How do the guidelines regarding ABLE accounts affect your disability planning options?

The ABLE Act allows qualified individuals with a disabling condition to establish and fund a tax-advantaged savings account from which they can pay for disability related expenses. The purpose of the ABLE Act is to give greater autonomy to these individuals without disqualifying them from important means tested benefits like Supplemental Security Income (SSI) and/or Medicaid.

On September 7, 2017, the Centers for Medicare & Medicaid Services (CMS) released a letter offering guidance to the states regarding treatment of the Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (the ABLE Act) for state Medicaid programs.

Some important clarifications in the letter include:

  • A Special Needs Trust (SNT) can distribute to an ABLE Act account without the disbursement being counted as income to the SNT beneficiary.
  • Medicaid estate recovery is only for amount of medical assistance provided after the establishment of the ABLE Act account.
  • A distribution from an ABLE account is not required to be used within the month of distribution, or within any time frame, if it is ultimately used for a qualified disability expense (QDE). This means it’s OK to distribute cash to the beneficiary: “For example, if an SSI-based individual receives an ABLE account distribution in August, but does not spend the distribution until December (and uses the distribution for a QDE in that month), the amount of the distribution is not counted in any month. If the individual uses the distribution in December for a non-QDE, the distribution would be counted as a resource in the month of December.”

An experienced Elder Law attorney can help you understand the ABLE Act and how it can help you or a loved one achieve a better quality of life. Contact the Elder Law attorneys with the Law Offices of Nay & Friedenberg LLC in Portland, Oregon at (503) 245-0894 to set an appointment.

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