"Under current law, people with disabilities who save more than $2,000 fail to qualify or risk the loss of their Supplemental Security Income (SSI), Medicaid and other benefits." This is huge for families and individuals who qualify for SSI. Now families can save money to buy assistive devices and apps to help with their child's special needs! Implementation of the law may take a while, as the IRS will have to decide what qualifies as an ABLE fund and establish exactly who will qualify. The IRS could include funding for:
- employment training and support
- assistive technology and personal support services
- health, prevention, and wellness
- financial management and administrative services
- legal fees
- expenses for oversight and monitoring
- funeral and burial expenses
If you want to read the official description of the ABLE Act, click here.
How ABLE Act Works further explains the following regarding ABLE accounts:
- Any contributor—such as a family member, a friend, or the disabled person—could establish an ABLE account for an eligible beneficiary. An eligible beneficiary could have only one ABLE account, which must be established in the state in which he resides (or in a state that provides ABLE account services for his home state).
- An ABLE account may not receive annual contributions exceeding the annual gift-tax exemption. Additionally, a state must provide adequate safeguards to ensure aggregate contributions to an ABLE account do not exceed the state-based limits for 529 accounts.
- An eligible beneficiary would be a child who meets the Supplemental Security Income (SSI) program’s disability standard for children or an adult who meets the SSI program’s disability standard for adults, provided that the adult’s disability occurred before he reached age 26.
- Qualified disability expenses would be any expenses made for the benefit of the disabled beneficiary related to education; housing; transportation; employment training and support; assistive technology and personal support services; health, prevention, and wellness; financial management and administrative services; legal fees; expenses for oversight and monitoring; funeral and burial expenses; and any other expenses approved by the Secretary of the Treasury under regulations.
- Earnings on an ABLE account and distributions from the account for qualified disability expenses would not count as taxable income of the contributor or the eligible beneficiary. Contributions to an ABLE account would have to be made in cash from the contributor’s after-tax income.
- Assets in an ABLE account and distributions from the account for qualified disability expenses would be disregarded when determining the qualified beneficiary’s eligibility for most federal means-tested benefits. For SSI, only the first $100,000 in each ABLE account would be disregarded.
- Assets in an ABLE account could be rolled over without penalty into another ABLE account for either the qualified beneficiary or any of the beneficiary’s qualifying family members. Any assets remaining in an ABLE account upon the death of the qualified beneficiary could be used to reimburse a state Medicaid agency for payments it made on behalf of the beneficiary.
Shelly is enjoying Winter Break snuggling with her dog!