Myth 5: The Myth of Special Needs Savings

By Holly Morris

In December of 2014, the Achieving a Better Life Experience (ABLE) Act, a federal law, was passed. Then, in 2015, North Carolina passed the law which requires the NC State Treasurer’s office to implement the federal law by administering ABLE Act accounts in North Carolina. So clients are asking, “What is the ABLE Act and what exactly does this mean for individuals with disabilities?”


Under the ABLE Act, qualified disabled individuals are allowed to save up to $14,000 per year in a unique savings account much like a 529 college savings plan without being penalized or disqualified from receiving benefits such as Social Security Income and Medicaid. These funds do not have to only be used for educational expenses, but can also be used for certain living and health expenses as well.


To be eligible for an ABLE account, a person must meet the definition of mental or physical impairment as set forth in the Social Security Act, and this impairment must have occurred prior to age 26. This means that individuals who qualify for Social Security Income or Social Security Disability Benefits, and other disabled individuals who do not strictly qualify for federal benefits but do qualify based on similar requirements, are eligible to open an ABLE account.


Because the funds that are in an ABLE account may be used to pay for a variety of qualified expenses, it is now an advisable option to use in setting aside money for care that may not get paid for by government benefits. Some of these qualified expenses include education services such as tutors and other materials, certain improvements to a primary residence, transportation expenses such as transit or purchasing vehicles, and job training. The funds may also be used for qualified health expenses such as dental, vision, medical and mental health services as well as long-term services, medical equipment and nutritional services to name a few. A comprehensive list of qualified expenses can be found in the Act.


Another benefit to the ABLE program is that any person, including but not limited to the disabled individual, family and friends are allowed to contribute to an ABLE account. The first $100,000 will not be looked at when determining eligibility for Social Security Income benefits. However, once an ABLE account reaches $100,000, the Social Security Income benefits will be suspended until the ABLE account balance falls below $100,000. At which point, the individual will resume receiving benefits without having to go through the application process again.


To enroll in an NC ABLE account, go to: www.NC.SaveWithABLE.com

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