Question 1

How do ABLE accounts work?

Accepted Answer

ABLE accounts are owned by the individual with the disability, but others can contribute. These accounts let families save for their children without risking eligibility for public assistance programs. For example, ABLE account savings don’t limit Medicaid eligibility, provided savings don’t exceed the state’s 529 savings limit.

The annual cap on contributions to an ABLE account is $15,000. Total contributions over time are limited to the individual's state limits on 529 accounts. People who are disabled receiving SSI benefits may face additional limits. SSI cash benefits might be suspended if the ABLE account exceeds $100,000. If the beneficiary dies, Medicaid may recoup costs for that beneficiary from their remaining ABLE account funds.

Like 529 college savings, you can choose the state program with an ABLE account that works for you even if you don’t live in that state.

Question 2

What can ABLE funds be used for?

Accepted Answer

Funds can be used for qualified expenses like personal support, health care, assistive technology, education, transportation, housing or other services that help individuals with disabilities live independently and improve their quality of life.

Question 3

Who qualifies for ABLE accounts?

Accepted Answer

ABLE accounts are for people with significant disabilities whose disability began before age 26. The individual can open an account after age 26, but their disability must have started before then.

If the individual has already qualified for SSI or SSDI, they can automatically create an ABLE account. If not, they may still be eligible with a physician's letter if they meet the age and disability criteria.

Question 4

What is a first-party special needs or supplemental trust?

Accepted Answer

A first-party special needs or supplemental trust contains assets owned by a person with disabilities. The individual with a disability must own the assets, though a parent or guardian sets up the trust before the beneficiary turns 65.

The individual with a disability must own the assets, though a parent or guardian sets up the trust before the beneficiary turns 65.

When the beneficiary dies, the trust must reimburse Medicaid for their spending on that individual. First-party SNTs must be irrevocable, so they cannot be changed once they're set up. These trusts are appropriate if the individual with a disability has assets that would otherwise disqualify them from public benefits, such as from an inheritance or a lawsuit settlement.

Question 5

What is a third-party special needs or supplemental trust?

Accepted Answer

Third-party special needs or supplemental trusts are initiated by a third party who donates assets to the trust to help the individual with a disability supplement their publicly funded benefits while the donor is alive. Assets pass to the beneficiary when the donor dies. There is no age limit on third-party SNTs.

Unlike first-party SNTs, because the beneficiary never technically owned the trust assets, third-party SNTs do not need to reimburse Medicaid. On the other hand, they cannot hold any assets owned directly by the beneficiary, such as an inheritance or settlement payment.

Question 6

What is a pooled trust?

Accepted Answer

Nonprofit organizations create pooled special needs or supplemental trusts for the benefit of multiple beneficiaries who create individual accounts within the pooled trust. These trusts can be low cost and more stable because they pool the assets of multiple beneficiaries. They can be appropriate for beneficiaries with few assets in their name. Like first-party SNTs, Medicaid must be reimbursed with remaining assets when the beneficiary dies, but the trust may be allowed to keep a portion of remaining assets to support others in the pool.

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