An ABLE (Achieving a Better Life Experience) account is a tax-advantaged savings account designed to benefit individuals with special needs or disabilities, allowing them and their families to save for disability-related expenses without jeopardizing eligibility for government benefits. To maximize the benefits of an ABLE account you must have a clear understanding of how the account works and how the funds can be used. With that in mind, the Los Angeles attorneys at Schomer Estate & Wealth Advisors discuss what you can purchase using funds from an ABLE account.
What Is an ABLE Account?
An ABLE account is a tax-advantaged savings account designed specifically for individuals with disabilities. Established under the Achieving a Better Life Experience Act of 2014, these accounts allow for the accumulation of funds to cover disability-related expenses. The key advantage of an ABLE account is that unlike other savings or income sources that might count against eligibility for benefits like SSI, money from an ABLE account used for QDEs does not impact the account holder’s benefits, provided it is used within the same month it is withdrawn.
What Are Qualified Disability Expenses (QDEs)?
The funds held in an ABLE account must be used for Qualified Disability Expenses (QDEs). QDEs, in turn, are expenses that the Internal Revenue Service (IRS) has approved as related to the disability that assist the account owner in maintaining or improving their health, independence, or quality of life. To continue to benefit from an ABLE account, the funds must be used appropriately. Although not an exhaustive list, the following QDE categories illustrate acceptable uses for funds held in an ABLE account:
- Housing and Basic Living Expenses: Funds from an ABLE account may be used to pay for essential living expenses, including rent, mortgage payments, property taxes, utilities, and even expenses related to home modifications that accommodate the individual’s special needs.
- Education and Training: ABLE account funds can be used for educational expenses at any level, whether the individual is pursuing a degree or participating in specialized training or certifications. Eligible education expenses may include tuition, fees, books, supplies, and even support services that might be needed for an individual to attend school, such as tutoring or specialized learning tools.
- Health and Wellness: Health-related expenses are some of the most obvious QDEs and may include things such as doctor visits, therapies, prescription and non-prescription medications, and medical equipment or devices. Funds in an ABLE account can also be used to cover costs for mental health services, dental care, vision care, and even holistic treatments that may improve the individual’s quality of life.
- Transportation: This can include the purchase of a vehicle if it is modified to meet the special needs of the individual, as well as public transportation costs, rideshare services, or specialized transportation services for individuals with disabilities.
- Employment Support: Individuals with disabilities who are working or seeking employment can use ABLE account funds for employment-related expenses such as costs for job coaching, career counseling, job training, or expenses related to starting a business. Funds may also be used to pay for adaptive equipment that allows the individual to work more efficiently or access a work environment.
- Legal Fees and Financial Management: ABLE funds can be used to cover legal fees, including costs associated with maintaining eligibility for disability benefits, creating estate planning documents, or paying for representation in legal matters. Financial management costs, such as paying a financial advisor to assist with budgeting or investment strategies for the ABLE account, are also considered QDEs.
- Assistive Technology and Personal Support Services: Funds from an ABLE account can be used to purchase assistive technology, such as communication devices or mobility aids. Additionally, personal support services, including home health aides, personal care attendants, or respite care, are considered QDEs, ensuring that the individual can access the assistance they need in their daily life.
Do You Have Additional Questions about an ABLE Account?
For more information, please join us for an upcoming FREE seminar. If you have additional questions about how you can use the funds in your California ABLE account, contact the experienced Los Angeles special needs planning attorneys at Schomer Estate & Wealth Advisorsby calling (310) 337-7696 to schedule an appointment.
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