In 2014, Congress passed the Achieving a Better Life Experience Act, known as the ABLE Act, allowing people with severe disabilities to put away money for the future without jeopardizing their eligibility for public benefit programs that provide important safety nets for those challenged by disability. These programs include Supplemental Security Income or SSI, federal housing benefits and Medicaid, known as Health First Colorado in our state, a joint federal-state program that often covers residential, medical and other important services.
Traditionally, people have had to keep their assets extremely low, usually under $2,000, to qualify for these programs. This in essence requires people to live in poverty to get the help they need from the government, but now ABLE accounts may provide an option for saving for future needs and purchases.
ABLE accounts are highly regulated, imposing restrictions on balances that vary by public benefit program as well as limits on contribution amounts and sources. ABLE funds may be spent only on qualified disability expenses to avoid being taxed when money is withdrawn. Qualifying disability expenses may include transportation, support services, educational expenditures and more.
ABLE accounts are available only to people who became disabled before they turned 26.
The IRS has posted a short video on You Tube about ABLE accounts that ends with directions on how to access more written information on ABLE accounts online at IRS.gov.
A lawyer with long-term planning experience for people with disabilities can advise an individual with disabilities or the family members or guardian of such a person about ABLE accounts and other legal options for protecting public benefit eligibility like special-needs trusts.