January 28, 2020

Achieving a Better Life Experience Using ABLE Accounts 

For someone living with disabilities, having a savings account can offer increased independence and autonomy, and enable a person live his or her dreams. Fortunately, the ABLE Act allows those with disabilities to live more freely with enhanced savings resources, without impacting Federal or California State Benefits. Anyone can contribute to these accounts, making them an excellent vehicle for those in their circle of support who wish to contribute, without triggering loss of public benefits. While programs such as Social Security Supplemental Income (SSI) and Medi-Cal place limits on resources, ABLE accounts are held to a much higher ceiling which is currently $100,000. 

In California, CalAble is the state’s provider of ABLE accounts. Anyone in the country may use CalABLE but the advantage to California residents is there is no Medi-Cal payback clause. This may not be the case for other states’ programs. Contributions can be made up to $15,000 annually, with a limit on account balance not to exceed $100,000. 

Eligibility is determined by the age when the disability occurred and the disability must have been present prior to the age of 26. In California with CalABLE, there are two ways to demonstrate this. First, if the individual meets the eligibility requirements for benefits such as SSI or SSDI this is sufficient to meet the requirement. However, for many others, their disability may occur after age 26 making them ineligible for public benefits. For example, the condition of female schizophrenia that tends to be diagnosed between ages 26 and 30, with many symptoms and limitations appearing earlier than the condition’s full onset.

In the above situation, self-certification is appropriate if the condition existed prior to age 26. The qualified physician should consider writing a letter stating the individual’s disability began prior to age 26, resulting in reduced ability to function and to care for one’s self, and that the condition is expected to last more than 12 months. With self-determination, the individual may not yet be receiving public benefits.

Funds are to be used for qualified expenditures, which is a quite a broad qualification. Some examples include education, housing, food, medical expenses, and transportation, however this is not an exhaustive list. One example of expenses that does not qualify includes illegal purchases such as illegal drugs. It’s important to note if ABLE funds are used toward shelter, this does not result in any loss of SSI benefits. In fact, social security is not allowed to request a list of expenditures. Never-the-less, it is prudent to always retain receipts and maintain a purchase ledger.

At Hitchman Fiduciaries, we regularly use ABLE accounts and have observed a higher quality of life for our beneficiaries, as well as cost savings in administration. In conjunction with special needs trusts, our professional fiduciaries also use these accounts to augment our beneficiaries’ standard of living and create a higher level of autonomy.

At Hitchman Fiduciaries, we are here to support you through all of life’s triumphs and challenges. If you have questions or would like to learn more about CalABLE, we can help! Don't hesitate to call us today at 949.200.9712 and a member of our team will get in touch within 24 hours.

Author: Lee Ann Hitchman, CLPF/MBA and Licensed Professional Fiduciary