By Ronald A. Fatoullah, Esq. and Eva Schwechter, Esq.
{3:07 minutes to read} One of the main priorities of family members of individuals with disabilities is to best provide for that person's disability-related expenses while maintaining the individual's eligibility for essential means-tested government benefits programs. In passing the Achieving a Better Life Experience (ABLE) Act, Congress created a new way for potentially millions of people to save for their disability-related expenses and maintain a higher quality of life without jeopardizing their government benefits. The creation and proper use of these accounts, called "ABLE" accounts, is of paramount importance to people with disabilities.
An individual diagnosed with a disability generally cannot own assets totaling more than $2,000 without forfeiting eligibility for government programs such as Supplemental Security Income (SSI). However, under the ABLE Act, tax-free savings accounts may be used to pay for qualifying expenses such as the costs of treating the disability or for education, housing, and healthcare, among other things. The existence of the accounts will not compromise the individual's ability to qualify for benefits like SSI or Medicaid, as long as the ABLE account requirements are adhered to. Families enrolled in ABLE plans may contribute up to $14,000 annually to these accounts without jeopardizing the account beneficiary's eligibility for SSI, Medicaid and other crucial government benefit programs.
The ABLE account savings plan may be used for an even broader array of products and services than many beneficiaries may realize, including housing expenses, bus fare, financial management services or even, potentially, a smartphone. In proposed regulations, the Treasury Department and Internal Revenue Service (IRS) reiterated that the term "qualifying disability expenses" should be "broadly construed" to include any benefit related to the designated beneficiary "in maintaining or improving his or her health, independence, or quality of life." Once in place, ABLE accounts will become another valuable tool for families of people with special needs to use in order to protect their loved ones' valuable benefits while enhancing their quality of life.
To help consumers navigate the ABLE process and accelerate the opening of accounts by eligible individuals, the ABLE National Resource Center has launched an education and information campaign called #ABLEtoSave (http://ablenrc.org/road-map-enrollment). The goal of the #ABLEtoSave campaign is to significantly boost public knowledge about ABLE accounts and ultimately increase the number of ABLE accounts opened.
Although it may be easy to set up an ABLE account, there are many hidden pitfalls associated with spending the funds in the accounts, both for the beneficiary and for her family members. Therefore, it is imperative that anyone thinking about establishing an ABLE account speak with her special needs planner first in order to make sure that all of the pieces of a special needs plan will properly align with the ABLE account.
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, special needs planning, and real estate. Eva Schwechter is an elder law attorney with the firm. The law firm can be reached at 718-261-1700, 516-466-4422, or toll-free at 1-877-ELDER-LAW or 1-877-ESTATES. Mr. Fatoullah is also a partner with Advice Period, a wealth management firm, and he can be reached at 424-256-7273.
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