Nysha Recent News

En-ABLE-d! Ohio SSA, Medicaid Disability Investment Accounts Now Open Nationwide

July 6, 2016

By Mendy Hecht, Hamaspik Gazette

State 1st with Federal ABLE Act; Fla., Neb., Tenn., Follow; Allows $14K Yearly Savings

People with disabilities getting Social Security benefits couldn’t save much money in the bank.  And people saving too much money in the bank would lose their Social Security disability benefits.

For decades, the federal rule was that you didn’t qualify for Social Security disability benefits if you had more than $2,000 in the bank.  The thinking was simple: If you have that much money, use it!  You don’t need us.

But what about people with disabilities who are functional enough to work?

What about people with disabilities who are functional enough to work—and save some money for long-term disability expenses?  And what if their family wants to save some money for them?

Their disabilities qualified them to get Social Security benefits.  Their capabilities qualified them to join the workforce.  But as soon as they started making money, they’d lose their Social Security benefits.

That snafu drove people on Social Security disability benefits to deliberately stay home and not work—with the maximum-savings rule essentially forcing them into unproductivity, stagnation and even depression.

All that changed with the 2014 passage of the federal ABLE Act: a watershed bill that removed Social Security’s maximum-savings rule.  The bill was shortly ratified by President Obama.

Now, people on Social Security disability benefits (SSI and SSDI) could get out there and work, be productive and earn a respectable income, feel good about themselves and give back to their communities—and not lose their benefits. 

The ABLE Act also allows them to keep their Medicaid benefits, too.

The ABLE (Achieving a Better Life Experience) Act, however, requires states to set up their own ABLE programs.

Some states, like Florida (whose ABLE account program launched this July 1), only offer ABLE accounts for Florida residents.

Others, though, like Ohio, are now offering them to any U.S. citizen nationwide.

In plain English, that means that a person living in New York whose disability is on the Social Security Administration (SSA)’s official list of qualifying disabilities for Social Security can now simply go to StableAccount.com, the State of Ohio’s official ABLE account website, and get started.

And for families whose loved ones have disabilities, the news—and the life-changing financial freedom that it brings—couldn’t be better.

What is an ABLE account?

An ABLE account is an investment savings account.  Money you put into it is invested, not put in the bank.

The ABLE accounts are modeled after the 529 investment savings accounts that are designed specifically for college costs—tuition, books and all other college expenses. 

Similarly, ABLE accounts are 529 investment savings accounts specifically for disability costs—therapy, durable medical equipment, training, transportation, home accessibility remodeling and all other disability expenses.

The new accounts are tax-exempt—meaning, you do not pay federal income tax on whatever you earn in interest.

While each state has slightly different rules, the basics are the same: People with disabilities getting monthly SSD benefits checks can set up their own ABLE investment accounts and save up to $14,000 a year.

Here are several other important rules:

  • You may not be eligible for an ABLE account if your age of onset of disability is after age 26.

  • An ABLE investment account works like a regular bank account, but the money may only be used for qualified disability expenses.  Each state has its own list of definitions of “qualified disability expenses.”  Some examples are: education, housing, transportation, health, and assistive technology.

  • Each state has its own rules on how often you can withdraw money.  In Ohio, for example, ABLE account holders are issued ATM cards pre-loaded with account money that can be used anywhere that takes MasterCard.  (But they don’t withdraw directly from the account when used.)

  • Using ABLE money on non-qualified expenses could get you in trouble!  Continued eligibility for Social Security or Medicaid could be lost.

  • Only one ABLE account per person nationwide, meaning that you can’t set up one in Ohio, another in Florida and a third in Nebraska.

  • You must open the account with a minimum opening deposit of amounts that may vary by state.  For example, Ohio requires a $50 minimum opening deposit.

  • You cannot save a total of more than $14,000 a year.

  • You cannot save a total of more than $100,000—if you do, your Social Security benefits are suspended (not canceled) until your total drops back down to $100,000 or less.

  • There may be monthly fees to keep your ABLE account active.  For example, Ohio charges $2.50 a month for residents and $5.00 a month for non-residents.

  • There may be asset-based fees too.  For example, Ohio charges residents a fee that runs from 0.19 percent and 0.34 percent of their savings, and non-residents a fee that runs between 0.45 percent and 0.60 percent, depending on which investment options you choose.