Disabled people who are eligible for Supplemental Security Income (SSI) live on extremely modest means. The become eligible for SSI if they meet the medical rules of disability, but also only if they show the financial need for SSI benefits. An individual must show he or she has less than $2,000 in combined assets, and this continues to be the case even after they start receiving benefits. Basically, they must show they are poor and will continue to be poor.
A few years ago steps were taken to help people who receive SSI maintain some sort of financial stabilization without risking the change of losing their SSI benefits for having too much income or assets. This was done through the creation of ABLE accounts. Recently, Social Security updated staff instructions related to ABLE accounts.
What They Are And Why They Are Needed
ABLE Accounts, which are tax-advantaged savings accounts for individuals with disabilities and their families, were created as a result of the passage of the Stephen Beck Jr., Achieving a Better Life Experience Act of 2014 or better known as the ABLE Act. The beneficiary of the account is the account owner, and income earned by the accounts will not be taxed. Contributions to the account, which can be made by any person (the account beneficiary, family and friends), must be made using post-taxed dollars and will not be tax deductible for purposes of federal taxes, however some states may allow for state income tax deductions for contribution made to an ABLE account.
Millions of individuals with disabilities and their families depend on a wide variety of public benefits for income, health care and food and housing assistance. Eligibility for these public benefits (SSI, SNAP, Medicaid) require meeting a means or resource test that limits eligibility to individuals to report more than $2,000 in cash savings, retirement funds and other items of significant value. To remain eligible for these public benefits, an individual must remain poor. For the first time in public policy, the ABLE Act recognizes the extra and significant costs of living with a disability. These include costs, related to raising a child with significant disabilities or a working age adult with disabilities, for accessible housing and transportation, personal assistance services, assistive technology and health care not covered by insurance, Medicaid or Medicare.
For the first time, eligible individuals and their families will be allowed to establish ABLE savings accounts that will largely not affect their eligibility for SSI, Medicaid and other public benefits. The legislation explains further that an ABLE account will, with private savings, “secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, Medicaid, SSI, the beneficiary’s employment and other sources.”
Unfortunately, ABLE accounts are not allowed for everybody and they come with restrictions. The law limits eligibility to individuals with significant disability with an onset prior to turning age 26. People who meet the age criteria and who receive Social Security benefits are automatically qualified for the program. Additionally, there is a limit of how much money can be placed in an ABLE account. The annual limits are $15,000 and there is a total limit per plan of $300,000 in some states.
