Do I have to spend down my entire settlement or inheritance to be able to keep my Supplemental Security Income (SSI)?
No! There is a new savings tool available to individuals with disabilities called the ABLE account. ABLE stands for Achieving a Better Life Experience. This Act was passed in December 2014, and it allows an individual with a disability to place $15,000 per year in an ABLE account. Up to $100,000 in an ABLE account does not count towards the $2,000 resource limit for Supplemental Security Income (SSI). This is a life-changing, quantifiable tool that allows individuals with disabilities to save money and gain independence without disrupting eligibility for public benefits.
In order to open an ABLE account the individual must have met the Social Security Administration (SSA) disability criteria before age 26. This does not mean that the SSA must have actually issued a disability determination before age 26. It is sufficient for a medical professional to opine that the individual’s disability began before that age.
Anyone can contribute to an ABLE account, including the account beneficiary. This is particularly useful when a person receiving public benefits receives a lump sum of money, such as a personal injury settlement or an inheritance. In the past, these funds often had to be spent down or placed in a special needs trust in order to avoid disruption of public benefits. Special needs trusts remain valuable and necessary planning tools, however, an ABLE account can be an extremely useful compliment to a planning strategy that involves a trust.
An individual with an ABLE account may use ABLE account funds for any “qualified disability expense” (QDE). The list of QDEs is very broad, and most importantly, includes food and housing expenses. While a distribution from a special needs trust that is used for food or housing will reduce SSI benefits by up to one-third, a withdrawal from an ABLE account for the same purpose will not. This allows the individual to maximize resources and enjoy increased financial autonomy.
While ABLE accounts are an exciting new tool in the world of special needs planning, every situation is unique, and there may be different strategies that are more appropriate for you or your loved one with a disability. If you are interested in learning more about ABLE accounts or discussing other special needs planning techniques, consult an attorney about your options.