I had an opportunity to be interviewed by a New York Times reporter a couple months ago about ABLE. Here’s some of the highlights I provided:
What is ABLE (Achieving A Better Life Experience)?
ABLE arose from a federal law enacted in December 2014 which allows for a tax-favored account to be established for people with disabilities. A new 529A section within the Internal Revenue Code and regulations were issued in Summer 2015. The State of Florida enacted its own ABLE program and participation opened officially July 1, 2016. Florida’s program is known as ABLE United, and it is administered through Florida’s Prepaid College Board.
What are the key features of ABLE Accounts?
Only people whose disabilities were present prior to the age of 26 may take advantage of ABLE. Funds may be contributed to an ABLE account by any person, including the disabled person, yet subject to annual limitations for total contributions to the account. The total contributions allowed annually to the account is limited to $14,000 currently. Funds accumulated in the account will not be counted against a disabled person’s receipt of SSI or Medicaid benefits up to certain values. If the ABLE account reaches $100,000 or more, SSI will be affected. However, the maximum account value to remain eligible for Florida Medicaid is much higher.
Contributions from the ABLE account are restricted to “qualified disability expenses”. Yet the list is quite long and includes: 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 other expenses approved by the Treasury Secretary through regulations. Qualified disability expenses also include by regulation “basic living expense.
What is the biggest benefit from ABLE?
There are a number of benefits to ABLE accounts. Based upon popular opinion so far, the ability to make payments toward housing expenses without causing a reduction in SSI benefits is the most significant benefit from an eligibility standpoint. In contrast, distributions from either a first party special needs trust or a third party special needs trust causes a reduction in the SSI payment of a limited amount.
What is its largest downside?
Upon the death of the disabled person, except for burial costs, all funds remaining in the account must pay back Florida Medicaid up to the amount of the lien for medical assistance provided the disabled person. In contrast, a payback does not occur when a parent contributes money or leaves an inheritance to a third party special needs trust.
In Summary, this is a bare-bones overview of ABLE. As an elder law attorney working with families of people with disabilities, I’m extremely excited about the possibilities of advising clients about the planning opportunities with ABLE accounts, and using these accounts in conjunction with special needs trusts.