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Ready, Willing and ABLE Accounts – Protecting Eligibility for Public Benefits

Ready, Willing and ABLE Accounts – Protecting Eligibility for Public Benefits

Oftentimes disabled individuals and their families need extra financial help to pay for costly medical care or other costs of living of the disabled person.  One way these costs are met is for the disabled person to apply for public benefits, such as Medicaid for health insurance or Supplemental Security Income (SSI).  However, most public benefits, including Medicaid and SSI, have strict asset limits that must be met in order for a disabled person to qualify for them.  If the disabled person owns property over the asset limit (which is $2,000 for an individual in 2019), then they will not qualify for the benefit.  There are some exceptions to this rule.

Exceptions to SSI and Medicaid Asset Limits

As I discussed in a previous article, assets held for the benefit of a disabled person in a Special Needs Trust, are not counted as the disabled person’s assets and therefore are not counted against him or her when determining eligibility for SSI or Medicaid.  Another exception to the asset limit is money held by a disabled person in an ABLE account. 

What is an ABLE Account?

An ABLE account is a special account that allows a disabled person to hold money in their name that is exempt from the asset limits for public benefits, such as SSI and Medicaid.  ABLE stands for the federal Achieving a Better Life Experience Act that was passed into law in 2014.  In order to qualify for an ABLE account, the account holder must have become disabled before the age of twenty-six (26) and must have a qualifying disability.  ABLE accounts are typically bank accounts, such as a checking account or savings account, but they need not be.  Accounts that invest in securities, such as stocks or mutual funds, can also qualify as an ABLE account.

ABLE Account Limitations

Anyone can contribute money to an ABLE account.  The Money can be put in the account by the disabled individual (for instance if they received a cash settlement from a lawsuit) or by the disabled individual’s family members.  However, there are limits on how much money can be held in the account.  Currently, there is a $15,000 a year maximum contribution limit.  Also, in order to remain eligible for public benefits, the account cannot have a balance of over $100,000.00.  The money in the ABLE account must be used for qualified disability expenses of the disabled individual. These are expenses that assist the disabled person in increasing or maintaining his or her health, independence or quality of life.  Finally, when a disabled person dies, the state can make a claim for any funds remaining in the ABLE account to pay back the state for Medicaid costs. 

ABLE Accounts Fall Under State and Federal Law

Although the federal government passed the law that allows for ABLE accounts, it is up to the states to determine whether they will permit them and to regulate them.  Arkansas has passed laws allowing for ABLE accounts.  Those laws can be found at Ark. Code Ann. § 20-3-104, et seq. The Arkansas ABLE program is administered by the Arkansas Treasurer of State’s office.  Click here for more information about the ABLE program from the Treasurer’s website.  For further reading about the Arkansas ABLE program, you can also click here.  Although Arkansas has passed laws that allow ABLE accounts, at the time of this writing there are not yet any Arkansas financial institutions that offer ABLE accounts to their customers.  However accounts can be opened at banks outside of Arkansas.  Care must be had to ensure that the financial institution has been approved by the Arkansas ABLE program.

Contact Our Firm

If you have further questions about ABLE accounts or if you would like to discuss a Special Needs Trust or have other estate planning needs, feel free to call our firm at (501) 960-6060 for a consultation or you can click here.   

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