Consider Putting Recipients’ Pandemic Relief Payments in an ABLE Account

  • August 6th, 2020

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.

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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.

 

 


Last Modified: 08/06/2020
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