The ABLE Act (Achieving Better Life Experience): A Planning Tool for Young Adults With Special Needs

ABLE became law in 2014 to allow family members to make gifts (during the donor’s lifetime) for the benefit of an individual with a disability, while allowing and encouraging that person to seek employment and independent living, knowing they are not limited to owning $2,000.00 in order to maintain SSI and Medicaid assistance.  The ABLE account is an alternative to a special needs trust or a pooled trust.  The ABLE account can also be used in addition to a special needs trust or a pooled trust.  Here are some important facts to know:

• The blindness or disability must have occurred before age 46
• There is no age limit for adding money to ABLE (unlike a special needs trust)
• Annual contribution in 2026 is limited to $20,000.00 (annual gift tax exclusion) and is not tax-deductible
• Up to $100,000.00 is protected/exempt to maintain SSI (up to $500,000.00)
• Only cash is permitted
• The account will be set up and managed by the state or a state agency
• Participants must be residents of the state
• Qualified disability expenses are permitted: education, housing, transportation, employment training, assistive technology, personal support services, legal fees, funeral & burial expenses  (violation = 10% income tax penalty + loss of Medicaid). They don’t affect SSI (POMS SI 01130.740).
• Only 1 account can be established for an individual
• The income earned on the assets will not be included in the gross income of the beneficiary if distributions do not exceed qualified expenses (if distributions exceed qualified expenses, there is a pro rata formula to compute the income tax)
• Withdrawals for qualified expenses are not taxed
• At the death of the beneficiary, the state is entitled to the monies up to the amount of Medicaid benefits paid after paying qualified disability expenses, including funeral expenses, as provided in F.S. 1009.986(7)(to avoid this, create a third-party special needs trust)

Consider using an ABLE account to maintain SSI and Medicaid when:

1. It is beneficial to have assets for future necessities rather than spending down; or,
2. Wages accumulate beyond the $2,000.00 resource limit for SSI and Medicaid; or,
3. There is a delay in making or paying for a purchase (i.e., handicapped vehicle).

Learn more by visiting https://www.ableunited.com/overview/ and consulting with an experienced elder law attorney.