There is no denying that the number of disabled individuals in the United States who rely on public assistance benefits such as Medicaid and Supplemental Security Income (SSI) has soared into the millions. Perhaps you have a loved one living with you right now who falls into this category, and it pains you to see them face one financial limitation or hurdle after the next as you and they struggle to cover basic living expenses, healthcare, and housing. You worry about their future and how to provide the best possible care without losing access to existing benefits. What they need is another critical lifeline, and ABLE accounts may be the answer.

Our team of estate planning and elder law attorneys have been busy speaking to many of our clients about the benefits of ABLE accounts. They can be incorporated into a loved one’s estate planning strategy. Furthermore, they allow individuals with disabilities to save money and plan for the future without putting existing benefits at risk. 

Please read on as we explore more about ABLE accounts in today’s article.

What Are ABLE Accounts?

ABLE stands for Achieving a Better Life Experience. Sometimes referred to as a 529A account, ABLE accounts are tax-free savings or investment accounts that allow individuals who became disabled before their 26th birthday to build, manage, and even have greater control over their wealth without worrying about how it may impact their eligibility for government assistance programs like Medicaid, SSI, or the Supplemental Nutrition Assistance Program (SNAP).  

According to the ABLE National Resource Center, there are 49 ABLE plans nationwide. There are also reportedly 150,000 ABLE accounts with a total savings of $1.5 billion. Generally, these accounts are restricted to individuals with no more than $2K in liquid resources ($3K for couples). That said, there are numerous benefits to ABLE accounts. They can be established by the person with a disability or a family member supporting them because they might not be able to do it themselves. Money deposited into these accounts can be used for any expenses related to the disability, including transportation, health and wellness, food, education, housing, legal fees, assistive tech, and more.

Additional benefits include but are not limited to the following: 

• Additional independence and economic security
• Tax-free savings opportunities
• Ease of access and low cost
• The ability to simplify daily bill pay and record-keeping
• The ability to plan for individuals with disabilities
• 529 college accounts can be rolled in without a tax penalty if the rollover stays within the annual contribution limit
• Additional tool for estate planning and financial planning
• ABLE and Special Needs Trusts can work together to minimize fees

Who Is Eligible for ABLE Accounts?

To qualify for an ABLE account, an individual must meet one of three requirements: 

1. They have been diagnosed with a qualifying disability before they reach 26
2. They are receiving SSI or SSDI payments based on blindness or disability
3. They have received a disability certification from their doctor

Each person can only have one ABLE account, which must list the eligible individual as owner and beneficiary. However, anyone can contribute to the account.

According to the Social Security Administration, contributions to an ABLE account may not exceed the annual gift tax exemption of $18,000. However, if the beneficiary is working, and they or their employer are not making certain retirement plan contributions, they may contribute an additional amount equal to the lesser of their annual compensation or the individual Federal Poverty Level for a one-person household in their state of residence for the prior calendar year. 

For 2024, the additional amounts are $14,580 in the continental U.S., $18,210 in Alaska, and $16,770 in Hawaii. Up to $100,000 in savings within an ABLE account is disregarded as a resource and will NOT affect Supplemental Security Income (SSI). 

Any amount of ABLE savings up to the plan limit, which can be between $235,000 and $596,925 (depending on the plan), will NOT affect eligibility for Medicaid, SSI, SSDI, etc.

Please click here for more information on how to enroll and open an ABLE account.

Leigh Hilton PLLC Would Love to Help Educate Your Family on ABLE Accounts

When you have decided to discuss your estate planning needs for the first time, it is natural to wonder where you should start. The easy answer is to contact an estate planning attorney. After all, protecting everyone you love and everything you own requires proper guidance from someone who can help you make informed decisions and tailor a plan that covers you and your family’s needs from A to Z.

Call Leigh Hilton PLLC in Denton, and we will work with you to determine the best strategy for your unique situation. Proper planning of an estate helps ensure your wishes are honored. We always want to be your first call for any estate planning need.