The Pennsylvania Department of Treasury has announced that the PA ABLE Savings Program will open on April 3, 2017. On that date the Department will officially begin accepting applications for enrollment.
In December 2014, the Federal government enacted a law which authorizes states to create “Achieving a Better Life Experience” [ABLE ] tax free savings account programs. ABLE accounts allow certain individuals with disabilities to accumulate savings without losing their eligibility for means tested SSI, Medicaid and other government benefit programs. To be eligible for an ABLE account an individual’s blindness or disability must have occurred before the individual reached age 26.
An ABLE account is established by and owned by the disabled individual (or by a parent or fiduciary acting on behalf of an eligible individual who is a minor or who lacks capacity). Anyone can contribute to it.
The money in an ABLE account can be used to pay for a broad range of “qualified disability expenses.” Funds can be used to pay for education, housing, health, transportation, personal support, employment training, legal and financial assistance, and more.
If the rules are followed, earnings on the ABLE account will not be subject to federal income tax, and perhaps more importantly, the funds in the account will not disqualify the owner from continued benefits under the Supplemental Security Income (SSI) and Medicaid programs. (If the account balance exceeds $100,000, SSI is suspended but Medicaid eligibility can continue.)
Ohio opened the first ABLE program in June 2016. Since then, many states have established ABLE account programs. Pennsylvania is now joining that group. For an updated listing of state programs click here.
ABLE accounts represent an important additional planning option for individuals who qualify. To understand the benefits and pitfalls and achieve optimal results ABLE accounts should be integrated and coordinated with other planning options like special need trusts. Check with a certified elder law attorney[1] or other experienced special needs planning lawyer in your state. Pennsylvania residents can contact Marshall, Parker and Weber for planning assistance.
Here are links to further information:
PA ABLE Program website: https://www.paable.gov/
The National ABLE Resource Center: https://www.ablenrc.org/
Marshall, Parker and Weber blog articles:
NewLaw Authorizes PA ABLE Savings Accounts (MPW blog, April 19, 2016)
ABLE Accounts – a New but Limited Financial Option for the Disabled (MPW blog, December 22, 2014)
[1] Certified Elder Law Attorneys are Certified by the National Elder Law Foundation. In Pennsylvania, this certification has been reviewed and authorized by the Pennsylvania Supreme Court. These attorneys are typically knowledgeable about special needs planning including ABLE.
