BY LAUREN AGORATUS, M.A.
Many families have heard about “special needs trusts” (SNTs) for their children with disabilities (see Resources.) SNTs allow parents to save funds yet have it not affect their child’s eligibility for benefits by saving a certain amount. However, some families can’t afford an attorney to set up a SNT. Now the ABLE (Achieving a Better Life Experience) Act provides an alternative or even supplement for SNTs.
HOW DOES AN ABLE ACCOUNT WORK?
ABLE accounts are similar to 529 savings plans used for college. Families can save up to $14,000 annually for a maximum of $100,000 total. Please note that contributions and income earned by the account are not taxable.
ELIGIBILITY FOR AN ABLE ACCOUNT
The child with a disability must be eligible for either SSI (Supplemental Security Income) or SSDI (Social Security Disability Insurance) for a condition that occurred before age 26. It is possible to have both an ABLE account and a SNT but there can only be one ABLE account under a person’s name.
CONCERNS FROM ADVOCATES
There was an opportunity for public comment on the establishment of ABLE Accounts. Some concerns from advocates included:
• Differences in states could affect how families can access accounts, especially more mobile parents such as military families.
• Requiring the successor designated beneficiary to be a sibling could affect an only child or how it is implemented if the sibling passes away.
• If the beneficiary dies, the ABLE account will pay back Medicaid expenses; clarification is also needed on who is responsible if Medicaid benefits are higher than the funds in the account.
• Clarification is needed on what are qualified expenses for “maintaining or improving his or her health, independence, or quality of life.”
• Although ABLE accounts can be used for housing, this will affect the individual’s SSI.
• Tax implications are unclear as the regulation states, “A qualified ABLE program, however, is subject to the taxes imposed by section 511 relating to the imposition of tax on unrelated business taxable income (‘UBTI’).”
HOW DO SNTs AND ABLE ACCOUNTS COMPARE?
There are some differences in how these accounts affect SSI/Medicaid, housing, and costs:
• affects SSI only if used for housing
• pay back Medicaid upon beneficiary’s death
• costs less, more flexible
SPECIAL NEEDS TRUST
• affects SSI/Medicaid if used for housing
• preferable over Able account as long as not used for housing
• Need a lawyer to establish trust account
WHAT PARENTS SHOULD KNOW
It’s up to each state to develop regulations on the ABLE Act. Only four states (FL, NE, OH, TN) have implemented ABLE Accounts. Families can contact their Governor’s office to ask for quick enactment. Parents should also be aware of the concerns cited above from advocates, especially as they relate to housing, crossing state lines, and Medicaid paybacks, in helping to develop their state plan.
In summary, ABLE accounts can be used instead of, or in addition to SNTs. The ABLE Act allows all families to save for their child without affecting other benefits. •
ABOUT THE AUTHOR:
Lauren Agoratus, M.A. is the parent of a child with multiple disabilities who serves as the Coordinator for Family Voices-NJ and as the central/southern coordinator in her state’s Family-to-Family Health Information Center, both housed at the Statewide Parent Advocacy Network (SPAN) at www.spanadvocacy.org