In December 2014, the Stephen J. Beck, Jr. Achieving a Better Life Experience Act (ABLE Act) was signed into law. Under federal ABLE, states may develop programs allowing disabled persons to have savings accounts which generally are not counted as resources by benefits programs such as SSI and Medical Assistance. Pennsylvania has been working to establish its own ABLE program, PA ABLE, and opened PA ABLE on April 4, 2017.
ABLE accounts are an alternative to special needs trusts. ABLE accounts do not have a trustee; an ABLE account’s owner determines when to withdraw funds from the account and how withdrawn funds will be used.
ABLE accounts are available only to persons who were disabled before age 26. Disability is proven either by receiving SSI or SSDI, or by a doctor’s certifying the accountholder’s blindness or qualifying disability.
A person may have only one ABLE account. The total annual contributions to an ABLE account is currently set at $14,000. For PA ABLE accounts, the current limit for the account’s aggregate contributions (contributions over multiple years) is $511,758. Balances in the account in excess of $100,000 can affect the accountholder’s eligibility for SSI, but do not effect Medicaid eligibility.
Funds in an ABLE account may be used for the accountholder’s “qualified disability expenses” (“QDEs”). QDEs relate to the accountholder’s blindness or disability, including expenses for the following:
- education
- 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
SSA’s policy guidelines say that funds withdrawn from an ABLE account and used for housing expenses are not in-kind support and maintenance (“ISM”) and will not result in a reduction of an SSI claimant’s benefit. Money that is not spent in the calendar month it is withdrawn may be a countable resource, depending on how it is held and what it’s eventually used for. An item purchased with ABLE funds is a countable resource if it would otherwise be countable under SSA or MA rules. Withdrawals that are spent on non-QDEs may be taxable and may incur an additional 10% income tax penalty.
The federal ABLE act includes a “payback” provision. At the death of an ABLE accountholder, funds remaining in the account first are used to pay back state Medicaid agencies for services they provided the accountholder from the date the account was established. However, Pennsylvania’s current ABLE legislation specifically prevents Pennsylvania DHS from submitting claims to the PA ABLE program.
PA ABLE’s website is available here. I also would love to hear about your experience with PA ABLE or another state’s program!