Alex, a 30-year old man with Down syndrome, has cause to celebrate today. As a Special Needs individual, Alex receives Medicaid and Supplemental Security Income (SSI). However, these federally funded benefits have been attached to some very restrictive rules. Specifically, up until now, Alex has been prohibited from having more than $2,000 in savings. If he exceeds that amount he loses government funding.
Given this minuscule savings limit, Alex has never been able to improve his life beyond what the government was willing to fund. So, Alex could never dream of living in his own apartment, or going to college, or having discretionary funds available for enhanced medical treatments. But that may soon change! Congress voted to enact the “Achieving A Better Life Experience“ (ABLE) Act on December 16, 2014. The President is expected to sign the bill.
Under the ABLE Act, a disabled person may have up to $100,000 in personal savings in a 529A savings account without losing major federal means-tested benefits. Specifics are as follows:
– Special needs children and adults diagnosed before age 26 are eligible for 529A accounts.
– Only one 529A account per disabled individual is permitted.
– These accounts may be funded by the individual, his family, or anyone else who wishes to do so. Total annual deposits may equal the annual gift tax exemption (currently $14,000 per year).
– Qualified disability expenses that may be paid with 529A funds include among other things: education, housing, transportation, employment training, personal support services, and health.
– 529A plans function in a manner similar to the very popular 529B college savings plans with associated tax benefits.
– 529A’s will be administered by the individual states.
Soon a new day will dawn for Alex. One that makes him more financially independent; one that gives him more control over his own life.
Getting Legal Help:
Experienced Estate Planning Attorney, Elga A Goodman, can help you understand the new law. She can work with you on all your Special Needs and Estate Planning issues. Contact us today at 973-841-5111.
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