Effective July 1, individuals with disabilities who have more than $2,000 in assets will not lose their means-tested federal benefits, provided that the funds are held in an ABLE (Achieving a Better Life Experience) account.
The basics of ABLE accounts
A type of tax-advantaged account modeled after 529 college savings plans, an ABLE account allows an individual to retain Medicaid, SSI and/or SSDI benefits without impoverishing him/herself. Individuals who are able to work can do so without fear of having these vital benefits terminated.
Up to $100,000 in an ABLE account is considered a non countable resource when determining the beneficiary’s eligibility for means-tested benefits. Any number of people can contribute to the account. Withdrawals for disability-qualified expenses are tax-free. Examples of such expenses include housing, education, job training, transportation, assistive technology, etc.
Parents of a disabled child, the disabled person him/herself or other authorized person (for example, guardian or attorney-in-fact) may open, contribute to and manage the ABLE account. The special needs individual is the owner and beneficiary. Any number of people may contribute to the account, although the owner/beneficiary may have only one ABLE account.
Special Needs Trust still useful
Due to certain restrictions, many parents and individuals will find the ABLE account an adjunct to, rather than a replacement for, a Special Needs Trust:
- An ABLE account can contain no more than $413,000. A Special Needs Trust has no such upper limit.
- The beneficiary of the ABLE account must have developed his/her disability by his 26th birthday. There is no age limit for a Special Needs Trust.
- If the ABLE owner/beneficiary has been receiving Florida Medicaid benefits, upon his/her death the State of Florida must be repaid from any monies that remain in the account . This is not a requirement for a Special Needs Trust.