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Linnea Levine

Linnea Levine

Ready, Willing and ABLE: Special Savings Account for Individuals with Disabilities

As I’ve shared before, one of my driving motivations as an attorney is to help ensure that people with special needs can live their lives to the fullest. With knowledge of federal and state laws, foresight and careful planning, my firm helps individuals and families make this a reality for themselves and their loved one with disabilities. Last month, we outlined some of the ins and outs of Special Needs Trusts. Now we’ll review another excellent tool to maximize financial independence and quality of life without jeopardizing any public benefit: ABLE accounts.

The Achieving a Better Life Experience (ABLE) Act of 2014 enabled states to establish and manage tax-advantaged 529A savings accounts for individuals with disabilities. Connecticut set up its ABLE Trust and provisions in October of 2020.

Similar in structure to college savings and health savings accounts, what made the passage of the ABLE Act important to me and so many of my clients is that it recognized the significant cost burden of living with or caring for someone with a disability. Government benefit levels don’t begin to meet the full need. Qualified Disability Expenses (QDEs) now fundable by an ABLE account include costs for items not covered by insurance, Medicaid or Medicare such as accessible housing and transportation, adaptive technology, assistive personnel and medical treatments. This can be life-changing.

Like Special Needs Trusts (SNT), ABLE accounts allow a beneficiary to accumulate reasonable assets (generally up to $100,000) and continue to be eligible for SSI or other government benefits, including financial aid for college. Contributions and fund growth are not counted against a person’s ability to qualify. However, unlike SNTs, an ABLE account has no trustee; the person with special needs controls the funds when it is within their capacity. This allows for a greater sense of independence, control and real-time spending decisions about basic and long-term needs.

Shown below are some ABLE account highlights:

  • The beneficiary must have the “disabling condition” prior to age 26.
  • An individual can only have one ABLE account.
  • Multiple individuals can contribute to the ABLE account with post-tax dollars, but annual total contributions are capped at $15,000.
  • For ABLE account beneficiaries who receive SSI or Medicaid, the ABLE account cannot exceed $100,000.
  • The account may be established in any state; it does not have to be the state of residence.
  • ABLE account rules and investment opportunities vary by state.
  • If the beneficiary dies, unused ABLE funds are used to reimburse Medicaid services rendered during his or her lifetime.
    When the individual’s assets are not great enough to justify the administration cost of establishing a special needs trust, an ABLE account may be the answer. Click here to read more about ABLE CT.

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