NEW DISABILITY BANK ACCOUNTS: IS ACHIEVING A BETTER LIFE EXPERIENCE IN YOUR FUTURE?

 

From lemonade stands, to mowing the neighbor’s grass, to paper routes, many of us remember doing these activities to supplement our weekly allowance. This has not the case for the majority of people with disabilities. Parents of special needs kids and disabled adults have always struggled to find ways to pay for their basic needs, let alone their future ones. Medicaid mandates that all recipients of Supplemental Security Income (SSI) have no income or assets exceeding $2000. Anything more can cause disabled individuals to lose eligibility for health care, attendant care, food stamps, housing, medical equipment, and much more. The domino effect is difficult to quantify.

Enter 2014. Congress passed the A.B.L.E. Act, also known as Achieving a Better Life Experience. All ABLE programs have the same tenants: a unique program name, a program manager, an administrative agency, and an investment manager The National Resource Center (nrc.org) has a comparison database of each state’s program and informative videos. These are tax-advantaged bank accounts, similar to 529 college savings plans, and are meant for those disabled from birth to age 26 and receive SSI. This ground-breaking legislation will be available nationwide by December 2017. It prohibits the loss of Medicaid for the account holder/beneficiary up to $100,000 as long as the money is used for Qualified Disability Expenses (QDE). Otherwise, the money counts as a resource causing the loss of Medicaid if the balance exceeds $2000, the long-standing benchmark set by the Social Security Administration. QDE funds must be used for specific disability related items not covered by insurance and/or community programs such as rent, utilities, transportation, assistive technology, dental/medical burial services, etc. Participants are required to document how the funds are used. Banks may charge various fees like those of standard accounts. All offer rollover options for transferring one account between states.

Putting policy into practice is a whole different ballgame. Consumers, guardians, and other players are entering an uncharted territory which means it will take time to work out the kinks. Many people with disabilities may lack the physical/cognitive skill set required to properly manage ABLE accounts.SSI has always restricted resources so having to now distinguish and keep track what is a QDE could be challenging. It’s also unclear how unemployed disabled consumers living independently will contribute to their own accounts. Another issue to be aware of is that while all plans offer interest earning and/or risk investing, only a few offer basic accounts.

The efficacy of oversight for all involved parties may continue being cause for concern as with existing disability programs such as the Ticket To Work or the Plan to Achieving Self Support, especially now due to the larger sums of money involved. Imagine how many potential ABLE accounts, for example, that could be opened by fiduciaries for the residents of a group home with fraudulent QDEs. There’s also nothing to prevent consumers with signature power themselves from doing the same for say, a vacation in the Bahamas. Still, proper documentation is all the proof necessary.

Perhaps the biggest hurdle surrounding the program is educating consumers and guardians of its existence. Fighting complacency is a problem that all of us face, however, it might just be what’s needed to improve the quality of life for people with disabilities.