What is an ABLE Account?
ABLE Accounts are savings accounts for people with disabilities. The passage of the Stephen Beck Jr., Achieving a Better Life Experience Act of 2014, or the ABLE Act, provides the opportunity to save money beyond typical resource limits.
Several thousand Idahoans with disabilities and their families depend on public benefits for health care, food, utility and housing assistance. ABLE accounts allow eligible Idahoans to save money to purchase qualified disability goods and services that will help them gain independence and choice without losing the assistance they need.
Idaho does not offer an ABLE Program at this time. However, eligible Idahoans with disabilities may sign up for an out of state program, if that state offers out of state enrollment.
The passage of House Bill 41, signed by the Governor on March 20, 2017 (Idaho Statute §56-708), allows eligible people with disabilities to save up to $100,000 in an ABLE account without losing state, local and federal benefits. Savings in an ABLE account does not count when determining an Idaho resident’s eligibility for a state or local assistance program/need-based state or local grant, as long as the ABLE account, and the activity related to it, is disregarded in determining the person’s eligibility for a federal assistance program. This legislation also established, subject to appropriation, a function to provide individuals with disabilities, and those assisting them, technical assistance relating to the ABLE Act.
The Idaho State Independent Living Council (SILC) provides information and referral about the ABLE Act; and technical assistance regarding setting up an ABLE savings account in another state. The SILC provides limited individual financial literacy education as needed, as well as one-day financial literacy workshops scheduled regionally.
ABLE Accounts are savings/investment accounts for people with disabilities. ABLE accounts provide the opportunity to save money and keep needed benefits.
- The beneficiary of the account owns the account.
- Income earned by the accounts will not be Federally taxed.
- Contributions to the account made by any person (the account owner, family and friends) will be made using post-taxed dollars and will not be tax deductible. Some states allow for state income tax deductions for contribution made to an ABLE account.
- Idaho does not offer a state income tax deduction.
- Money in an ABLE account does not count against the resource limits for SSI, Medicaid, and other State and Federal benefits.
- They have a disability with functional limitations documented by a physician with letter of certification.
- They receive Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI).
- They are medically eligible for SSI or SSDI benefits, i.e. certain disabled children or working adults with disabilities who receive Medicaid benefits.
- An ABLE account may provide more choice and control for the beneficiary and their family.
- The cost of establishing an account will be less than Special Needs or Pooled Income Trusts.
- Some programs offer investment and saving options, allowing greater flexibility for growth.
- Determining which option is the best for you will depend upon your individual circumstances.
- A person can have both an ABLE account AND a trust.
- The total annual contributions by all individuals, including family and friends, for a single tax year is $15,000 (amount will be adjusted for inflation).
- $15,000 is the maximum amount a person may gift another person without reporting it to the IRS (gift tax exclusion).
- The ABLE to Work Act allows beneficiaries who are employed to contribute an amount equal to their current year gross income — up to $12,140 (as of 2019) each year — to their ABLE accounts in addition to the annual standard contribution limit. Keep in mind that if the beneficiary or their employer is contributing to a defined contribution plan (401K), annuity plan (403(b)), or deferred compensation plan (457(b)) this calendar year, the beneficiary is not eligible to make ABLE to Work contributions.
Limitations for SSI and other public benefits
- The first $100,000 in an ABLE account is exempt from the SSI $2,000 individual resource limit.
- When an ABLE account balance exceeds $100,000, the beneficiary’s SSI cash benefit (and likely other public benefits) will be stopped until the account falls back below $100,000.
- While the beneficiary’s SSI cash benefit is suspended there is no loss of Medicaid eligibility or services.
- When an ABLE account owner passes away, the state Medicaid program may file a claim against the account to reclaim Medicaid related expenses.
A qualified disability expense is any expense related to an individual as a result of living with a disability.
Qualified Disability Expenses
- Employment training and support
- Assistive Technology (ramps, computer software, eye glasses and more)
- Personal Assistant Services
- Health care expenses (not covered by insurance)
- Financial management and administrative services
- Basic living expenses: Currently the IRS has ruled that basic living expenses, including food, clothing and utilities, also qualify.
It is important to note that ALL expenses must be paid directly from the ABLE account. Transferring funds to a personal account may result in exceeding resource limits.
Opening an Account
- What proof will the ABLE program need from you in order to open an account?
- What proof will you need to show that your disbursements are qualified expenses?
- Is there a minimum contribution to open an ABLE account?
- Is there a fee to open an account? If so, how much is that fee?
Maintaining the Account and Fees
- Is there a required minimum contribution to your account? If so, what is the amount?
- Are the fees paid up front or are they reduced if you leave your money invested for several years?
- Are there restrictions on how often you can withdraw money from your account?
- What investment options does the state ABLE program offer?
- Will the options available meet your needs regarding growth, while limiting the risk you are willing to take with contributions to your ABLE account?
- Does the state program offer incentives or additional benefits (such as a match or a rewards program, or financial literacy information for account holders) to help you save, contribute to your account, grow the account, and manage your invested dollars? If so, what is it? Most important, do you understand it?
State programs currently accepting out of state enrollment (as of August 29, 2019):
- District of Columbia
- New Jersey
- North Carolina
- Rhode Island
For help on which states are offering programs and information about these programs, contact the Idaho State Independent Living Council (SILC) for ABLE information and technical assistance.
Work Incentives Planning and Assistance Program (WIPA)
- Services are provided statewide in Montana and Idaho under Cooperative Agreement from the Social Security Administration. https://www.msubillings.edu/socialsecurity/
These videos, through the Idaho Department of Labor, are specific to Idaho.
- How Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI) and employment can work together. https://www.youtube.com/playlist?list=PLBqJda-k_2Oy25A2rTIWHvugGa28q0d77
DisAbility Rights Idaho
- Protection & Advocacy for Beneficiaries of Social Security (PABSS). https://disabilityrightsidaho.org
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DON’T WAIT! Start today by calling the Idaho SILC. Ask for ABLE Technical Assistance and Information.
SILC Technical Assistance
The State Independent Living Council (SILC) provides Technical Assistance, information, and Financial Literacy training. Please contact us to learn more about ABLE today.
The information enclosed is not a substitute for benefit planning, legal, or financial advice. Please consult with a qualified benefit planner, an attorney, or a qualified financial advisor should you have specific concerns related to opening an ABLE account.