What is an ABLE account?
An ABLE account is a type of savings and investment account that can be held and used by a person with a disability who is receiving needs based government benefits. SSI, Medicaid, and some other assistance programs will not count the money being held in an ABLE account as a resource that disqualifies the person from the benefit.
Who can open an ABLE account?
An ABLE account can be opened for a person who has a disability that began before age 26. It does not matter how old the person is when the account is opened, as long as there is proof that the disability began before age 26. The account can be opened by the person, or by a guardian or other responsible person (see individual state accounts for specifics).
Who can put money in an ABLE account?
Anyone can put money in the account. The person with the disability can deposit work earnings and gifts to the account, but parents, grandparents, and anyone else who would like to give money can also deposit money into the account.
Is there a limit to how much money can be put in an ABLE account?
Yes, sort of. There is a yearly maximum and an overall maximum for money to be both tax advantaged and excluded from available resources for purposes of SSI and Medicaid qualification. Currently, up to $15,000 in deposits within one year. This amount may be adjusted for inflation periodically, and there are a few circumstances where the yearly maximum may be different (lawyers are incapable of answering a question without saying “it depends.”) In addition to the yearly deposit limit, once the total amount in the account goes over $100,000, the extra amount may be counted as a resource for determining eligibility for SSI and Medicaid. The account can accumulate more than that, but it may cause problems for the person’s benefits eligibility.
What can ABLE account money be used for?
Money in the account can be used to pay for items, services, and activities related to the person’s disabling condition. Most state’s interpret this provision liberally, but account holders should read their state rules carefully and keep receipts and explanations for all the money spent.
What happens to money still in the ABLE account when the account holder dies?
Many, but not all, states allow the Medicaid program to be reimbursed for payments made on behalf of the individual during their life. If there is money still in the ABLE account after any Medicaid claim, that money goes to the individual’s heirs or as directed in the individual’s will.
Can a person have more than one ABLE account?
No. Only one ABLE account per person is allowable. However, The ABLE account can be transferred to a different state program if one is found that better suits the person’s needs.
Does an ABLE account have to be opened in the state where the person lives?
No, most state ABLE programs allow accounts to be opened no matter where the person lives. Each state program is a little different, so you may prefer an ABLE account in a different state. You can see the terms of each state program and compare them here – ABLE National Resource Center.
What is the difference between an ABLE account and a special needs trust?
There are many differences, and they serve different purposes in a special needs legal plan, but here are some of the primary differences:
- An ABLE account can hold a limited amount of money, but a special needs trust can hold any amount
- An ABLE account can hold only cash. A special needs trust (other than a pooled trust) can hold real property and other assets as well as cash
- An ABLE account can be managed by the person with the disability. A special needs trust is managed by a Trustee.
- Any money in an ABLE account may have to be used for Medicaid recovery. Special needs trusts that contain only money or assets contributed by people other than the person with the disability do not have to pay Medicaid.
Should everyone who qualifies have an ABLE account?
This answer totally depends on the individual circumstances. Although ABLE accounts do provide some benefits, not everyone is going to need those benefits. And while it might not hurt to have an ABLE account even if one is not really needed, it can hurt if it’s being managed by someone who might not exercise the proper care and that could end up jeopardizing SSI and Medicaid benefits. So no, not everyone who is eligible needs an ABLE account.
Where can I find more information on ABLE accounts?
An excellent resource, especially if you want to compare and choose a state program to open an account, is the ABLE National Resource Center. You can also discuss these accounts and their benefit to you, if any, with your special needs planning attorney. An ABLE account is one part of a larger plan and should be part of the discussion you have with your attorney.
Parker Counsel Legal Services consults with special needs families in Austin Texas, Western Mass, the New Hampshire Seacoast, and Northern New Jersey. Special needs trusts, guardianship, and more. Give us a call and tell us about your family situation for some guidance on how best to plan a safe, secure future for your child. 833-RED-BOOT (833-733-2668)