If you are caring for someone with a disability, you know the importance of government benefits like Medicaid and SSI (Supplemental Security Income). However, like many government programs, Medicaid and SSI are “means-tested” which means that you are only eligible for these benefits if you have limited resources. This discourages people from saving money and being more self-sufficient.
The good news is that this is no longer the case in New Jersey since now you can set up what's called an ABLE account (ABLE stands for Achieving a Better Life Experience). The ABLE account gives those with disabilities the ability to save, while preserving their important SSI and Medicaid.
To open an ABLE account, you must meet the following requirements:
- Your disability was present before the age of 26; and
- You are eligible for SSI or SSDI because of a disability.
You must self-certify that you have one of the following:
- Blindness as defined by the Social Security Act (SSA); OR
- A medically determinable physical or mental impairment with marked severed function limitation that has lasted, or is expected to last, at least 12 continuous months or result in death;
- AND you must have a written disability-related diagnosis signed by a physician.
You must re-certify as to your disability annually.
How much can you save?
You can save up to $100,000 without exceeding your SSI/Medicaid resource limit. Only the amount OVER the $100,000 is counted against your limit, along with assets held in non-ABLE accounts.
If your account exceeds the $100,000 limit, you risk losing your SSI benefits. However, you will continue receiving Medicaid benefits regardless of your account balance. Of course, the idea is to spend some of the money in this account for "disability related" expenses so as to avoid exceeding the $100,000 limit.
How to open an ABLE account?
Opening an account is simple. Here is a link to how you can do this. https://www.state.nj.us/humanservices/dds/hottopics/able/. This can be done right online and without the help of an attorney.
ABLE accounts can take the place of a Special Needs Trust
An ABLE account is a very simple and convenient way to build up a modest amount of assets without having to set up a Special Needs Trust which can be a costlier alternative. ABLE accounts can also be used in case a person receives a financial gift or inherits a modest amount of money. The only draw back is the $100,000 cap. For resources in excess of $100,000, a Special Needs Trust may still be required in order to preserve means-tested benefits.