WHO IS ELIGIBLE FOR AN “ABLE” ACCOUNT?
ABLE accounts (“Achieving a Better Life Experience”) allow an individual, who was disabled prior to age 26, to set up an account which allows the funds to grow tax-deferred and which will not be counted as an asset for public benefits the disabled person may be receiving as a result of their disability. One of the goals of the ABLE account is to encourage a disabled person to save his or her own funds to enhance the quality of his or her life; something that was not permissible to do previously if an individual was receiving certain government benefits. While the federal government passed this law to allow qualified individuals to have these accounts, it is up to each state to establish its own program. Currently, if a state does not have a program set up, the disabled individual can establish an account with a bank in a state that has a program in place. Connecticut has passed a law allowing ABLE accounts, and the program is in development, but not yet available. In the interim, any qualified Connecticut individual can set up an ABLE account in one of the states that has an approved program.
Quick facts about ABLE accounts:
- The individual must have been disabled prior to the age of 26, even if the account is established after age 26. This is shown by receipt of Social Security Disability Income (SSDI) or Supplemental Security Income (SSI) or by the filing of a disability certification with a written diagnosis from the individual’s physician.
- To be eligible to open an account you must be the disabled owner and beneficiary.
- Total contributions to an ABLE account currently cannot exceed $15,000.00 in any one calendar year.
- If the total value of the account exceeds $100,000.00, SSI benefits will be suspended, but will resume once the account is reduced below $100,000.00.
- Withdrawals from the account must be for qualified disability expenses which are related to the blindness or disability of the beneficiary.
- Any funds remaining in the account at the time of the death of the beneficiary, after the payment of qualified disability expenses, will first be applied to pay back the state(s) that have provided Medicaid benefits, if any.
While creating an ABLE account is not an option for many disabled individuals, it can be a valuable tool for those who do meet the criteria for owning such accounts by allowing them control and access over some funds while maintaining their SSI and Medicaid benefits.
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