ABLE Savings Accounts
Achieving a Better Life Experience (ABLE) accounts allow eligible SSI beneficiaries to save funds for disability-related expenses in a tax-advantaged account. Savings in these funds will not be counted as resources by SSA when determining continued SSI eligibility.
ABLE Accounts for SSI Beneficiaries
ABLE savings accounts were created as a result of the Stephen Beck Jr., Achieving a Better Life Experience Act of 2014 or better known as the ABLE Act. An ABLE account is a type of tax-advantaged account that can be used to save funds for the disability-related expenses of the account’s designated beneficiary, who must be blind or disabled by a condition that began prior to his or her 26th birthday. The designated beneficiary must be:
- Receiving SSI based on disability or blindness that began before age 26;
- Entitled to SSDI, Childhood Disability Benefits (CDB), or Disabled Widows or Widowers Benefits (DWB) based on disability or blindness that began before age 26; or
- Someone whose primary care physician has certified that he or she is disabled or blind by a condition that began before age 26.
A beneficiary may only have one ABLE account.
Why Open an ABLE Account?
Eligibility for SSI, as well as some other public benefits, requires that an individual maintain less than $2,000 in cash savings or other items of significant value. However, the ABLE Act recognizes the extra and significant costs associated with living with a disability, or raising a child with significant disabilities. These costs can include obtaining accessible housing and transportation, personal assistance services, assistive technology, and health care not covered by insurance.
Contributions to the Account
Contributions to the account, which can be made by any person (the account beneficiary, family and friends), must be made using post-tax dollars and will not be tax deductible for purposes of federal taxes; however, some states may allow for state income tax deductions for contribution made to an ABLE account. Income earned by the accounts will not be taxed. The total annual contributions by all participating individuals, including family and friends, for a single tax year is $15,000. The amount may be adjusted periodically to account for inflation.
- The total limit over time that could be made to an ABLE account will be subject to the individual state’s limit for education-related 529 savings accounts.
- Many states have set this limit at more than $300,000 per plan.
Additional Contribution Guidelines for SSI Recipients
For individuals with disabilities who are recipients of SSI, the ABLE Act sets some further limitations.
- The first $100,000 in ABLE accounts would be exempted from the SSI $2,000 individual resource limit.
- If and when an ABLE account exceeds $100,000, the beneficiary’s SSI cash benefit would be suspended until such time as the account falls back below $100,000.
- It is important to note that while the beneficiary’s eligibility for the SSI cash benefit is suspended, this has no effect on their ability to receive or be eligible to receive medical assistance through Medicaid.
Additionally, upon the death of the beneficiary, the state in which the beneficiary lived may file a claim to all or a portion of the funds in the account up to the amount in which the state spent on the beneficiary through their state Medicaid program. This is commonly known as the “Medicaid Pay-Back” provision and the claim could recoup Medicaid related expenses from the time the account was open.
Eligible Expenses Allowed by ABLE Accounts
Certain qualified disability expenses can be distributed from the ABLE account if they are expenses related to the blindness or disability of the designated beneficiary. Examples of qualified disability expenses include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management, and administrative services and other expenses which help improve health, independence and/or quality of life.
Ready to Learn More about Setting up an ABLE Account?
There are over 30 ABLE programs nationwide, most of which are enrolling individuals regardless of their state of residence. The ABLE National Resource Center has extensive resources available on finding the best ABLE Account program to meet your needs.
- Adult Course
- April, 2018