Achieving a Better Life Experience (ABLE) Act goes into effect on July 1, 2016. The ABLE Act authorizes the establishment of a special savings/investment account that has a tax-advantaged status. Currently ABLE accounts may only be established by those who developed a qualified disability (one that would allow you to qualify for SSI/SSDI) prior to reaching 26 years old. But it allows those who qualify to contribute up to $14,000 annually to the account. Up to $100,000 in an ABLE account is considered an exempt / non-countable resource for the purpose of determining Medicaid eligibility. This is nice, since without it, assets cannot rise above $2,000 to qualify for SSI and Medicaid.
An ABLE account can be opened and contributed to by the disabled individual, their parents, guardian or agent authorized to act. The ABLE account funds can then be used for certain disability-related expenses such as: schooling, medical expenses, housing expenses, purchasing disability therapies and technologies/utilities and more. The ABLE act actually amends section 529 of the IRS code. If that sounds familiar, it’s because the tax-qualified works similar to a 529 college savings account.
For those who do not meet the ABLE account’s significant restrictions but who are otherwise looking to qualify for Medicaid, your Medicaid planning attorney will discuss special needs trusts, pooled special needs trusts, and other spend down Medicaid qualification strategies.
ABLE United website for eligibility requirements and information on opening an ABLE account.