This article was contributed by Jennifer Mahan, Director of Advocacy and Public Policy.
Individuals with developmental disabilities and their families have been eagerly anticipating the availability of ABLE savings accounts, which allow a person with a disability to save for critical expenses while still allowing eligibility for means-tested disability supports and health care. North Carolina has looked at the options and resources available to operate an ABLE account program and has determined that the best approach is to join a consortium of other states to keep costs lower and still provide good value and customer service for account-holders.
Under this consortium of states, ABLE accounts should start to become available in early 2017, according to information presented to advocates from the ABLE Board of Trustees and the NC Department of the State Treasurer. This statement presented at the last NC ABLE Board of Trustees meeting outlines the board’s decision to participate in the 11-state group. You can learn more about ABLE accounts and sign up for information at the NC Department of the State Treasurer.
With recent changes to federal law, you are no longer required to open an account in the state where the individual with the disability resides; you can open an account in any state that offers them! The Arc of the US is tracking ABLE implementation and which states are operating accounts; see the results here. Please note that some states may be offering accounts only to state residents, an individual can have only one account at a time, and fees may apply for accounts to be rolled over into new accounts should you want to move them to another state later.
In August of 2015, legislation authorizing ABLE accounts passed the General Assembly and was signed into law by the governor. The Achieving a Better Life Experience (ABLE) Act, a federal law signed in December 2014, will give many individuals with disabilities, including those on the autism spectrum, and their families the opportunity to save for the future and fund essential expenses such as medical and dental care, education, community-based supports, employment training, assistive technology, housing, and transportation. The law allows eligible individuals with disabilities to create “ABLE accounts” that resemble the qualified tuition programs, often called “529 accounts,” that have been established under that section of the tax code since 1996.
By saving for and funding critical daily expenses, ABLE accounts will give North Carolinians with disabilities increased choice, independence, and opportunities to participate more fully within their communities. Without these accounts, people with disabilities have very limited ways to save, and any savings may prevent them from accessing other needed programs and services.
Key Characteristics of ABLE Accounts
- An eligible individual may have one ABLE account, which can be established in any state that offers ABLE accounts.
- Any person, such as a family member, friend, or the person with a disability, may contribute to an ABLE account for an eligible beneficiary.
- An ABLE account may not receive annual contributions exceeding the annual gift-tax exemption ($14,000 in 2016). A state must also ensure that aggregate contributions to an ABLE account do not exceed the state-based limits for 529 accounts.
- ABLE accounts are investment savings accounts and monthly fees are typically charged for account management. Compare fees and services across states before choosing where to open an ABLE account.
- An eligible individual is a person (1) who is entitled to benefits on the basis of disability or blindness under the Supplemental Security Income (SSI) program or under the Social Security disability, retirement, and survivors program OR (2) who submits certification that meets the criteria for a disability certification (to be further defined in regulations). An eligible individual’s disability must have occurred before the age 26.
- Qualified disability expenses are any expenses made for the benefit of the designated beneficiary and related to his/her disability, including: education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and other expenses, which are approved by the Secretary of the Treasury under regulations.
- Tax treatment: Earnings on an ABLE account and distributions from the account for qualified disability expenses do not count as taxable income of the contributor or the eligible beneficiary for purposes of federal tax returns. Contributions to an ABLE account must be made in cash from the contributors’ after-tax income.
- Rollovers: Assets in an ABLE account may be rolled over without penalty into another ABLE account for either the designated beneficiary (such as when moving to another state) or any beneficiary’s qualifying family members. At this time, college savings 529 accounts cannot be rolled over into ABLE accounts.
Federal Treatment of ABLE Account under Means-Tested Programs, Including Supplemental Security Income and Medicaid
- Means-Tested Programs: Assets in an ABLE account and distributions from the account for qualified disability expenses would be disregarded when determining the designated beneficiary’s eligibility for most federal means-tested benefits.
- Supplemental Security Income (SSI): For SSI, only the first $100,000 in an ABLE account will be disregarded. Assets above $100,000 will count as resources under SSI. If the designated beneficiary’s ABLE account balance exceeds $100,000, the individual’s SSI benefits will not be terminated, but instead suspended until the individual’s resources fall below $100,000. It is intended that distributions expended for housing will receive the same treatment as all housing costs paid by outside sources.
- Medicaid Eligibility: A beneficiary will not lose eligibility for Medicaid based on the assets held in an ABLE account, even during the time that SSI benefits are suspended (as described above for an account over $100,000).
- Medicaid Payback Provision: Subject to certain limits and upon a state’s filing of a claim for payment, any assets remaining in an ABLE account upon the death of the qualified beneficiary must be used to reimburse the state for Medicaid payments it made on behalf of the beneficiary. The amount of Medicaid payback is calculated based on amounts paid by the beneficiary as premiums to a Medicaid buy-in program.
The Autism Society of North Carolina has supported the development of ABLE accounts, which will be another tool that families and individuals can use to create opportunities to enhance their lives. We will provide information to the public about how to access them as it becomes available. Please check the ASNC blog, website, and social media outlets for updated information and other helpful resources.
If you have questions about this or other public policy issues, please contact Jennifer Mahan, Director of Advocacy and Public Policy at ASNC, at firstname.lastname@example.org or 919-865-5068.Tags: ABLE accounts, ABLE Act, ASNC, autism, autism advocacy, autism resources, autism society of NC, Autism Society of North Carolina, Autism spectrum, Autism Spectrum Disorders, autism support