ABLE Accounts For Clients with Disabilities

June 23, 2017

Clients with disabilities who receive governmental benefits cannot have more than $2,000 in savings. If they do, they start to lose those much-needed benefits.

There is a new type of saving vehicle known as “ABLE Accounts” which permit people with disabilities and their families to save up to $14,000 a year without losing benefits. The accounts are somewhat similar to the 529 College Savings Plans. With ABLE accounts, money can be saved and can be used for anything that helps the life of the person with a disability.

This new type of savings vehicle is allowing people with disabilities to save more money for the very first time. The accounts allow people with disabilities to save without losing governmental benefits, such as Supplemental Security Income monthly benefits, or Medicaid healthcare.

Wisconsin recently passed legislation (Assembly Bill 731) that ensures that Wisconsin residents who open ABLE accounts in any state can access state income tax benefits.

It should be noted that many of the state accounts are open to non-residents of the state, so that people who live in Wisconsin don’t have to move to a neighboring state – but may still be able to open an ABLE account in a neighboring state. Each state has a website for its plan. But all of the plans allow people with disabilities to save $14,000 a year, and friends and family can contribute. Currently there is a $100,000 limit of what can be in an ABLE account before the person would lose Supplemental Security Income payments. It is also important to remember that a state can claim any leftover money when the account holder dies as payment for care paid by Medicaid after the ABLE account was opened.

ABLE accounts should be considered whenever special needs trusts are considered.