Consider Putting Recipients’ Pandemic Relief Payments in an ABLE Account

Like millions of other Americans, recipients of Medicaid and Supplemental Security Income (SSI) have received or should soon receive a one-time $1,200 coronavirus relief payments from the federal government.  And, if Congress can come to an agreement, a second round of economic impact payments will be coming.  (If you haven’t received your payment and did not file a 2019 tax return, click here to access the IRS’s page for non-filers.)

Although this money does not immediately affect eligibility for means-tested programs like Medicaid and SSI, if the money is not spent within 12 months it will count as an asset and could affect eligibility.

One solution is to put the funds in an Achieving a Better Life Experience (ABLE) account, where it can remain without affecting eligibility for programs like Medicaid and SSI.  Authorized by Congress in 2014, ABLE accounts are a tax-advantaged way to put money aside for dependents with disabilities.  Funds in the accounts can be spent on a wide range of disability-related expenses without compromising eligibility for government benefits. Unlike a special needs trust, an ABLE account can be managed and controlled by the beneficiary. 

Not everyone with a disability can qualify for an ABLE account, however.  Eligibility is limited to people who developed their disability before age 26. Also, total contributions to ABLE accounts are limited to $15,000 per year, although beneficiaries who work can make ABLE contributions above the $15,000 annual cap from their own income up to the Federal Poverty Level. If the value of the account exceeds $100,000, any SSI income is suspended until the account dips below that limit.  These savings plans may be used for a broad array of products and services related to the eligible individual’s disability.

For help opening or investing in an ABLE account, talk to your special needs planner.