ABL BLE Acc ccounts Overview and and Use to Help with ISM Linda - PDF document

11/17/2017 ABL BLE Acc ccounts Overview and and Use to Help with ISM Linda Landry Disability Law Center November 3, 2017 What is the ABLE Act? • The achieving a Better Life Experience (ABLE) Act • Enacted by Congress in 12/2014 • 26 USC §529A • Allows eligible people with disabilities to save money in tax exempt investment accounts set up by state ABLE Act programs. • ABLE Account funds are not counted as assets for federal means-tested benefits. • ABLE Account funds must be used for ‘qualified disability expenses.’ Regulations and Resources • IRS regulations • Proposed at 80 FR 35602 (6/22/15) https://www.gpo.gov/fdsys/pkg/FR-2015-06- 22/html/2015-15280.htm • No final regulations yet. • SSA policy Guidance. POMS SI 01130.740 https://secure.ssa.gov/apps10/poms.nsf/lnx/0501130740 • CMS policy guidance . https://www.medicaid.gov/federal-policy- guidance/downloads/smd17002.pdf • State laws & regulations establishing ABLE account programs may indicate how their means-tested programs will count these funds . • ABLE National Resource Center . http://www.ablenrc.org/ 1

11/17/2017 ABLE Accounts • ABLE Accounts are investment accounts that grow without taxation. • Contributions to ABLE Accounts are not tax deductible. • Distributions for qualified disability expenses (QDE) do not count as income for tax purposes. • Distributions for QDEs do not count as income for federal needs-based benefit purposes. • Instead, distributions from ABLE Accounts are resources that have changed form. Distributions for QEDs are non countable resources Why ABLE Accounts? • ABLE Accounts allow eligible people with disabilities to save money without losing important federal benefits. • ABLE Accounts allow individual choice and control over spending by people eligible for SSI, Medicaid, and other federal needs-based programs. But there are details that people need to know about establishing ABLE Accounts and making disbursements to avoid problems. • ABLE Accounts work with supported decision-making. Massachusetts ABLE Account program • The Attainable Savings Plan • https://www.mefa.org/products/attainable/ • https://www.fidelity.com/able/attainable/overview 2

11/17/2017 Who Qualifies? • Must have acquired a disability prior to age 26. • Those with onset dates after attaining age 26 do not qualify . • Required severity of the disability. • Determined to meet the blindness or disability requirements for SSI or SSDI, or • Obtain a ‘disability certification’ signed by a physician. • Do not need to submit this when opening up an account but must retain it in records and provide on request. • The onus for verifying disability eligibility is on the individual. • Individual or person with signature authority must certify under penalty of perjury to meeting the standards for eligibility. Standard for ‘Disability Certification’ • Medically determinable physical or medical impairment that results in marked and severe functional limitations, and that • Can be expected to result in death, or • Has lasted or can be expected to last for a continuous period of not less than 12 months, • Or, is blind within the meaning of the SSI program. • And, the blindness or disability occurred before age 26. Opening an Account • Accounts can be opened by: • An individual meeting the disability criteria; or • An agent with signature authority: an agent under power of attorney, or a parent, or a legal guardian. • For those unable to establish and manage the account, or, who choose not to. • Those with signature authority may not have a beneficial interest in the account. • In either case, the individual with a disability is the account owner and designated beneficiary. 3

11/17/2017 Account Limits • A individual can be the beneficiary of only one ABLE Account. • The individual and any third party can contribute to the account • But, total annual contributions are limit ed • $14,000 in 2017 • $15,000 in 2018 • The total account limit over time is the state maximum for 529 accounts and varies by state. ABLE Accounts and SSI Asset Count ing • Funds in ABLE Accounts up to $100,000 are not countable assets for SSI recipients. • Where ABLE Account funds make an SSI recipient over assets, the SSI recipient will be in suspense until the excess has been spent down (the 12 month suspense rule limit does not apply here). • The SSI recipient in suspense will remain Medicaid eligible . • ABLE Account distributions are not income, but rather, assets that have changed form. • Not counted as income, in other words. • Distributions not spent on QDEs will count as assets. What are QDEs? • Qualified Disability Expenses (QDE) • Expenses related to blindness or disability that are ‘beneficial in maintaining or improving the beneficiary’s health, independence, or quality of life.” sec. 1.529-A-1(b)(16). • Not limited to items that are medically necessary or which solely benefit the beneficiary. 4

11/17/2017 QDE Examples • Education • Housing • Transportation • Employment training and support • Support and Assistive technology • Health, Prevention and wellness QDE Examples • Financial management and administrative services • Legal fees • Funeral & burial expenses • Basic living expenses. • Other expenses approved by the Secretary of the Treasury under regulations consistent with the purpose of the program and/or published in future guidance in the Internal Revenue Bulletin. Funds spend on non-QDEs? • ABLE Account funds spend on non-qualified disability expenses incur a 10% penalty. • The amount also counts for tax purposes. • SSA consequences • The distribution is a countable resource as of the month after the of the withdrawal. 5

11/17/2017 Funds Withdrawn for and Spent on QDEs • Distributions for non-housing related QDE do not count as an asset even if retained beyond the month of withdrawal. • The funds must be identifiable, however . • Distributions for housing related expenses do count as an asset if not spent in the month of withdrawal. • Housing expenses are these: mortgage; real property taxes; rent; heating fuel; gas; electricity; water; sewer; and garbage removal. Contributions to ABLE Accounts • Third party contributions to ABLE Accounts do not count as income to the beneficiary. • The contributions of the beneficiary to his/her ABLE Account are not excluded from income counting (Unlike an SSI recipient’s use of income to fund a PASS). • Example. An SSI recipient with a part time job decides to open an ABLE Account and deposit some of his earnings in the ABLE Account as saving for future needs. The earnings he deposits in the ABLE Account will still count as income in the month of receipt to reduce his benefit. 6