ABLEActAccounts:
QuestionsandAnswersforParents
PresentedbyLoganK.Philipps,Esq.
LastrevisedJanuary18,2016
Q:WhatistheABLEAct?
TheABLEActfallsunderSection529oftheInternalRevenueCode.TheActallowspeoplewith
disabilitiesandtheirfamiliestosetupasavingsaccountfordisability-relatedexpenses.Fundsin
anABLEaccountgrowtax-freeandaregenerallynotconsideredresourcesforthesupplemental
securityincome(SSI)program,Medicaidandotherfederalmeans-testedbenefits.
Q:Whyisitimportant?
Individuals with disabilities face the loss of benefits if they have resources over very low
thresholds-currently$2000.00forSSIand$1500.00forMedicaid.
Q:WhatexpensesareallowedtobepaidbyABLEaccounts?
A "qualified disability expense" means an expense related to the designated beneficiary as a
result of living a life with a disability. These include education, housing, transportation,
employment training and support, assistive technology, personal support services, health care
expenses,financialmanagementandadministrativeservices.
Q:HowdosavingsinanABLEAccountaffectSSIorMedicaid?
The first $100,000 in ABLE accounts will be exempted from the SSI $2,000 individual resource
limit. If and when an ABLE account exceeds $100,000, the beneficiary will be suspended from
eligibility for SSI benefits and no longer receive that monthly income. When the account again
fallsbelow$100,000,paymentsbeginagain.Theamountsintheaccountareexemptedfromthe
Medicaidresourcelimit.
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Q:Whoiseligibleforanaccount?
EligiblityforanABLEaccountislimitedtoindividualswithsignificantdisabilitieswithanageof
onsetofdisabilitybeforeturning26yearsofage.
Q:Aretherecontributionlimits?
AqualifiedindividualmayhaveonlyoneABLEAccount.Thetotalannualcontribution(fromall
donors) into this account is limited to $14,000. This amount will be adjusted annually for
inflation.ThetotallimitovertimethatcouldbemadetoanABLEaccountwillbesubjecttoOhio’s
$426,000limitforeducation-related529savingsaccounts.
Q:Whathappensifthemoneyisnotspent?
ABLEaccountscontainastatepaybackprovision.ThismeansthatMedicaidwillbepaidbackfirst
forservicesprovidedwithfundsremainingintheaccountwhenthebeneficiarydies.
Q:WhenwillthesebeavailableinOhio?
Ohio is one of 35 states to have passed implementing legislation. The State Treasurer is
responsible for establishing the Ohio plan to implement ABLE accounts. According to the
TreasurerforOhio,alaunchofABLEaccountsisexpectedinearly2016.ItappearsthatOhiowill
beoneofthefirststatestolaunchABLEaccounts.OhioansmaynotbelimitedtoOhio’splanand
willbeabletoaccessprogramsinotherstateswhentheyareimplemented.
Q:HowmightABLEaccountsbeusedtoplanforalovedone?
Because of the spending restrictions and the payback provision, ABLE accounts should be
consideredasapotentialcomponentofaspecialneedsplanthatincludesotherstrategies.For
most families and individuals, an ABLE account will be used in conjunction with a third party
specialneedstrust.
ABLE Act law is still being determined at the state level. Families should ensure they have the
mostuptodateinformationregardingeligibilityandlegislativeupdatesbeforemakingdecisions.
Pleasecontactusformoreinformation.
Logan assists individuals and families to plan for their lives and legacies
through various estate planning strategies including, but not limited to,
revocable living trusts, wills, and customized powers of attorney. An area of
concentration for Logan is work concerning children with special needs
including guardianship, alternatives to guardianship, and special needs trusts
that allow continued eligibility for government benefits while providing
funds for quality of life enhancements. He frequently speaks to parents,
lawyers and financial advisors about planning for children with special needs.