Individuals with disabilities can save in ABLE savings accounts for short and long-term disability-related expenses without affecting their federal benefits. The Massachusetts ABLE plan, sponsored by MEFA, is called Attainable®. ABLE accounts including Attainable® have several benefits you can take advantage of. We’ve listed some of the key benefits below.
Tax Benefits
ABLE accounts offer tax-exempt growth and no penalties if used for qualified disability expenses. They allow an individual who is receiving Supplemental Security Income (SSI) to save up to $100,000 with no impact on their benefits.
Range of Qualified Expenses
Qualified expenses for an ABLE account include, but are not limited to, those associated with healthcare, housing, transportation, employment training, basic living (food, clothing, etc.) and personal support services.
Rollovers
You can roll over up to $18,000 per year from a 529 to an ABLE account with no penalty.
Flexibility
In addition to broader spending power, the ABLE account owner has immediate access to funds, and the account can be established, managed, and owned by the individual with a disability. This differs from access and spending from a Special Needs Trust.
Use with Special Needs Trusts
ABLE and Special Needs Trusts can work as fantastic complements to each other. As an example, while you can’t pay for a housing expense directly from a trust, you can move funds from the trust to an ABLE account and then pay that expense directly from ABLE. Trusts can be written or amended to make distributions to an ABLE account. And while ABLE has yearly limits and a total overall account maximum, and cannot accept non-cash assets, Special Needs Trusts can accept unlimited dollars and non-cash assets, such as real estate.
PSAs
You can establish a Person with Signature Authority, or PSA, on the ABLE account, and that individual can manage the account for the beneficiary. To become the PSA on an Attainable® account, the guardian simply needs to complete and submit this form with the appropriate guardianship paperwork. The person with the disability is always the account owner, but there may be times when a PSA is needed as well on the account.
Burial Expenses
Upon the owner’s death, the money remaining in an ABLE account goes to the account owner’s estate. Prior to that happening, any outstanding disability expenses and burial expenses can be paid from the individual’s ABLE account.
Use with VA Benefits
Attainable® eligibility is based on Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) status, and SSDI/SSI benefits have always worked well with the forms of assistance created through Veterans Affairs (VA), as they have different criteria to receive support. VA benefits and Attainable® can therefore be used together to improve the lives of Veterans. One the areas where this can be particularly useful to Veterans is in the area of paying for health services like physical therapy or mental health services. Though you must apply for them separately, SSDI and VA compensation are not affected by each other.
Eliminating Spend Downs
Prior to the ABLE Act, individuals receiving federal benefits were not allowed to retain more than $2,000 in assets at any time or their benefits would be reduced. This necessitated a “spend down,” in which money needed to be spent on something that was not counted as an asset, regardless of whether or not the items were needed or wanted, in order to protect that individual’s ability to continue to receive federal benefits and afford to live. Thanks to the ABLE Act, individuals can now save funds in significant amounts to increase their independence without impacting their federal benefits. It allows money that would otherwise be used in a “spend down” to be saved for the individual’s actual needs.
For more information on Attainable, watch our webinar overview, available online anytime.
