Does an ABLE Account Affect SSI Eligibility?

The relationship between financial resources and eligibility for public benefits, such as Supplemental Security Income (SSI), is a common concern for individuals with disabilities and their families. This article aims to clarify how Achieving a Better Life Experience (ABLE) accounts specifically interact with SSI eligibility, offering insights into how these savings vehicles can provide financial security without undermining crucial benefits. Understanding these rules is important for effective financial planning.

Understanding ABLE Accounts

An ABLE account serves as a tax-advantaged savings and investment vehicle designed to support individuals with disabilities. These accounts, established under Section 529A of the Internal Revenue Service tax code, allow eligible individuals to save money for disability-related expenses. The primary purpose of an ABLE account is to enable individuals with disabilities to build financial assets without risking their eligibility for means-tested government benefit programs.

To qualify for an ABLE account, an individual must have a disability that began before the age of 26. This age-of-onset requirement is a key criterion. Eligibility is also met if an individual is already receiving Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) benefits. For those not receiving these benefits, a physician’s certification of a severe disability that began before the specified age is necessary.

Funds held within an ABLE account must be used for “qualified disability expenses” (QDEs) to maintain their tax advantages. These expenses are broadly defined and include costs related to maintaining or improving the health, independence, or quality of life of the account beneficiary. Examples of QDEs include:
Education
Housing
Transportation
Employment training and support
Assistive technology
Personal support services
Healthcare
Prevention and wellness
Financial management
Legal fees
Funeral and burial expenses

Understanding Supplemental Security Income (SSI)

Supplemental Security Income (SSI) is a federal needs-based program administered by the Social Security Administration (SSA). This program provides financial assistance to aged, blind, or disabled individuals who have limited income and resources. The core purpose of SSI is to help recipients meet their basic needs for food and shelter.

Eligibility for SSI is determined by strict income and resource limits. For an individual, countable resources generally cannot exceed $2,000, while for a couple, the limit is $3,000. Resources include cash, bank accounts, stocks, and bonds. However, certain assets are excluded from these limits, such as the home where the individual lives, one vehicle, household goods, and personal effects.

Income also plays a role in SSI eligibility and benefit amounts. The SSA considers various types of income, including earned income from work, unearned income such as other benefits or gifts, and even in-kind support like free food or shelter. The program is designed to provide support to those with the most significant financial need, with benefit amounts varying based on income and living arrangements.

Impact of ABLE Accounts on SSI Eligibility

ABLE accounts are specifically designed to allow individuals with disabilities to save money without jeopardizing their eligibility for Supplemental Security Income (SSI). A significant benefit of these accounts is that the first $100,000 held within an ABLE account is excluded when the Social Security Administration determines SSI resource eligibility. This exclusion allows individuals to accumulate substantial savings for disability-related expenses beyond the standard SSI resource limits.

If an ABLE account balance exceeds $100,000, SSI cash benefits may be suspended. However, eligibility for Medicaid is not affected by an ABLE account balance exceeding this $100,000 threshold. SSI benefits are reinstated once the account balance, combined with other countable resources, drops back below the $100,000 limit.

Distributions from an ABLE account used for “qualified disability expenses” are generally not counted as income for SSI purposes. This means that withdrawing funds for legitimate disability-related costs will not reduce the SSI recipient’s monthly benefit. However, if distributions are not used for qualified disability expenses, they can be counted as income and may affect SSI eligibility. Funds distributed for housing expenses, if not spent within the same calendar month of receipt, can be counted as a resource for SSI purposes.

Upon the death of an ABLE account beneficiary, a “Medicaid clawback” provision may allow states to recover certain Medicaid costs from the remaining funds in the ABLE account. This means that after qualified disability expenses, including funeral and burial costs, are paid, states might claim reimbursement for Medicaid services provided since the ABLE account was opened. Some states, however, have enacted legislation to limit or prohibit such Medicaid recovery from ABLE accounts.