Tips to Maximize Your ABLE Account Savings
Without Risking Your State & Federal Benefits

November 21, 2016

Designed to benefit those with disabilities, an ABLE account is a long-term investment account that allows beneficiaries to save and invest their money while still providing easy access for expenses when necessary. One of the main benefits of opening an ABLE account is that it allows individuals with disabilities to save and invest money without losing eligibility for public benefits programs like Medicaid or SSI (Supplemental Security Income). Users can spend money directly from the account on Qualified Disability Expenses including education, housing, transportation, and additional assistive services. Given that the intent of the account is to save for disability expenses, there are potential tax implications for non-qualified expenditures. Implications beyond that should be minimal if the user is aware of certain exceptions.

Social Security views ABLE assets not as income but as conversions from one resource to another, meaning that ABLE assets do not affect SSI benefits, including housing, as long as the total account balance is below $100,000. Every dollar an account contains that is over $100,000 is included in total resources. If an account causes a user to exceed SSI resource limits, eligibility for SSI will not be revoked; however, there will be a suspension of SSI benefits until resources are back under the resource limits.

Perhaps more concerning to users is the effect of ABLE holdings on housing benefits and the ability for users to spend ABLE account money on housing. ABLE accounts are designed to allow users to withdraw funds to pay for housing with no effect on SSI, but there are situations in which benefits could be affected due to housing expenditures.

If funds from an ABLE account are used for housing, the user must withdraw the money in the same month in which they intend to spend it. This means that, if funds will be used to pay for rent in the month of October, the money to pay for rent must be withdrawn in October as well. If a user withdraws money in September to use in October, that withdrawn amount will be included in total resources and may affect SSI benefits for that month. This holds true whether or not the withdrawn money was originally intended to be spent on housing. Money from an ABLE account that is withdrawn outside of the month in which it will be spent on housing will be considered by the SSA to be a countable resource for the month in which it is withdrawn and may result in suspension of SSI benefits for that month.

Other aspects of the ABLE account that have the potential to affect federal benefits are the annual contribution limit and overall balance limit. The ABLE Act currently limits contributions to $14,000 in a calendar year.  In addition, a recipient of benefits such as SSI and Medicaid must keep their account balance below $100,000.  Intuition ABLE Solutions (IAS) offers features that enable users to track their assets held in the ABLE account, and there are systems controls in place so that the annual contribution limit is not exceeded.  Users can easily monitor whether they are approaching the $14,000 contribution limit. 

The user can view an account summary as well as all account transactions by simply logging into the ABLE account.  Unlike the annual $14,000 contribution limit, the $100,000 account balance limit applies to the net balance including all transactions, such as contributions, withdrawals, gains/losses and fees.  The user can monitor the account to ensure that the $100,000 balance limit is not exceeded so that federal benefits are not affected.  If the account is approaching the balance limit, the user may choose to withdraw some of the money for Qualified Disability Expenses to reduce the balance before the limit is reached.  As long as the account balance doesn’t exceed $100,000, there will be no effect on current benefits, and the funds in the ABLE account will continue to be excluded from total resources for the purpose of benefits eligibility.

The user has the opportunity to view all quarterly and annual statements and tax documents by logging into the ABLE account.  If an account administrator is managing several beneficiary accounts, they can obtain all this information for each beneficiary and will be able to print those documents for future review or if that information is requested by the Medicaid or Social Security Administration offices.

In the near future, IAS plans to implement an automatic alert system that will allow users to configure various email alerts linked to their account. They will have the option to decide what alerts they want and when they want these alerts. Alerts could notify the user when total contributions are approaching the yearly $14,000 contribution limit, when account balance is nearing $0, and when an account balance is approaching the $100,000 SSI limit. IAS will also have the unique ability of allowing users to categorize withdrawals to help facilitate budgeting for qualified expenses.

Overall, the ABLE account has no effect on SSI benefits so long as the appropriate steps are taken to ensure that money withdrawn for housing is used within the same month and that annual limits and total balance limits are not exceeded.   Fortunately, if a situation occurs that results in temporary suspension of benefits, the user’s eligibility for benefits is not permanently revoked and can be reinstated once resources are returned to the applicable limits.

jaymiekohlMaximize your ABLE Account Without Risking your State & Federal Benefits