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Understanding ABLE Accounts: Background, Need and Eligibility

Life Care Planning

The ABLE Act of 2014 offers disabled individuals in specific circumstances the opportunity to save funds in ABLE accounts without putting their Supplemental Security Income (SSI), Medicaid or other benefits at risk. This legislation addresses the financial challenges of the extra costs for care incurred in having a disability. In most cases, an individual receiving SSI and Medicaid cannot have more than $2000 in cash, retirement earnings or any other assets. Under the guidelines of the ABLE Act, having an ABLE savings account will now allow individuals with disabilities who receive SSI or other public benefits to have additional funds to take care of expenses without being penalized as in the past. There are, however, some limitations on ABLE accounts.

Anyone can contribute to an ABLE account to provide for the disabled individual’s needs and funds can be used to pay for expenses such as housing, transportation, education, assistive technology, employment training, healthcare resources and financial management. With an ABLE savings account, the only stipulations are that the total amount allowed to be deposited yearly into these accounts is $15,000 with the cap on these accounts being $100,000. After $100,000, the disabled individual will see his or her SSI reduced until the account drops to below $100,000. Medicaid is not affected. Another interesting part of the ABLE Act, as explained in The Achieving a Better Life Experience Act Resource Center, is the ability for states to set a limit for total ABLE account balances if the disabled individual does not receive SSI; these caps can be $300,000 or more.

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While an ABLE account can offer individuals with disabilities more possibilities for a better quality of life, anyone interested in having one of these accounts must meet special criteria. Those who are eligible for an ABLE account include those individuals whose significant disability occurred prior to age 26 and are currently a recipient of SSI or SSDI. Someone with SSI whose disability occurred at age 30, for example, would not be eligible for an ABLE account. In most cases, an individual will need to meet both of these requirements but the ABLE Act also allows for an exception. Those with significant disabilities which occurred before age 26 but who do not receive SSI or SSDI, can still open an ABLE account if a licensed physician will submit a letter of certification.

Prior to the ABLE Act, individuals with disabilities needed to be poor to receive SSI, Medicaid and other benefits. Having the option to open an ABLE savings account offers the disabled the opportunity to experience a higher quality of life through increased financial stability.

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