ABLE accounts are a relatively new tool that people with disabilities and their families have to use in planning for adulthood. ABLE is an acronym for Achieving a Better Life Experience and the basic idea is that it allows the accumulation and spending of money in the name of the disabled person without causing the loss or reduction of SSI (social security) and medicaid benefits. Before the ABLE accounts, this was not possible.
ABLE accounts do NOT replace the need for special needs trusts and other planning tools, but they do some very useful things for some circumstances. Here are a few basic things you should know about ABLE Accounts:
- ABLE accounts are the ONLY way an individual can accumulate money in their own name and still receive all the SSI and Medicaid benefits they would otherwise be eligible for. However, there are limits to the amounts of money – currently up to $15,000 per year and $100,000 total can be accumulated without causing a benefits disruption. The yearly amount may fluctuate from year to year.
- ABLE accounts are only available to individuals whose disability occurred prior to their 26th birthday. This means all individuals with a developmental disability such as cerebral palsy, autism, or Down Syndrome are eligible, as well as individuals whose disability was the result of an accident or medical malpractice or illness, as long as it occurred prior to age 26.
- Funds in an ABLE account may be able to pay for some things without causing an SSI reduction that would occur if funds from a special needs trust or another source were used. This means that even people who are not capable of handling an account themselves, may benefit from having one. This is a benefit that should be discussed with your attorney to see if using an ABLE account in conjunction with other tools may be useful. This also may be a benefit that future legislative changes could eliminate, so if you are using an ABLE account for this purpose you will need to keep a close eye on legal and regulatory changes.
- Any funds being held in an ABLE account that remain at the time of the individual’s death are subject to claim by Medicaid. It may still be a good idea to accumulate money, but in many cases it may be better to avoid using the ABLE account merely as a savings account because of the possibility of it eventually going to Medicaid rather than designated beneficiaries.
Not all states currently have ABLE accounts, but you do not have to open an account in the state in which you live. You can find great information on the specifics of currently available accounts on the ABLE National Resource Center website.
For more information generally on planning for the future of a child with special needs, you can read our articles here and here, or call our office for a short, free consult. You can reach us toll free at 833-RED-BOOT (833-733-2668). We serve families in Texas, Massachusetts and New Hampshire.