What is the ABLE Act?
The North Carolina Achieving a Better Life Experience (ABLE) Act was signed into law in 2015. The ABLE Act enables individuals with special needs or their families to open savings accounts that do not count as assets (within stated limits) when determining eligibility for Medicaid, Supplemental Security Income (SSI), or other government benefits. These savings accounts are intended to cover qualified disability expenses for the individual with the disabling condition. This may include housing, transportation costs, assistive technology, job training, and more. The IRS determines which expenses qualify.
Who is eligible to open an ABLE account?
The ABLE Act has two criteria that must be met:
- The disabling condition must have occurred prior to age 26. The savings account may be opened after that age, but the disability must have existing prior to the 26th birthday.
- The individual must be considered disabled based on criteria set by the Social Security Administration (SSA). If he or she already receives SSI or SSDI payments and meets the age criteria, then approval is automatic. If not, then self-certification of disability is possible, but it would be advisable to have a medical doctor sign a letter certifying the individual does meet the functional requirements outlined by the SSA.
ABLE Act Limits for 2019
In general, the current annual contribution to an ABLE account from all sources is $15,000. If the account beneficiary works and his/her employer does not contribute to a retirement plan, then the individual may contribute employment earnings over and above the $15K (with limitations). If the individual receives SSI and the ABLE balance exceeds $100,000, SSI benefits will stop until the balance drops below the threshold. Eligibility for Medicaid benefits continues unless the ABLE account balance reaches $450,000 or more.
It is important to note that upon the death of the individual the remaining balance in the account will be subject to the Medicaid’s payback provision. There were some other updates included in the Tax Cuts and Jobs Act of 2017 that may be found on the IRS website.
How do I open an ABLE Account?
There are many ABLE account options available, both within the state and outside. The individual is limited to one ABLE account, but may transfer between accounts if a better option is found. Visit NC ABLE to see programs in North Carolina. Most programs may be started online and funded electronically; the IRS now permits funds in qualified 529 programs to be rolled into an ABLE account. The disabled individual may open the account on his/her own, or a family member may open the account and contribute to it. The ABLE National Resource Center website has more information on ABLE.
In addition to the benefits offered through the ABLE Act, families of individuals with disabilities may consider special needs trusts or other estate planning tools to provide long-term support for their loved one. Contact the estate planning attorneys at Brinkley Walser Stoner to make an appointment.