If You Have a Disability, Consider an ABLE Savings Account
If you have a disability, you may be missing out on a savings opportunity. ABLE Savings Accounts allow people with disabilities to save for their financial needs, while not denying them eligibility for government benefits such as Medicaid.
ABLE (Achiting a Better Life Experience Act) accounts were created in 2014 and first became available in 2016. Now, as reported by the New York Times , they are available in 41 states and Washington, DC. Enrollment numbers have so far been low – just around 40,000 – although the National Disability Institute says up to eight million people may be eligible for ABLE accounts.
So far, having savings or other assets worth more than $ 2,000 could make you eligible for Medicaid or supplemental insurance income, The Times explained. Here’s Anne Karrns from The Times:
Money saved on an ABLE … account does not count towards this amount. In this way, a person with a disability can save for future needs or use money to cover ongoing disability-related costs such as health care, housing, transportation, education and training, without losing public assistance.
In April, the Department of Housing and Urban Development issued a notice explaining that ABLE funds cannot deny you eligibility for housing assistance.
Who can get an ABLE Savings Account?
Each state has its own set of rules, but either way, you must have been disabled before you turn 26 to be eligible for one of these savings accounts. Congress is considering raising the age limit to 46 years.
You can save up to $ 15,000 a year. If you are employed, state law may allow you to save up to $ 27,000 per year. If you have a 529 college savings account, these funds can be transferred to an ABLE account if the amount is less than the annual contribution limit.
You can invest ABLE’s money in mutual funds or other investment funds, keep it in a traditional savings account, or keep a checking account with a companion debit card. Some states allow non-residents to register, although your state may offer a tax deduction or credit for contributions made to ABLE accounts.
One word of caution: if you die, the state may sue all or part of your ABLE savings to help cover the state’s costs of your Medicaid coverage.
The National Disability Institute maintains the ABLE National Resource Center where you can compare government programs and learn how to proceed.