ABLE Accounts: A Tool to Enhance Financial Stability

April 8, 2019

National Disability Institute (NDI), ABLE National Resource Center’s (ABLE NRC) founder and manager, envisions a society in which people with disabilities have the same opportunities to achieve financial stability and independence as people without disabilities. April is National Financial Capability Month and the perfect time to celebrate that vision.

April is also National Social Security Month, a month where the Social Security Administration (SSA) highlights tools and resources such as ABLE accounts to help individuals feel secure, today and into the future.

Financial Capability Month and National Social Security Month can complement each other perfectly through ABLE. For SSA beneficiaries receiving Supplemental Security Income (SSI) and/or Social Security Disability Insurance (SSDI), an ABLE account can be a powerful financial stability tool, which can be enhanced by opening a my Social Security account to keep track of payments and report wages.

SSA recognizes the importance of sharing accurate information regarding ABLE accounts and recently conducted a webinar on Achieving Financial Independence with Ticket to Work and an ABLE Account, along with the following blog.

ABLE accounts are Section 529A savings accounts that allow eligible persons with a significant disability that began before age 26 to save without an effect on most means-tested benefits. The savings grow tax-free and may be used for qualified disability expenses (QDEs). QDEs fall into 11 broad categories and may include expenses for housing, basic living or items or services related to health, prevention and wellness. Other examples of QDEs related to work include:

  • Transportation to and from your place of employment
  • Employment training and support
  • Job coaching
  • Interview preparation and resume development
  • Costs associated with certificates and accreditation
  • Assistive technology

To increase savings, family members, friends or an employer can also contribute to an individual’s ABLE account. Money contributed by these third parties is not counted as income by public benefit programs.

At the end of 2018, more than 35,000 individuals established ABLE accounts in one of the 41 state programs, including the District of Columbia, with a combined savings of over $170 million. However, many ABLE-eligible individuals have delayed enrollment due to myths surrounding ABLE accounts.

MYTH: If I save over $2,000, I will lose my SSDI, SSI and Medicaid.

Many people believe that they will lose all benefits when they exceed $2,000 in savings. While it is true that the SSI and Medicaid programs have a $2,000 resource limit for an individual, the first $100,000 in an ABLE account is not counted. If you have more than $100,000 in an ABLE account, the excess counts against the resource limit. When the resource limit is exceeded, the SSI payment is temporarily suspended, but Medicaid continues. This special rule only applies if savings, other than those in the ABLE account, do not exceed the $2,000 resource limit. If you are receiving SSDI benefits, there is no limit on how much you can save.

MYTH: If I save all of my earnings in an ABLE account or have it directly deposited, Social Security will not count the earnings.

When you are working and depositing earnings into an ABLE account, Social Security does not change the way they look at your earnings. They apply their regular income counting rules to earnings and to other income. While direct deposit of earnings into an ABLE account can be used and is encouraged, it is not a way to avoid income counting rules.

MYTH: An unlimited amount of money can be deposited into an ABLE account.

The total annual contributions for all contributors in 2019 is the same as it was in 2018, $15,000. Employed ABLE account owners may contribute an additional $12,140 of their gross income into their ABLE account if they do not have an employer-sponsored retirement plan. Residents of Alaska and Hawaii can contribute even more up to $15,600 or $14,380 more, respectively. Contributions grow tax-free, and the total aggregate account limit over time is subject to the state limit for 529 savings accounts, which currently ranges between $100,000 and more than $500,000.

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