by Christine A. Alsop, The Elder & Disability Advocacy Firm of Christine A. Alsop, LLC
The Federal Act, known as the Achieving a Better Life Experience Act allows individuals with disabilities to have an investment account that will not cause ineligibility for means-tested government benefits, such as Supplemental Security Income (SSI) and Medicaid. These accounts are also not subject to federal income tax, if they are spent on “qualified disability expenses.” To be eligible, the individual must have developed their disability before the age of twenty-six and the disability must have been present for one year or longer. Additionally, the person must be entitled to SSI, SSDI or be able to ‘self-certify’ that they are disabled when opening their account.
The Missouri ABLE account is found through the Missouri Treasurer’s Office and the application is done completely online. See: www.moable.com.
Once established, the account can be used for food and shelter expenses, without reducing the individual’s SSI payments. It can also be used for clothing, personal care items and transportation expenses.
An ABLE account is not a checking or savings accounts; the accounts are actually investment accounts and Missouri allows the participant to decide on five different investment options. There are some restrictions on funding the account; the maximum yearly contribution is $15,000 from any person or source. An employed person can contribute an additional $12,490 of their income. The maximum lifetime contribution limit is $482,000. Missouri’s ABLE account is set up to never allow an account to violate the contribution limits. For people on SSI, there are more severe restrictions of the amounts that can be contributed. Those on SSI, are limited to $100,000 for contributions, and any amounts over $100,00 are treated as available resources.
For planning purposes, having an ABLE account and a Special Needs Trust can be a great way to avoid disruptions of benefits. As long as the funds withdrawn from the ABLE account are used immediately for food and shelter costs, there will be no disruption. Compare this result from food and shelter costs being distributed from a Special Needs Trust, which will generally always result in a reduction of SSI benefits.
And at death, a Special Needs Trust mandates that the State of Missouri is first in line to be repaid. However, the ABLE account permits Medicaid to file a claim for repayment of its claim, but they are not necessarily paid first. In fact, if there is any money for outstanding qualified disability expense, the account is first used to satisfy those. The account can also be used to pay your funeral and burial costs. Medicaid can only be repaid for amounts it is owed after your account was created.
Knowing about the Missouri ABLE account is another way to help individuals who are disabled and who rely on government benefits in our community. It is important to discuss the impact of these accounts with an experienced attorney who understands the benefits disabled people may receive now or in the future.