Establish an ABLE Account for your child

Read about a new savings vehicle for persons with a disability soon to be available in New York

It is difficult for your child with a disability to accumulate resources for future discretionary spending or to purchase a “big ticket” item.  Your child is limited to $14,850 in resources if he or she is on Medicaid and only $2,000 to maintain eligibility for Supplemental Security Income (“SSI”).  Recognizing this difficulty, Federal Law authorized States to establish ABLE programs to offer a tax favored vehicle for savings.  The express intent of the Law is to “. . .encourage and assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities to maintain health, independence, and quality of life.”  The good news is that New York has adopted an ABLE program; the bad news is that ABLE Accounts will not be available in New York until mid-2017.

You can (and should!) establish an ABLE Account for your child with a disability at any time during his or her lifetime; provided that, the onset of his or her disability occurred prior to age twenty-six.  When your child turns age eighteen, he or she may establish his or her own ABLE Account if one has not already been established.  Remember; however that your child is limited to only one ABLE Account at a time.   Anyone can contribute cash (or cash equivalent) to the ABLE Account, up to a limit of $14,000 per year.  The amounts in an ABLE Account can be used for “qualified disability expenses,” which include: tuition and education material and services; housing expenses for  a  primary  residence,  including rent, real  property taxes, and utility charges; public transportation; vehicle and other transportation expenses; expenses  related  to  obtaining  and maintaining employment; health  prevention  and  wellness  expenses, including insurance premiums, rehabilitation services; durable medical equipment; and nutritional  management.  New York limits the aggregate amount saved in an ABLE Account to $100,000.  Any amount remaining in the ABLE Account at the death of your child must be used to “pay-back” the State for any Medicaid benefits provided after the ABLE Account is established.

For your child with a disability, the major advantage of an ABLE Account is that amounts saved in the account are disregarded for purposes of eligibility for SSI and Medicaid.  This means that your child can safely accumulate resources without jeopardizing his or her benefits.  Another benefit is that amounts paid into an ABLE Account by you or another person close to your child will not be counted when computing his or her “income” to determine eligibility for these means-tested benefits. 

For more information on the current status of ABLE Accounts in New York go to the website of the Office of the New York State Comptroller.