ABLE Accounts – What to Know

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The Achieving a Better Life Experience Act of 2014 provides much needed assistance for Americans with disabilities. They’re able to design a financial plan to alleviate potential stress if they’re unable to perform their jobs.

A man in a wheelchair. We only see the bottom of the chair and his hand on the wheel. Title: ABLE Accounts: What to Know

Millions of Americans with disabilities depend on a wide variety of public benefits for income, health care, food, and housing. Many of these benefits are means-tested, meaning that they impose limits on participants’ income, assets, or both. Those limits can vary between states and between programs.

The ABLE Act Offers More Possibilities

The federal Achieving a Better Life Experience (ABLE) Act was passed in 2014. It authorized states to establish tax-advantaged savings programs. Individuals with disabilities can save and invest up to $16,000 per year. Those funds grow tax deferred. They can be withdrawn tax-free if they are used for “qualified disability expenses”. Expenses like education, medical and dental care, employment training, community-based programs, assistive technology, transportation, and housing. As of February 2022, 46 states have active ABLE programs. And you can still open an ABLE account in any state that accepts outside residents into their program.

Kevin McAvoy, an experienced Special Needs Planner at the Barnum Financial Group, calls the Act “revolutionary and empowering”. ABLE accounts allow for the accumulation of resources for the benefit of an individual with a disability. Without jeopardizing key federally funded benefits like Supplemental Security Income (SSI) and Medicaid. Mr. McAvoy has clients who have been able to build a retirement plan because of the ABLE program. He estimates that anywhere from five to seven million people could be eligible for ABLE. Unfortunately, only about three percent of those individuals are aware of its existence.

Special Needs Trust

Special Needs Trust (SNT) is another financial vehicle for people with disabilities. These trusts are durable, flexible, well tested, and can manage and protect large sums of money. SNTs are available to a wider class of individuals than ABLE accounts. They require that participants be eligible for benefits based on a disability that began before age 26. There are limits on how much an ABLE account can hold without jeopardizing eligibility for SSI. SNTs have no such limits. They also tend to provide more flexibility around investments. For those reasons, ABLE accounts work well for small-to-moderate amounts of money. SNTs are a better fit for larger sums which includes gifts and inheritances.

ABLE accounts and some SNTs have “payback provisions.” This requires that the state reimbursement for the medical assistance be paid out when the beneficiary dies. However, if an SNT is funded only by contributions from people other than the beneficiary, it does need to have payback provisions. This can be one of the most important considerations in deciding what type of account or trust to establish.

Legal Perspective

People using either the SNT or ABLE would benefit from having a legal perspective, notes Kathleen A. Cassidy, JD and Vice President of Advanced Markets at Barnum. “Special Needs Trusts and ABLE accounts are designed to protect eligibility for SSI and Medicaid. That means that, in addition to all the usual considerations around trusts and investment accounts, they must be established and administered with careful attention to state and federal public benefits law.”

This is an area where it’s especially important to get advice from qualified legal, tax, and financial advisors. Whether the choice is an ABLE account or an SNT, the options and help are there for Americans with disabilities.


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