ABLE ACCOUNTS: Achieving a Better Life Experience
Achieving a Better Life Experience (ABLE) Account: A tax-advantaged savings account for individuals with disabilities and their families. The amount of SSI an individual receives is based on their assets as an adult and is affected by how much money they have in their bank account. It can be important to have one of these special savings accounts, as this allows excess money to be saved without it affecting the individual’s benefits.
ABLE Accounts dramatically increase the ability to save money for future needs. Before ABLE accounts, a person with a disability could not save over $2,000 or they would risk losing Medicaid and SSI benefits. Now, with ABLE Utah, individuals with a disability can save well over $2,000 AND keep their public benefits. The account is owned by the individual with the disability and allows for investment benefits.
- To be eligible for the accounts, individuals must have a disability that onset before age 26 AND either be eligible to receive SSI or SSDI due to disability; or have a condition listed on SSA’s “List of Compassionate Allowances Conditions”; or have self-certification. For self-certification, an individual needs a diagnosis of a physical or mental impairment that causes “marked and severe functional limitation” or a condition that has lasted or is expected to last for at least 1 year. An individual does not need to send in a written diagnosis but must have it on hand.
- The beneficiary of the account is the account owner, and income earned by the accounts will not be taxed.
- Costs of establishing an account will be considerably less than a Supplemental Needs Trust or Pooled Trust. There is a $25 minimum opening deposit. The monthly fee is $3.25 per month ($9.75 quarterly). Asset-Based fees are between 0.19% and 0.33%.
- To fund the ABLE account, individuals can transfer funds from a bank account to an ABLE Account. Contributions to the account, which can be made by any person (the account beneficiary, family, friends Special Needs Trust or Pooled Trust), must be made using post-taxed dollars and will not be tax deductible for purposes of federal or state income tax earnings. However, some states may allow for state income tax deductions for contributions made to an ABLE account.
- Users can use the money saved in ABLE accounts to pay for any expense related to their disability — not just medical expenses not covered by Medicaid. The expense must relate to the disability and help maintain or improve health, independence, or quality of life.
- These include but are not limited to:
- Basic Living Expenses
- Assistive Technology
- Financial Management
- Health & Wellness
- Legal Fees
- Personal support services
- As of March 2022, users can contribute up to $16,000 per year.
- Able to Work Act Contribution: if employed, individuals can contribute an additional $12,880 of income. Their wages can fund the full $28,880, but contributions from all other sources (ex. family members and other financial accounts) are restricted to $16,000. Keep in mind, if the account holder or their employer is contributing to a retirement plan – including a defined contribution plan (e.g. 401(k)), annuity plan (403(b)), or deferred compensation plan (457(b)) this calendar year – the account holder is not eligible to make ABLE to Work contributions.
- Trusts can be written or amended for distributions to ABLE Accounts. Trusts can accept unlimited cash and non-cash assets.
- ABLE Accounts have a gift option where other people can contribute to the individual’s ABLE Account and it does NOT count as a resource or income for public benefits eligibility.
- The maximum lifetime limit for Utah is currently $501,000. New contributions can not be made if the overall balance is $501,000 or above (although the account can continue to accrue earnings). Once the balance drops below the lifetime limit, contributions may resume.
- Even though the limit is $501,000, SSI benefits will be stopped if the account reaches $100,000. Once the account drops below $100,000, SSI benefits can be restored.
- Investment tools include four Vanguard mutual fund-based investments and one FDIC-insured savings option.
- Account owners have control of their funds.
- Free withdrawals without limits. Money can be transferred to the individual’s personal checking or savings, pay with a third-party check, or transfer funds onto the individual’s STABLE Card. ABLE Utah will not ask where the funds are being spent, but benefit agencies and the IRS can.
- When the beneficiary passes away, the account will pass to the account holder’s estate. The estate administrator notifies ABLE Utah and the admin. can take over the account access. If the beneficiary does not have a will then the account will go through a normal probate process. Medicaid will be reimbursed from any funds in the account. Medicaid payback is only from the date the account was opened. Before Medicaid reimbursement, the estate can pay for funeral expenses and pay any outstanding bills. Paid Medicaid buy-in premiums can also be deducted.
- Balances over $100,000 count as a resource, but SSI is merely suspended, not terminated.
- If money is held onto from one calendar month to the next, then housing expenditures count as resources.
- Beneficiary’s own wages still count as income even if contributed to an ABLE Utah Account.
- Utah Work Incentive Planning Services (UWIPS) helps people on Social Security understand how working impacts their SS and other benefits.
STABLE CARD done
This is a loadable prepaid debit card, where participants can easily spend money from an ABLE Utah account and can be used anywhere Visa is accepted. However, it does not pull money directly from an ABLE account to better protect spending. STABLE Cards are available at no cost to all ABLE Utah account holders! There is no overdraft, no cash access (from an ATM), allows for online spending records and annotated expenses, and sends notifications for low balances. You can have a STABLE card for the beneficiary and also for the authorized legal representative.
800-439-1653 Monday – Friday, 7am – 6pm MDT