By Ben Gettinger
Milford-Orange Probate Court
Ben Gettinger
Congress passed the Achieving a Better Life Experience, or ABLE, Act in 2014. The primary purpose of the ABLE Act is to provide tax-free savings accounts for people with disabilities. The savings accounts, known as ABLE accounts, can be used to pay for qualified disability expenses.
In order to qualify for an ABLE account, the designated beneficiary, who is also the account owner, must be eligible for supplemental security income based on a disability or blindness that began before the age of 26; entitled to disability benefits, childhood disability benefits, or disabled widow(er)’s benefits based on a disability or blindness that began before the age 26; or someone who has certified, or whose parent or guardian has certified, that they met the criteria for a disability certification before age 26.
The ABLE account can generally be funded by any person (including the account owner), a special needs trusts or pooled trusts, among other sources. The contributions must be made from post-tax dollars and are generally not tax deductible.
The current contribution limit in Connecticut is now $17,000 a year, but certain individuals who have earned income may be eligible to contribute more. Connecticut also has an account balance limit of $300,000.
Most expenses incurred as a result of living with a disability are covered under the ABLE Act, and may include education, food, housing, transportation and health care expenses.
In addition to potential tax advantages, ABLE account owners may be allowed to keep their current benefits. The account owner will generally remain eligible for Medicaid regardless of the account balance as long their non-ABLE account resources are below $100,000. And while there is a Medicaid payback provision, certain expenses take priority upon the death of the account holder. These may include funeral and burial expenses and outstanding qualified expenses. In Connecticut, account balances of $100,000 or less may also be excluded from the account owner’s Social Security income resource limit, and only the amount over $100,000 is counted against the resource limit.
If your or someone you love has a disability, an ABLE account may be a good way to ease some of the financial burdens. More information can be found at savewithable.com/ct/home.html or by calling 888-609-3268. This information is general and for general informational purposes only. You should consult a benefits and/or tax professional before opening an ABLE account. An ABLE account may not be right for everyone who qualifies. The qualifications, plan advantages and disadvantages and account thresholds are subject to change and differ by state.
Ben Gettinger is the probate judge for the Milford-Orange Porbate Court.