Having a disability often requires significant costs, and inequity in the banking industry can make it difficult for people with disabilities to have opportunities to manage daily expenses and build wealth.
If you have a disability, you can have some control over your finances by opening an ABLE account.
What is an ABLE account?
Achieving a Better Life Experience Accounts, or ABLE Accounts, are tax-free savings accounts for people with disabilities.
An ABLE account allows people with disabilities to manage their money without worrying about how it may affect government assistance like Social Security or Medicaid income.
“ABLE accounts allow people to take some control over their finances,” said Miranda Kennedy, director of the National ABLE Resource Center. “Either for themselves as a person with a disability or for a supporting family member someone who may not have the capacity to establish or support it.”
Most people with disabilities or their family members can deposit $ 15,000 into an account each year.
However, if you have a job and your employer does not contribute to a pension plan, you can save more money. You can deposit an amount equal to your annual gross salary or that matches the individual federal poverty level, whichever is less. In 2021, the individual federal poverty level is $ 12,880.
You can use the money in the account for any expenses related to your disability. Use it for everyday expenses – like transportation costs – or big purchases, like putting a down payment on a house.
Kennedy pointed out that people with ABLE accounts can also have a special needs trust, so you are not disqualified if you have a trust. A special needs trust allows you to establish a financial guardian for a person with a disability in the event of the death of a parent or guardian. The financial guardian can help manage the inherited funds.
Who can get an ABLE account?
To be eligible for an ABLE account, you must have fulfilled one of the following conditions before the age of 26:
- Qualified for SSI if you had a disability or blindness
- Receipt of disability insurance benefits, children’s disability benefits or disabled widow’s benefits
- You have received a disability certificate, or your parent or guardian can verify that you have a disability before the age of 26
Kennedy told Insider that people often confuse ABLE accounts with youth-only accounts. However, anyone over the age of 26 can apply if they qualify.
You can open an ABLE account if you are at least 18 years old. A parent or legal guardian who acts as a legally authorized representative can also open an account for the person with a disability and manage it.
Should you get an ABLE account?
An ABLE account is a great option if you are a person with a disability looking for a way to manage your personal finances. You can open and set up the account on your own and make financial decisions independently.
It is also a good choice if you or a family member with a disability find your options for saving money are limited.
If you are currently receiving government assistance for housing or food, there is a limit to how much you can have in cash or in a bank account. However, the ABLE account is usually not taken into account because it is a tax free account. For example, the SSI program has nothing below $ 100,000 in an ABLE account.
Kennedy told Insider that ABLE accounts can also be beneficial in times of uncertainty.
“We had a guy who shared a podcast,” Kennedy said, ““ What if you were in Minnesota and your furnace goes out in the middle of winter, and it’s $ 4,000. What are you going to do ? If you have this money in an ABLE account, your stress decreases and your quality of life increases. You are able to have more control, and that’s important. “
How to open an ABLE account?
You cannot enter a bank to open an ABLE account. Instead, you will need to apply through an ABLE state program.
Currently, there are approximately 44 state ABLE programs available, with programs active in all states except Idaho, North Dakota, South Dakota, Wisconsin, and Hawaii.
You do not need to be a resident to apply for some programs. The ABLE National Resource Center has a mapping tool with specific details on each state program.
Kennedy advises people to watch several state programs in addition to their state program because there are many possibilities.
“There will be one that will suit some individual situations that might not be suitable for others,” Kennedy said. “But people should always look at their home state first, because there are cases where a state program will more incentivize and support someone who opens a plan in their own state if they reside in that state. . “
Once you have chosen a state program, you can complete an online application on the state ABLE program website. The app will ask you for basic credentials, and you can get help over the phone or email if you have any questions while filling out.
If you are curious to learn more about the ABLE program, the National ABLE Resource Center has many resources and comprehensive guides.
You can compare state programs through the website’s three state comparison tool. Find out how people with different types of disabilities have used the ABLE Account under the ABLE NRC Ambassadors Program 2020 and the ABLE NRC BIPOC Ambassadors Program 2021.
People with disabilities affected by COVID-19 can also turn to the National Disability Institute Financial Resilience Center for other ways to manage their money. The Financial Resilience Center will answer questions about health, money management and more. You can talk to an AFCPE licensed financial advisor, read guides, or watch videos in American Sign Language.