ABLE Accounts - Latest Update
With the near finalization of Regulations from the IRS on the
ABLE accounts, Social Security has published POMS on the ABLE accounts. Here is
the link and then the entire POMS is pasted below. This is a very good
overview of the program. I have highlighted in
red what I think is one of the MAJOR points of an ABLE
account. Social Security will not count payments for shelter as in-kind
support for individuals on SSI as long as you use the money for shelter in the
month you pull the money out.
TN 72 (12-15)
SI 01130.740 Achieving a Better Life Experience (ABLE) Accounts
CITATIONS:
Public
Law 113–295 The Stephen Beck, Jr., Achieving a Better Life Experience Act
(ABLE Act) – Enacted December 19, 2014
A. What is an
ABLE Account?
An Achieving
a Better Life Experience (ABLE) account is a type of tax-advantaged account
that can be used to save funds for the disability-related expenses of the
account’s designated beneficiary, who must be blind or disabled by a condition
that began prior to the individual’s 26th birthday. An ABLE program can be established and maintained by a State or a State agency directly or by contracting with a private company (an instrumentality of the State). An eligible individual can open an ABLE account through the ABLE program of the individual’s State of residence. If an eligible individual’s State of residence does not have an ABLE program but has contracted with another State, the eligible individual can open an ABLE account through that other State’s ABLE program.
An eligible individual can be the designated beneficiary of only one ABLE account, which must be administered by the ABLE program of the State in which he or she lives or, if the designated beneficiary lives in a contracting State, by the ABLE program of the State with which the State of the individual’s residence has contracted. If the designated beneficiary of an ABLE account moves to another State, then the individual must transfer his or her ABLE account to the new State of residence or, if the new State of residence is a contracting State, to the ABLE program of the State with which the new State of residence has contracted.
Upon the death of the designated beneficiary, funds remaining in the ABLE account, after payment of any outstanding qualified disability expenses, are used to reimburse the State(s) for certain Medical Assistance (Medicaid) benefits the designated beneficiary received.
B. Definition of
terms
1. Designated beneficiary
The
designated beneficiary is the eligible individual who established and is the
owner of the ABLE account. To be an eligible individual, he or she must be:
eligible for Supplemental Security Income (SSI) based on
disability or blindness that began before age 26;
entitled to Disability Insurance Benefits (DIB), Childhood
Disability Benefits (CDB), or Disabled Widow’s or Widower’s Benefits (DWB)
based on disability or blindness that began before age 26; or
someone who has certified, or whose parent or guardian has
certified, that he or she:
has a medically determinable impairment meeting certain
statutorily specified criteria; or,
is blind; and,
the disability or blindness occurred before age 26.
NOTE: No inference
regarding disability under the Social Security Act may be drawn from a
disability certification.
2. Contributions
A
contribution is the deposit of funds into an ABLE account. Any person can
contribute to an ABLE account. (Note that “person,” as defined by the Internal
Revenue Code, includes an individual, trust, estate, partnership, association,
company, or corporation.) However, the Internal Revenue Service (IRS) limits
the total annual contributions any ABLE account can receive from all sources to
the amount of the per-donee gift-tax exclusion in effect for a given calendar
year. For 2016, that limit is $14,000.
3. Distributions
A
distribution is the withdrawal or issuance of funds from an ABLE account. The
designated beneficiary or the person with signature authority determines when
distributions are made. Distributions may be made only to or for the benefit of
the designated beneficiary.
4. Person with signature authority
A person
with signature authority can establish and control an ABLE account for a
designated beneficiary who is a minor child or is otherwise incapable of
managing the account. The person with signature authority must be the
designated beneficiary's parent, legal guardian, or agent acting under power of
attorney. For SSI purposes, we always consider the designated beneficiary to be
the owner of an ABLE account, regardless of whether someone else has signature
authority over it.
5. Qualified disability
expenses
Qualified
disability expenses (QDEs) are expenses related to the blindness or disability
of the designated beneficiary and that are for the benefit of the designated
beneficiary. In general, a QDE includes, but is not limited to, the following
types of expenses:
Education;
Housing;
Transportation;
Employment training and support;
Assistive technology and related services;
Health;
Prevention and wellness;
Financial management and administrative services;
Legal fees;
Expenses for ABLE account oversight and monitoring;
Funeral and burial; and,
Basic living expenses
6. Rollover
A rollover
is the distribution of all or some of the funds from one ABLE account to the
ABLE account of a member of the original, designated beneficiary's family. For
the purposes of a rollover, a member of the designated beneficiary's family
means a sibling, which includes step-siblings and half-siblings, whether by
blood or by adoption.
7. ABLE Program
An ABLE
program is the program established and maintained by a State (or agency or
instrumentality thereof) through which the residents of that State, or the
residents of a contracting State, can open ABLE accounts.
8. Qualified disability expense (QDE) for housing
Housing
expenses for purposes of an ABLE account are the same as they are for in-kind
support and maintenance purposes, except that they do not include food. QDEs
for housing are payments for:
Mortgage (including property insurance required by the mortgage
holder);
Real property taxes;
Rent;
Heating fuel;
Gas;
Electricity;
Water;
Sewer; or
Garbage removal.
C. When to
exclude ABLE account contributions, balances, earnings, and distributions
1. Exclude contributions
Exclude
contributions to an ABLE account from the income of the designated beneficiary.
This includes rollovers from a family member's ABLE account to an SSI
recipient's ABLE account. NOTE: Do not deduct contributions from the countable income of the person who makes the contribution. The fact that a person uses his or her income to contribute to an ABLE account does not mean that income is not countable for SSI purposes. For example, a recipient or deemor can have contributions automatically deducted from his or her paycheck and deposited into an ABLE account. In this case, include the income used to make the ABLE-account contribution in the recipient or deemor's gross wages.
2. Exclude ABLE account earnings
The funds in
an ABLE account are invested and can accrue interest, earn dividends, and
otherwise appreciate in value. Such earnings increase the account's balance.
Exclude any earnings an ABLE account receives from the income of the designated
beneficiary.
3. Exclude up to and including $100,000 of balance
Exclude up
to and including $100,000 of the balance of funds in an ABLE account from the
resources of the designated beneficiary.
4. Do not count ABLE account
distributions as income
A distribution
from an ABLE account is not income but is a conversion of a resource from one
form to another. See SI 01110.600B.4. Do not count distributions from
an ABLE account as income of the designated beneficiary, regardless of
whether the distributions are for non-housing QDEs, housing QDEs, or
non-qualified expenses.
5. Exclude retained distributions for non-housing related qualified
disability expenses (QDE)
Exclude from
the designated beneficiary’s countable resources a distribution for a QDE other
than housing if it is retained beyond the month received. This exclusion applies for as long as:
the designated beneficiary maintains, makes contributions to, or
receives distributions from the ABLE account;
the distribution is unspent; and
the distribution is identifiable. (NOTE: Excludable funds
commingled with non-excludable funds must be identifiable to be excluded. See SI 01130.700A.)
NOTE : Apply normal SSI
resource counting rules and exclusions to assets or other items purchased with
funds from an ABLE account. a. Example of an excluded distribution
Eric takes a distribution of $500 from his ABLE account in June 2016 to pay for a health-related QDE. His health-related expense is not due until September, so Eric deposits the distribution into his checking account in June. The distribution is not income in June. Eric maintains his ABLE account at all relevant times, and the distribution is both unspent and identifiable until Eric pays his health-related expense in September. We therefore exclude the $500 from Eric's countable resources in July, August, and September. See SI 01130.700 for instructions on identifying when excluded funds have been commingled with non-excluded funds.
b. Example of an excluded QDE purchase
Fred takes a distribution of $1,500 from his ABLE account in September 2016 to buy a QDE - a wheelchair. The wheelchair is an excluded resource in October and continuing, because it is an individual’s personal property required for a medical condition. See SI 01130.430 for instructions on household goods, personal effects, and other personal property.
D. When to count
ABLE account balances and distributions
1. Count ABLE account balance amounts over $100,000
Count the
amount by which an ABLE account balance exceeds $100,000 as a countable
resource of the designated beneficiary.
a. Rule for indefinite benefit suspension and
continuing eligibility for Medicaid during periods of excess resources
attributable to an ABLE account
A special
rule applies when the balance of an SSI recipient's ABLE account exceeds
$100,000 by an amount that causes the recipient to exceed the SSI resource
limit--whether alone or in combination with other resources. When this happens,
the recipient is put into a special SSI suspension period where:
we suspend the recipient's SSI benefits without time limit (as
long as he or she remains otherwise eligible);
the recipient retains continued eligibility for Medical
Assistance (Medicaid); and
the individual’s eligibility does not terminate after 12
continuous months of suspension.
We will
reinstate the recipient's regular SSI eligibility for any month in which the
individual’s ABLE account balance no longer causes the recipient to exceed the
resource limit and he or she is otherwise eligible. NOTE: Updated instructions will be issued when additional procedures related to this special suspension status are complete. Due to the limitation on contributions described in this section at SI 01130.740B.2, there will be no SSI recipients in this suspension status for several years (until individuals have been able to contribute more than $100,000 to an ABLE account).
Example — excess resources — recipient is suspended but retains eligibility for Medicaid
Paul is the designated beneficiary of an ABLE account with a balance as of the first of the month of $101,000. Paul's only other countable resource is a checking account with a balance of $1,500. Paul’s countable resources are $2,500 and therefore exceed the SSI resource limit. However, since Paul's ABLE account balance is causing him to exceed the resource limit (i.e., his countable resources other than the ABLE account are less than $2,000), Paul’s SSI eligibility is suspended and his cash benefits stop, but he retains eligibility for Medicaid.
b. Ineligibility due to excess resources other
than an ABLE account
The special
suspension rule does not apply when:
the balance of an SSI recipient's ABLE account exceeds $100,000
by an amount that causes the recipient to exceed the SSI resource limit;
but the resources other than the ABLE account alone would make
the individual ineligible for SSI, due to excess resources
When this
happens, suspend the recipient's SSI benefits using the payment status code
N04. While in N04, the recipient loses eligibility for Medical Assistance
(Medicaid) and the individual’s SSI eligibility will terminate 12 months later
if the suspension continues during this period. Reinstate the recipient's
regular SSI eligibility and Medicaid benefits for any month in which the
individual’s ABLE account balance and other resources no longer cause the
recipient to exceed the resource limit. Example — combination of resources — recipient loses SSI eligibility
Christine is the designated beneficiary of an ABLE account with a balance as of the first of the month of $101,000. Christine's only other countable resource is a checking account with a balance of $3,000. Christine's countable resources are $4,000 and therefore exceed the SSI resource limit.
However, because her ABLE account balance is not the cause (i.e., her countable resources other than the ABLE account are more than $2,000), the special rule does not apply, and Christine is not eligible for SSI because of excess resources. Christine’s SSI benefits are suspended using payment status N04, and her Medicaid benefits will stop.
c. Ineligibility for other reasons
If an
individual is ineligible for any reason other than excess resources in an ABLE
account, the special suspension status does not apply. Suspend the individual’s
SSI eligibility using normal procedures. Example – ineligibility for a reason other than excess resources in an ABLE account
In April, Sam has a first of the month resource balance in his ABLE account of $102,500. However, Sam also has excess deemed income in April and will be N01 despite the excess funds in his ABLE account. Before the end of April, Sam leaves the U.S. and does not return until July 1. Sam will be N03 for May, June and July. If Sam still has excess resources in his ABLE account effective August 1 and is otherwise SSI eligible, he will go into the special ABLE resource suspension status and be eligible for Medicaid.
2. Count as a resource retained distributions for housing-related
QDEs or expenses that are not QDEs
A
distribution from an ABLE account is not income, but is a conversion of a
resource from one form to another. See SI
01110.600B.4. Count as a resource a distribution for a housing-related QDE or for an expense that is not a QDE if the distribution is retained into the month following the month of receipt. If the distribution is spent within the month of receipt it has no effect on eligibility. However, apply normal SSI resource counting rules and exclusions to assets or other items purchased with funds from an ABLE account
Example – retained housing QDE is a resource
Amy takes a distribution of $500 from her ABLE account in May to pay her rent for June. She deposits the $500 into her checking account in May, and withdraws $500 in cash on June 3rd and pays her landlord. This distribution is a housing-related QDE and part of her checking account balance as of the first of June, which makes it a countable resource for the month of June.
E. How to verify,
document, and record ABLE account balances
1. Obtain evidence of the ABLE account
Whenever a
recipient or deemor alleges being the designated beneficiary of an ABLE
account, obtain evidence that provides the following information:
the name of the designated beneficiary;
the State ABLE program that is administering the account;
the name of the person who has signature authority (if different
from the designated beneficiary);
the unique account number assigned by the State to the ABLE
account;
the account opened date;
the first-of-the-month account balance or information sufficient
to derive a first-of-the-month balance.
If the
available evidence doesn't provide this information, contact the appropriate
ABLE program to obtain it.
2. Document the evidence
Fax the
evidence into the electronic folder (EF) or Non-disability Repository for
Evidentiary Documents (NDReD). If you contact the ABLE program directly,
document the information you received on a Report of Contact (DROC) in MSSICS
or on a Report of Contact (SSA-5002) in non-MSSICS claims.
3. Record the account on a MSSICS “Other Resource” page
Record the
account information and balance on a MSSICS Other Resource (ROTH) page. There
is an ABLE account drop down under “Type.” See MS INTRANETSSI 013.032 for
instructions on completing this screen. NOTE: The designated beneficiary of an ABLE account is always the owner of the account for SSI purposes.
F. How to verify,
document, and record ABLE account distributions
1. When to develop
Only verify
a distribution when a recipient or deemor alleges retaining, or other evidence
indicates he or she retained, all or part of a distribution into months
following the month of receipt. Since distributions do not count as income, the
distribution is only material in determining whether the recipient's countable
resources exceed the limit.
2. Verify the distribution
Obtain
evidence showing the amount of any distributions, the dates taken, and who
received them (for example, whether it was paid directly to a vendor). Obtain
and accept the recipient or deemor's allegation as to whether a distribution
was or will be used for:
a QDE other than housing;
a housing QDE; or
an expense that is not a QDE.
3. Exclude retained distributions for QDEs other than housing
Exclude from
the designated beneficiary’s countable resources any retained distribution or
part of a distribution for a QDE other than housing per SI 01130.740C.5
in this section. Example of a retained QDE other than housing
Elizabeth takes a distribution of $500 from her ABLE account in May to pay for a health-related QDE she expects to pay in September. She deposits the distribution into her checking account in May and withdraws it in September to pay the health-related QDE. We would exclude the $500 from Elizabeth's countable resources from June through September. Starting in June, the technician documents the deposit on the RFIA page inputting $500 as the “excluded amount.” She selects “Other” as the exclusion reason and inputs “ABLE QDE distribution” as the “other reason.”
4. Count retained distributions for housing QDEs and expenses that
are not QDEs
Count as a
resource any distribution or part of a distribution for a housing QDE or an
expense that is not a QDE if it is retained into the month following the month
of receipt. Example of a retained QDE for housing
Amy takes a distribution of $500 from her ABLE account in May to pay her rent for June. She deposits the $500 into her checking account in May, and withdraws $500 in cash on June 3rd and pays her landlord. This distribution, which is a housing-related QDE, is part of her checking account balance as of the first of the month in June, which makes it a countable resource for the month of June.
5. Record the amount excluded on the appropriate resource page
ABLE account
distributions are the conversion of a resource from one form to another.
Accordingly, they continue to be a resource if retained into the month
following the month of receipt. A retained QDE distribution is excluded from
resources per SI
01130.740F.3 in this section. Depending on how and where they are retained, record the amount in the "amount excluded" field of the appropriate resource page in MSSICS with a reason of "ABLE QDE distribution."
SI
01130.740 - Achieving a Better Life Experience (ABLE) Accounts - 12/18/2015
Batch run: 12/18/2015 Rev:12/18/2015 |
Travis D. Finchum, Esq.
Board Certified Elder Law Attorney
Co-Trustee, Guardian Trusts
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