INFORMATION ABOUT TAX-FREE SAVING ACCOUNTS FOR DISABLED INDIVIDUALS
The Stephen Beck, Jr., Achieving a Better Life Experience Act (ABLE) became law on December 19, 2014. The law aims to ease financial strains faced by individuals with disabilities by making tax-free saving accounts available to cover qualified disability expenses.
IMPORTANT FACTS TO KNOW ABOUT THE ABLE ACT:
TREATMENT OF ABLE UNDER FEDERAL MEANS-TESTED PROGRAMS:
Disregard the first $100,000. Only assets above $100,000 count as a resource. If an ABLE balance exceeds $100,000 by an amount that causes the recipient to exceed the SSI resource limit --whether alone or with other resources, suspend the SSI payment until the countable resources are below the allowable limit.
A beneficiary’s Medicaid continues when an SSI recipient’s ABLE account exceeds $100,000 by an amount that causes the recipient to exceed the SSI resource limit--whether alone or with other resources. The recipient retains eligibility for Medical Assistance (Medicaid) without a time limit as long as he or she remains otherwise eligible.
Medicaid Payback Provision
Assets remaining in an ABLE account upon the death of a beneficiary must be used to reimburse the state for Medicaid payments it made on behalf of the beneficiary.
Frequently Asked Questions:
An ABLE account is a tax-advantaged account, similar to a Section 529 qualified tuition program (QTP). The States administer ABLE accounts established for the benefit of the individual. The designated beneficiary is also the owner of the account.
An individual who is blind or disabled, with a medical disability that began before the age of 26 is eligible for an ABLE account.
Eligible individuals are limited to one ABLE account.
Any person can contribute to an ABLE account. (The Internal Revenue Code defines a person as an individual, trust, estate, partnership, association, company, or corporation.)
The IRS limits the total contributions to the annual gift tax exemption (e.g., the 2017 limit is $14,000). States will set a maximum allowed for ABLE account balances.
An ABLE account excludes the first $100,000 as a resource for SSI purposes.
The SSI recipient’s benefits suspend without a time limit, but are not terminated. The individual would remain eligible for Medicaid while in suspense.
ABLE accounts are transferrable to family members who are also qualified individuals.
Some qualifying distributions are education, housing, transportation, employment support, assistive technology, health and wellness. Qualifying distributions from an ABLE account, for reasons other than housing, would not generally affect SSI eligibility or payment amount.
Distributions from an ABLE account for the purpose of housing expenses may be a countable resource if retained beyond the month of receipt.
Non-qualified distributions from an ABLE account may be a countable resource if retained beyond the month of receipt.
Any State can file a claim against the ABLE account for reimbursement of any medical assistance paid on behalf of the account beneficiary after establishment of the ABLE account.
The individual signs a certification that indicates a physician’s diagnosis is available for the IRS or the ABLE program if requested to satisfy the disability certification requirement.
ABLE account participants may open an account in any participating state they choose.
OTHER USEFUL LINKS
SSA Program Operations Manual System (POMS): https://secure.ssa.gov/apps10/poms.nsf/lnx/0501130740
Federal Rule - Notice of Proposed Rulemaking (NPRM): https://www.federalregister.gov/articles/2015/06/22/2015-15280/guidance-under-section-529a-qualified-able-programs#h-20
ABLE National Resource Center: http://ablenrc.org/
Center for Medicare and Medicaid ABLE Medicaid Director Letter: https://www.medicaid.gov/federal-policy-guidance/downloads/smd17002.pdf
THIS INFORMATION IS GENERAL.
FOR MORE INFORMATION, CALL 1–800–772–1213 (TTY 1–800–325–0778),
VISIT OUR WEBSITE (www.socialsecurity.gov) ON THE INTERNET,
OR CONTACT YOUR LOCAL SOCIAL SECURITY OFFICE.