The Centers for Medicare and Medicaid Services (CMS) has finally issued some guidance on the use and funding of ABLE accounts for individuals with disabilities, and guidance on the way the ABLE statute intersects with the strict financial requirements of the Supplemental Security Income (SSI) and Medicaid programs. The federal statute (the ABLE Act) created an opportunity to create a fund to be used to pay for Qualified Disability Expenses (QDEs) for a person with disabilities without disrupting their eligibility for other crucial means-tested benefits.
The Medicaid and SSI programs have a resource limit — an applicant can possess no more than $2,000 of non-excluded “resources.” The residence, one car, an irrevocable funeral trust, and all of the funds in a qualified ABLE account are considered to be “excluded resources.”
As for “income,” there are an array of different income thresholds/limits depending on the particular program, and generally, income received by a beneficiary is counted towards these limits (with certain disregards). Interest or dividends earned by the funds in a qualified ABLE account are disregarded as “income.” Distributions from a qualified ABLE account to a beneficiary for Qualified Disability Expenses are also disregarded as “income.” QDEs are expenses that are related to the eligible individual’s blindness or disability, and may include, but are not limited to, expenses incurred for housing, transportation, education, employment training and support, and assistive technology. ABLE accounts can be critical for situations where the individual requires housing that isn’t otherwise paid for through other programs.
The guidance can be found in both the Social Security Procedures and Operations Manual (POMS) and in the CMS memorandum.
The contribution of funds to an ABLE account for a disabled family member or other person is not a penalty-free transfer of assets by an individual who applies for Medicaid within 5 years of making that gift (the look-back period). Potential MLTSS/Medicaid applicants should consult with an elder law attorney before making such a transfer of assets.
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