Talk with ElderLawLexington | McClelland & Associates about a tax-free Achieving a Better Life Experience (ABLE) account that allows people with disabilities to save for their future. STABLE also permits family and friends to give them money. STABLE accounts offer a better quality of life for people with disabilities. STABLE makes it easier to save than ever before. More independence, greater financial security and a better quality of life, that’s what a STABLE account means. STABLE accounts are a relatively new way to help individuals with disabilities save money and pay for qualified disability-related expenses. For the first time ever, that means tax-advantaged savings, usually without endangering eligibility for the means-tested benefit programs such as SSI and Medicaid for the health and well-being of many people with disabilities. Contributions to a STABLE account can be made by anyone, from the account owner to family, friends and loved ones, helping more people play a part in creating a better quality of life.
In April 2016, Governor Bevin signed into law Senate Bill 179, allowing Kentuckians to establish ABLE accounts. The Kentucky law is a state version of the ABLE Act that Congress passed in late 2014. Savings placed in STABLE accounts by disabled Kentuckians or their families will generally not be taxed or considered resources for the supplemental security income (SSI) program, Medicaid and other federal means-tested benefits. Many disabled individuals and the families that provide for them struggle financially due to the caps that the government places on individuals with disabilities. Kentucky’s STABLE Act legislation allows every single eligible Kentuckian to set up a STABLE account program, expanding economic freedom by allowing them and their families to work and save to pay for disability-related expenses. Although Kentucky has not implemented the program, any active state program which allows out of state participants may be used.
If you or a loved one has a qualifying disability that began before the age of 26, up to $14,000 each year can be saved in a STABLE account without affecting Medical Assistance (MA), Supplemental Security Income (SSI) and most other benefits, as long as all other benefits rules are met. A total of $100,000 tax-free can now be accumulated in a special STABLE account, without affecting SSI payments which is limited to one person. If and when a STABLE account exceeds $100,000, the beneficiary’s SSI cash benefit would be suspended until such time as the account falls back below $100,000. It is important to note that while the beneficiary’s eligibility for SSI cash benefit is suspended, this has no effect on their ability to receive or be eligible to receive medical assistance through Medicaid. Prior to the passing of the STABLE Act, individuals were not allowed to have assets totaling more than $2,000 or earn more than $680 per month without forfeiting eligibility for government programs like Medicaid. This was particularly worrisome for families, considering that Medicaid is often the only healthcare option available for persons with significant disabilities.
A qualified disability expense is defined as any expense related to the designated beneficiary as a result of living a life with disabilities. The qualified disability expense is basically what is permitted by the SSI rules from a special needs trust. STABLE accounts are designed to be flexible, easy to manage, easy to contribute to and easy to use for qualified expenses. Participants can use their STABLE account to pay for a wide range of qualified disability-related expenses, beyond just medical care. These may include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses which help improve health, independence and/or quality of life.
For a more detailed understanding of how an ABLE account can be opened, please contact us at ElderLawLexington | McClelland & Associates and we’ll be glad to assist.