STABLE Accounts: a Source of Assistance for Disabled Individuals Beyond SSI

Financial Planning for Disabled

In December of 2014, the federal government enacted the Achieving a Better Life Experience Act (“ABLE Act”). The ABLE Act allows states to establish tax-free savings accounts for individuals with disabilities to pay expenses not covered by government benefit programs. The funds in an ABLE account can provide a source of assistance for disabled individuals beyond that provided Supplemental Security Income (SSI) or Medicaid.

Ohio has become one of the first states to implement the ABLE act with the authorization of accounts referred to in the state as STABLE accounts. To be eligible for a STABLE account, an individual must have become blind or disabled prior to their 26th birthday. Anyone may contribute to the disabled person’s STABLE account, but the total of all contributions is limited to $14,000 per year. Earning on the funds in the STABLE account accumulate on a tax-deferred basis, and withdrawals are tax free if made for “Qualified Disability Expenses” Qualified Disability Expenses include expenditures for basic living expenses, housing, transportation, education, and assistive technology.

Disabled individuals who qualify for SSI or Medicaid are generally not permitted to own more than $2,000 of total assets. However, a disabled individual may have up to $100,000 in a STABLE account without losing their SSI eligibility. Moreover, the funds in a STABLE account will not disqualify an individual from Medicaid regardless of the amount. Any amounts remaining in a STABLE account at the individual’s death must be used to reimburse the state for Medicaid expenses paid on that person’s behalf.

If a disabled individual is not capable of managing his or her own account, an authorized legal representation such as a Guardian or Agent under a Power of Attorney may administer the account.

For information on STABLE accounts contact Joe Motta at 440-930-2826.