ABLE Act is Relief for Families With Disabled Children
Many families who raise and care for disabled or special needs children face a difficult and sad dilemma. On the one hand, the medical costs for treatment can be exorbitant, especially considering that the needs may last throughout the child’s lifetime, and may include expenses that are life modifications that go beyond just medical treatment.
The Public Benefit Dilemma
Medicaid and other public benefits can help, but if the families make too much income, those benefits become unavailable.
That means that for many families, the only way to make sure their loved one’s needs are paid for is to remain unemployed or underemployed. Otherwise, they risk earning an amount that’s not enough to live off of and pay the medical bills, but that is too much to qualify for the medical assistance their family needs.
Having just $2,000 in retirement funds, savings, or personal property can disqualify families from much needed medical public benefits.
ABLE Act May Help
There is a tax and estate planning vehicle that can help these families. It’s called the Achieving a Better Life Experience Act of 2014, or the “ABLE Act.” Setting up an ABLE account allows families to put money into the account for the benefit of the disabled child, without having that money count against the public benefit income limit. Practically, it means that families with savings or assets can still qualify for benefits, so long as those savings are put into the ABLE account.
ABLE savings are used to supplement public benefits that the disabled person receives. But money in an ABLE account can also be used for almost anything that benefits the disabled. That includes training, transportation, support aids, in-home assistance, assistive devices, and even some professional services (accountants or financial advisors) that are needed.
Requirements for ABLE Accounts
There are some prerequisites for being able to use an ABLE account. You must be disabled before the age of 26, or at least have the first onset of the eventually disabling condition appear before the age of 26.
ABLE uses Social Security’s definition of a disability to determine qualification. However, a person does not actually need to have been determined disabled by Social Security to apply, and in some cases, a letter or certification from a licensed physician will be enough to utilize the account.
There are limitations to the program. Currently only $14,000 per year can be contributed to an ABLE account, and over an entire lifetime, the maximum may vary. In many cases, reaching a maximum could cut off Social Security benefits, although Medicaid benefits would still be obtainable.
ABLE Funds Are Subject to Medicaid Payback
Additionally, money put into an ABLE account could be lost if the disabled person passes away. In that case, the state may be able to make a claim on any amounts remaining in an ABLE account to recoup any money the state spent for the medical needs of the deceased.
This, of course, means that if the disabled person has children or other beneficiaries, those individuals would not receive any money in the ABLE account upon the passing of the disabled person.
Caring for those with medical needs requires knowledge of taxes and estate planning. Contact Tampa asset protection and estate attorney David Toback to discuss your estate and healthcare plans.