ABLE Programs Provide Financial Independence to Disability Community

By / January 29, 2017 / Managing Your Money / 8 Comments

Learn how an ABLE account for disabled persons provides a tax-free savings plan that covers qualified expenses such as education, housing, and transportation.

Disability doesn’t discriminate. It impacts people of all races, ethnicities, genders, geographic locations, lifestyle and financial statuses. Until recently, individuals receiving federal benefits were restricted in the amount of money they could save, preventing many from planning for the future. It wasn’t until 2014 that financial independence would prove to be a possibility.

After years of advocating, negotiating, and compromising, one of the most important pieces of legislation for the disability community was passed. The Stephen Beck Jr. Achieving a Better Life Experience (ABLE) Act amends section 529 of the Internal Revenue Code, allowing states to design tax-advantaged savings and investment accounts specifically for individuals with disabilities.

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The mission behind state ABLE programs: save money while maintaining federal benefits such as Supplemental Security Income (SSI) and Medicaid. ABLE programs are grounded on providing economic independence to individuals with disabilities and serve as the means through which financial goals can be met with confidence.

The passed legislation allows each state to independently set up its ABLE program and determine whether it is state-specific, partnered with other states or open nationally. To date, 18 states have implemented and opened a qualified ABLE program. Florida is currently the only state that has limited eligibility to state residents.

Funds in an ABLE account may be used toward future qualified disability expenses including housing, education, transportation, legal fees, financial management, employment training/support and even basic living expenses. With unique investment options, the account holder has a choice in how their money works for them. Much like a Roth IRA or 529 savings account, income earned by the accounts will not be taxed, and contributions to the account made by any person will not be tax deductible.

Unlike other savings options, the individual with the disability is the sole owner of the ABLE account and may manage it independently. However, authorized persons may establish it and help with oversight. ABLE account holders can accumulate $14,000 annually, either autonomously or with the help of contributors. Contributions may come from friends, family or any individual who wishes to aid the beneficiary.

To be considered eligible, an individual must meet the disability and severity requirements for SSI or Social Security Disability Insurance (SSDI). The onset of blindness or disability must have occurred before the individual’s 26th birthday. Current age is not considered when opening an ABLE account – except that the account must be opened by an adult 18 years of age or older. Click here to learn more about eligible disabilities.

Florida’s Congressman Ander Crenshaw, champion of the legislation, expressed the heart behind the ABLE Act, Florida’s qualified ABLE program, when he said, “No longer would individuals with disabilities have to stand aside and watch others use IRS-sanctioned tools to lay the groundwork for a brighter future. They would be able to as well.”

The ABLE Act is an opportunity that started when families gathered around a dining room table more than a decade ago and developed a way to help their children without hindering them in the future. It is an opportunity that levels the playing field and provides freedom from the limitations that restricted them in the past. Individuals with disabilities can now save, protect and grow their money with confidence and most importantly, independence.

John Finch, Director of ABLE United, Florida’s qualified ABLE program, is administered by the Florida Prepaid College Board and is designed to support individuals with disabilities to maintain health, independence and quality of life.

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ABLE Programs Provide Financial Independence to Disability Community
4 (80%) 1 vote

  • Dear Chris,

    I can respond regarding the impact of your work activity on Supplemental Security Income (SSI) eligibility. Typically, under current law, in most states Medicaid insurance accompanies SSI eligibility. I do not have information about whether your wife can qualify for Medicaid without SSI eligibility and, if so, what the limits are on family income. I suggest that you contact your state Medicaid office to make inquiries.

    In-kind earned income such as free or reduced-cost housing and/or shelter utilities is treated as earned income as long as the worker is not a domestic or agricultural worker. This means that to the extent that your earnings exceed $65, one-half of the fair market value of the free housing or the difference between the FMV and what you pay would be part of your countable income. Stated another way, the FMV of the in-kind payment in the form of shelter would be added to your cash wages. From that $65 plus one-half of the excess would be excluded before adding up your income to determine whether or not any of our income is deemed available for the support of your wife and results in a reduction of her benefits.

    One option for your family might be to get housing that would allow for a roommate. If the roommate does not pay more than his or her share of shelter expenses and purchases food separately or pays for only his or her share of food, it will not affect SSI eligibility.

    Sincerely,
    Kay

  • Dear Chris,

    Please see my response of about an hour ago to your first posting of this question. Check with a tax accountant about the specifics of being able to claim mileage.

    Sincerely,
    Kay

  • Dear Chris,

    I do not know how Uber runs its business–whether drivers are employees or independent contractors. If you drive for them and you are an employee, your gross wages would be used in your wife’s Supplemental Security Income benefit calculation. If you are an independent contractor, then your net profit from self-employment would be the earnings used. You would give an estimate of expected earnings and profit and update it as it changed during the year if you had a significant change. Your wife would be paid based on the estimate and then any recalculation needed would be done after you filed your self-employment tax return for the year.

    If self-employment is involved, a tax accountant can tell you what expenses are business deductions that can be used to reduce your gross receipts to net profit.

    Sincerely,
    Kay

  • Dear Chris,

    Your wife is out of the appeals period to formally contest the fact of the overpayment. If she can prove she wasn’t overpaid, the adjustment might be made informally. The $650 figure sounds correct for receiving free housing unless her share of the housing costs was less than $260. The figure is also based on your income being low enough at the time that none was deemed to her. If you had enough income for her to have income deemed to her, then that is the cause of the overpayment. If either the overpayment appears to be correct based on this explanation or she doesn’t want to try to contest the overpayment by gathering facts and reasons why it is wrong, she can try to get the monthly overpayment collection reduced to $50 based on hardship. The only other thing I can suggest is to look at whether you are spending your raise on anything that you could avoid and use the money for food. (Your wife’s SSI goes down only $1 for every $2 iof your raise. Of course, you have taxes held out, but your raise does still result in a net increase in family income.

    Sincerely,
    Kay

    Sincerely,
    Kay

    • Chris

      Thank you- we might look into the hardship payment

      We did pay the full utilities cost while we lived there (with my friend).

  • Carol Lee

    I really dont understand soc sec every time I get a letter they are giving me different figures or deductions. Its all so confusing. I just recently got back pay due to a dire need letter I submitted. A month later they want to decrease my SSI benefits from 755 to 479 . I dont get it.

    • Dear Carol Lee,

      You have not given me enough information to provide you with an explanation of the specific reasons for the changes in your Supplemental Security Income (SSI) benefits. (It sounds as if you are getting SSI, not Social Security Disability.) I can tell you that SSI benefits are calculated on a monthly basis. As long as your income is within the limits income received in one month affects benefits paid two months later. Each notice of change should tell you why the change is occurring and the month it affects.

      Sincerely,
      Kay

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