A Santa Clara Special Needs Attorney’s Take on the ABLE Act and New Savings Opportunities for Disabled Individuals

Thanks to a new law passed in Congress last month, disabled individuals will no longer have to choose between saving a small nest egg for future care expenses or preserving long-term eligibility for low-income benefits such as Medi-Cal or Supplemental Social Security Insurance (SSI).

Under the Achieving a Better Life Experience (ABLE) Act, individuals with disabilities now have the opportunity to save their own money toward future health-care costs, housing expenses, transportation, education, and other needs without jeopardizing eligibility for critical government benefits.

Eligibility under the ABLE Act is limited to those whose disability began when they were 26 and under, with a $14,000 cap on yearly contributions.  A total of $100,000 tax-free can now be accumulated in a special ABLE account, which is limited to one such account per person.

Prior to the passing of the ABLE Act, individuals with disabilities were unable to have assets totaling more than $2,000 or earn more than $680 per month without forfeiting eligibility for government programs like Medi-Cal.  This was worrisome for families, considering that Medi-Cal is often the only healthcare option available for those with significant disabilities.

To protect such benefits, then, parents of disabled children would often go to great lengths to avoid putting assets, donations, or inheritances in their child’s name.  But now, under this law, families have new opportunities to help their child save for the future while keeping much-needed government benefits intact.

Additionally, the ABLE Act offers another exciting benefit in that disabled individuals will no longer be deterred from pursing gainful employment opportunities in the local community.

Prior to the passing of this law, individuals who had some capacity to work and contribute to society were often deterred from doing so out of fear that they would cross the income thresholds of their benefits and lose everything.  Now, young people with disabilities can take a chance in pursuing meaningful work opportunities without sabotaging their financial future.

As a Santa Clara special needs attorney, I feel this is a wonderful law and a positive step forward in empowering disabled children and young adults.  An ABLE Account combined with solid planning tools such as Special Needs Trusts now affords families with even more protection and flexibility when saving for the future.  A good special needs attorney can help families utilize these tools for maximum savings opportunities and peace of mind.