Our Medi-Cal attorneys recognize the benefits of opening ABLE accounts because the money in those accounts do not jeopardize your Medi-Cal benefits regardless of how much you have. In order to ensure that the funds in your ABLE account are not counted in terms of your Medi-Cal eligibility, let our Medi-Cal attorneys advise you.
What is an ABLE account?
An ABLE account is a financial account that allows individuals with disabilities to build up their assets while enjoying certain tax advantages. Individuals with disabilities that began before the age of 26 are authorized to open an ABLE account. Investments held in an ABLE account are not taxed which allows the balance to grow at a faster rate. Also, individuals that deposit their earned income into their ABLE account can qualify for the federal Saver’s Credit.
Other benefits of using an ABLE account
The savings accumulated in an ABLE account can be used to pay for a variety of expenses. There are certain limitations, but the rules are quite flexible. If you have questions about which expenses are appropriate to be paid from an ABLE account, ask our Medi-Cal attorneys. When it comes to SSI benefits, you can also maintain up to $100,000 in your ABLE account without affecting your benefits. If your balance does exceed that amount, your SSI benefits will stop and resume when your balance drops back below the limit.
Rules about opening an ABLE account
There are a few requirements that must be met when opening an ABLE account. First, you are only allowed to open an account through a state-designated program or institution. Some states have ABLE account programs, but California does not. The good news is that you can open an account in another state, but you can only open one ABLE account. Although your disability must have begun before you were 26 years old, you can be older than that when you open the account.
Will your disability qualify you for an ABLE account?
In order to qualify for an ABLE account, your disability must meet the Social Security’s standards for adults with disabilities. If you are already receiving benefits such as Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Childhood Disability Benefits, Medi-Cal based on a disability, or Medi-Cal’s Working Disabled Program, you will automatically qualify.
However, if you are not receiving disability-based benefits of any kind, you can still “self-certify” meets the required standards. Remember that you must have proper documentation of your disability verified by a physician. You must also show that your disability causes “marked and severe functional limitations.” In other words, your disability must be on Social Security’s List of Impairments or at least as severe as one of the impairments on that list.
Be sure to compare state ABLE programs
Although California does not have an ABLE account program, you should compare the programs in other states before choosing one. Consider how difficult it is to deposit and withdraw money for qualifying expenses. If an account includes a debit card, that may be a better option. You should also consider the types of investments that are offered through the program so you can select a program that provides the investments that will meet your particular needs.
Another consideration is the type of fees that are charged by the program, such as fees for opening the account and fees that relate to the balance you maintain in the account. You may also want to determine whether the program provides any additional benefits that may apply to you. You should also know that you can transfer your ABLE account from one state to another. So, if you are not happy with the program you have chosen, you are not stuck with it. If you have additional questions, let our Medi-Cal attorneys help.
Limitations on depositing money into an ABLE account
There are a few limitations with regard to how much money you can deposit into an ABLE account within each calendar year. You are limited to depositing a maximum of $15,000 from any source and an additional $12,060 from your own earned income from employment. As such, there maximum possible will not exceed $27,060 each year.
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