What the ABLE Act Passage Means for Your Family
One of the common issues that an elder law attorney faces is assisting family members with matters associated with caring for a disabled family member. Oftentimes, these consultations occur because the caretaker simply cannot afford the additional costs of maintaining the level of care necessary for a person with disabilities. Fortunately, Congress passed the ABLE Act, a law that before the end of 2015 could provide families with the mechanism to put aside tax-exempt funds for the sole purpose of providing this care.
Understanding the restrictions
With more than 50 million people across the United States living with some type of disability, there are plenty of families who are in a position to benefit from this program. However, the law is very specific about who may avail themselves of the program. Those who have a qualified disability prior to the age of 26 will be able to take advantage of these specialized accounts.
What type of accounts are these?
Family members will be able to set up a savings account that is similar to a health care savings account or a 529 (college savings) plan. Family members and friends will have the option of depositing funds into this account for the sole purpose of funding the needs of a disabled person. Only one account may be opened for a beneficiary, and the funds that are deposited in this account are not tax-deductible.
What about SSI and other benefits?
In the practice of elder law, we often deal with questions about SSI, Medicaid and other benefits programs. Often the asset restrictions on these accounts are challenging since the beneficiary must not have more than $2,000 in assets in order to qualify for many benefits. With the ABLE Act, the beneficiary’s account may have a balance as high as $100,000 before it will impact their SSI or SSD payments, but it will not impact Medicaid benefits. It is important to note that should the beneficiary die and have a balance in the account, the estate may be required to repay some of the Medicaid benefits paid out on behalf of the beneficiary.
Elder abuse attorneys frequently deal with clients who are struggling to provide services to their disabled loved ones. Technology, day-to-day care, and other issues are often difficult to fund without changing their loved one’s ability to collect important benefits they need for daily living expenses. Fortunately, the ABLE Act should change all of this in the near future. There will be a comprehensive list of qualified expenses that may be funded through these accounts once the IRS and other agencies can agree on which expenses should qualify. As the states adopt the provisions of these accounts, families will have a new mechanism for financially assisting their disabled loved ones without putting their current benefits at risk.