Florida ABLE Accounts now available

Florida's ABLE program is now operational. Effective July 1 (with certain restrictions which I discuss below), an individual with a qualifying disability may preserve his/her eligibility for means-tested federal government benefits while retaining more than $2,000 in assets. Assets must be held in an ABLE account, a special type of tax-advantaged savings account authorized under the Achieving a Better Life Experience Act of 2014 (which I discussed previously here and here). A person who has established an ABLE account and who depends on vital government benefits such as Medicaid, SSI or SSDI will no longer be forced to remain impoverished to qualify for benefits, resulting in greater independence and better quality of life. Individuals who are able to join the workforce will be able to do so without fear of losing benefits. 

An ABLE account is a savings vehicle modeled on college savings plans. The disabled individual (or his/her parent, attorney in fact or other authorized individual) may open, contribute to and manage the account. The disabled individual is the owner and beneficiary. Growth is tax-free, and up to $100,000 of the account is considered a "non-countable resource" for Florida Medicaid eligibility purposes. Funds may be withdrawn tax-free for qualified disability expenses such as employment training, assistive technologies, transportation, special therapies, medical expenses, housing, education, etc. 

Visit ABLE United to learn more about eligibility requirements, how to open an account, types of investments available and more. Investment options may be chosen from pre-selected portfolios, or a custom portfolio may be put together from the options offered. 

As I noted above, there are some significant program restrictions:

• The individual must have developed the qualifying disability by his/her 26th birthday. (Advocates are hopeful that the age limit can be raised or eliminated in the future.)

• If the account owner has been receiving Medicaid benefits, the state must be paid back from any funds remaining in the account when the account-holder passes away. 

• No more than $14,000 per year may be contributed by any individual to the account. 

• Once the account reaches $418,000, no additional contributions can be made.

For these and additional reasons, families and individuals may still find a Special Needs Trust or a Pooled Trust a better choice, either in lieu of or in addition to an ABLE account. Unlike the ABLE account, there is no upper limit on contributions or total amount accumulated in a Special Needs Trust or Pooled Trust. 

Contact The Karp Law Firm if you wish to explore which option is best for your or your loved one's circumstances.

ABLE Act allows people with disabilities to save and still keep government benefits

The recently passed ABLE Act ("Achieving a Better Life Experience") amends section 529 of the IRS code, allowing people with disabilities to save for the future and remain eligible for means-tested federal benefits. Prior to passage, special needs individuals who accumulated over $2,000 in assets would lost vital benefits such as Medicaid and SSI. Under the new ABLE act, these people will no longer be forced to keep themselves effectively impoverished.

The law allows for the establishment of tax-advantaged savings accounts for the benefit of a disabled individual. The funds in an ABLE account, just like the funds in a Special Needs Trust, may be used only for those services and items not provided by the government, for example, special therapies, housing, transportation, job training, assistive technologies, etc. Any number of people may contribute to the account, but a disabled individual may have only one such account. The accounts do have certain limitations, though:

• Any amount in excess of $100,000 in the account may cause a reduction in government benefits.

• No more than $14,000 may be deposited into the account annually.

• The beneficiary's disability must have developed before the beneficiary reached the age of 26.

• Upon the death of the beneficiary, the funds in the account must be used to repay Medicaid.

Given its limitations, the ABLE account can serve as an adjunct to, rather than a substitute, for a special needs trust or pooled trust. 

The accounts will become available when each state works out its administrative apparatus to comply with the new law.