ABLE accounts are protected savings opportunities for people who have a significant disability with an onset prior to age 26. For 2019, friends and family can contribute up to $15,000 directly into an ABLE account. ABLE account owners who work, and do not have an employer- sponsored retirement account, may save up to $12,140 in additional savings from their earnings.
You can save income – both earned and unearned income – or have it directly deposited into an ABLE account. However, it still counts as income and will not qualify you for additional public benefits.
If you are a working beneficiary who receives Social Security Disability Insurance (SSDI) benefits or Supplemental Security Income (SSI) payments, there are work supports that can reduce the earnings the Social Security Administration (SSA) counts which may allow you to save more money. To learn more, visit the Ticket to Work website or review the Social Security Red Book.
Unearned income such as a pension, 401K, worker’s compensation payments, unemployment compensation, veteran’s benefits, rental income and child support payments can be deposited into an ABLE account. These income sources also follow the usual income counting rules for the public benefits program and cannot qualify you for additional benefits. Some advisors, however, may suggest a variety of legal, alternative strategies to increase the available funds which can be deposited into an ABLE account. These may include:
ABLE accounts are a tool to disregard assets or resources, not income. Assets and resources are disregarded for most federally funded means-tested benefits (with one exception related to SSI beneficiaries and only when the account exceeds $100,000). Contributions from family and friends do not count as income when deposited directly into an ABLE account. All income received by the beneficiary still follows usual income counting rules.
Savings in an ABLE account are disregarded when determining eligibility for most federally-funded means-tested benefits.
All federal housing support programs are income-based programs and do not have asset limits. While we anticipate that ABLE funds would be excluded from HUD determinations, we are still awaiting guidance from the Department of Housing and Urban Development (HUD) as it relates to housing and ABLE.
If housing expenses are paid from ABLE, it is a best practice to pay the expense the same month the funds are taken out of the ABLE account. This can be done with a debit card or check option and complies with SSI policy.
The good news is that you can have both a special needs trust (SNT) AND an ABLE account. There are no restrictions! There are lots of advantages to an SNT and to an ABLE account. They are different but can be used to complement one another.
If you are an ABLE-eligible individual and you meet any applicable state residency requirements, you can easily open an ABLE account. You may wish to compare state options and view your choices across the country by using the state comparison tool on the ABLE National Resource Center (ANRC) website.
ABLE account owners and ABLE-eligible individuals can also open an SNT, but it is important to consult a trained professional who can talk to you about both planning tools, the advantages and disadvantages of each and how these two tools can work well together.
To learn more, view our January 31, 2019 archived webinar, “ABLE Accounts and Special Needs Trusts,” and review Attorney Jim Sheldon’s ABLE Case Summary “ABLE Accounts Compared to Special needs Trusts.”
Yes, it will affect means-tested benefits because it is not a “special needs trust.” A representative payee is someone who manages the Social Security benefits of an individual who has been determined to be incapable of handling their own benefits. While the title of the savings or checking account may suggest this, the actual account owner is the beneficiary even though he or she does not have control over the account. The funds in this type of account are counted as a resource for that beneficiary.
A diagnosis alone may not indicate that you qualify for an ABLE account.
The ABLE Act contains two requirements for eligibility:
1. Your disability must have an onset prior to the age of 26 AND
2. You must be receiving Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) benefits.
If you are not receiving SSI or SSDI, you must have a disability certification document from a licensed physician, a M.D. or D.O., that indicates that you have a qualifying physical/mental disability or blindness which results in marked and severe functional limitations and has lasted, or can be expected to last, for at least 12 months or results in death.
Your level of severity must “meet, medically equal or functionally equal” a listing in the Listing of Impairments in Appendix 1 of Subpart P of 20 CFR Part 404. The listings categorize impairments by body system, and they contain the criteria needed to satisfy that listing.
The Social Security Administration (SSA) maintains a list of “compassionate allowance conditions” which are so severe that they are deemed to meet the requirements of an impairment sufficient for a disability certification, provided the condition was present before age 26.