmental programs.

So, Do I Need An ABLE Account Or A Special Needs Trust?

You should have both an able account and a special needs they are both important tools in allowing people with disabilities to live full lives.

The able account is best used as a tool to protect assets on a short-term basis. for instance if you are getting close to the $2,000 asset limitation on your checking account and are collecting ssi, the able account is a good place to take money out of your regular checking account and deposit it in the able account, so that you will continue to be able to collect your government benefits. able accounts are very easy and free to set up. this is one of the reasons why they are a good tool to have. the downside of an able account is when the person with a disability dies the state, medicaid, has the ability to come in in charge back They spent supporting the person with a disability.

The Special Needs Trust is best used as a long-term planning tool. the Special Needs Trust is the ideal location to put money inherited from parents and grandparents. there is no asset limitation on the amount of money that can be deposited into a special needs trust. so while this account has a upper limit of 100,000, the Special Needs Trust has no such limitation, in fact you could have millions of dollars in the Special Needs Trust and still qualify for government benefits. another important difference between the able account and a Special Needs Trust is that when the person With a disability dies, the terms of the trust control where the leftover money goes. whether it goes to that person’s children, or wherever they have designated, Or whatever is designated in the trust itself. another important difference is when the person with a disability dies, the state, Medicaid, has no right to any of the assets in the trust.

Attorneys typically charge in excess of $3,000 for these same documents.

Book a free consultation to learn more about how my services can help you provide financial protection for a child with special needs.

Understand What Payback Provisions Are

If there is any money left in the able account when the person with a disability dies that money will be used to pay any Medicaid liens. this is the major difference between using an able account and a Special Needs Trust.

Frequently Asked ABLE Account Questions

Who can open an ABLE account?

The Eligible Individual may open and manage an ABLE account independently if they are over the age of 18.

If the Eligible Individual is a minor under the age of 18, is unABLE to open the account, or chooses to open an account but not exercise signature authority, an individual authorized to act on their behalf may open and manage the account as the Authorized Representative.

Who can serve as the Authorized Representative of an Eligible Individual?

An ABLE account may be established by the Authorized Representative of an Eligible Individual in the following order of priority:

The agent under a Power of Attorney, or if none
Conservator or Legal Guardian (of the person and/or property),
Spouse,
Parent,
Sibling, or
Grandparent.

By opening an Eligible Individual’s ABLE account, the Authorized Representative is self-certifying that there is no other individual with a higher priority who is willing and ABLE to open and manage the ABLE account as the Authorized Representative.
Eligible Individuals who require the assistance of a trusted service provider also have the option to designate a Care Representative as their agent with authority to open and manage their account using a DurABLE Limited Power of Attorney for the specific management of the ABLE account.

May I open more than one ABLE account?

No. Eligible Individuals may only have one ABLE account at any time.

Can you put SSI into an ABLE account?

Yes. People with a disability who have an ABLE account who receive Social Security or SSI benefits can deposit their benefits into their ABLE accounts.

What is the difference between ABLE and Special Needs Trust?

The major difference between an able account and a Special Needs Trust is that after the person with a disability passes awayUnder a Special Needs Trust the state / Medicaid Has no right to the Assets in the trust, while in an able account when the person with a disability passes away, the state / Medicaid has a right to charge back for all money spent on the individual with a disability. Another major difference between an able account and a Special Needs Trust is the ease in which they can be set up and used. enable account can be set up online for free and used immediately, well a Special Needs Trust requires special drafting, and making sure that the person’s wheels are tied to the special needs trust. this can all be done using SpecialNeedsTrustsonline.com

Does an an ABLE account affect SSI?

Able accounts only affect SSI benefits if there is more than $100,000 in the able account.

What are the benefits of the ABLE Account?

the primary benefit of an Able account is allowing the person with a disability to have a savings account that can have more than $2,000 and still qualify for SSI and other government benefits.