One of the unique challenges we have as families with a special-needs member centers around maintaining eligibility for benefit programs. Supplemental Security Income, arguably the most important of those benefits, provides a monthly income of $914 for the federal benefit and access to Medicaid-funded services in 2023.
Keeping SSI is the easiest way for most families to have access to income, health insurance, day programs, care facilities and therapies for their loved one with an intellectual or developmental disability. And, as I hope you understand by now, a person with more than $2,000 in countable resources loses their SSI income benefit and, potentially, their other state and federally funded benefits.
In prior emails and in my books, I talk about different steps to take to keep assets out of your family member’s name. Good estate planning is one set of techniques. Charging rent and moving money from a rep payee account to your account is another. The ABLE is a newer option.
Still, that money can pile up pretty quickly. In 2003, the SSI payment was $552 for an individual. Back then, money could come into the account and you had some time spend it or move it. Now, SSI payments not spent will add up to more than $2,000 in under three months. These days, I feel like I blink and three months go by.
The ABLE account is one technique to use to move money from a rep payee account to stay under the limit. There are pros and cons of the ABLE mentioned in more detail here – ABLE Act account updates – Rob Wrubel – Special Needs Planning and in other articles at robwrubel.com.
Congress passed extensive legislation late in 2022 with some small wins for people in the disability community. One was increasing the eligibility age from 26 to 46 for people to open an ABLE.
Disabilities come from many sources. Some people, like my daughter, were born with theirs. Others become physically or intellectually disabled later in life – from cars accidents, brain injuries or debilitating diseases – and the new rules allow far more people access to the ABLE.
It has been estimated that this change will make more than six million additional people eligible to open these types of savings accounts.
Ideally, Congress would change two key issues for people with qualifying disabilities. Right now, there are income limits that endanger benefits and it would be great to separate income from access to Medicaid for people with disabilities. The other is that $2,000 resource limit. There was an effort to raise that to $10,000 in 2022 but it did not make it into the final version and so no change occurred.
On top of that, the contribution amount went up in 2023 (separate from the new legislation). In 2023, a person can contribute (or have others contribute) $17,000 to an ABLE which is a $1,000 increase from 2022. People with jobs can contribute more than the $17,000 and can contribute 100% of their pay up to the federal limit which is $13,590 in the continental US for 2023.
Some states have different rules with the ABLE. My home state of Colorado made a significant upgrade to the ABLE going into 2023. Colorado now allows for a state income tax deduction when contributing to the ABLE, will match up to $25 to a new account and allow for Colorado 529s to transfer to the Colorado ABLE without state income tax recapture. The big news is that Colorado will no longer put a lien on ABLE accounts and that remaining dollars in the ABLE will not have to repay the state. This is huge news and makes it far easier to recommend the Colorado ABLE so families who fund these accounts do not have to worry about losing them in the future. Check for changes in your state and confirm with your planning team before funding an account.
The ABLE is an important tool and using it can help your family member save, invest and access funds without losing their benefits when used well.