Parents, caregivers, and adults with disabilities and special needs often find themselves staring down a seven-figure bill, or more, to cover the cost of lifetime care. Not to mention the stress of emergency expenses that can be difficult to plan for. And even when you do plan for these expenses, you can be penalized for having too much money in your checking account, which could result in people with disabilities losing state or federal benefits.

Coming up with that cash and not being penalized doesn’t have to be impossible — if families know how to plan for it.

There are several strategies families, caregivers, and adults with disabilities and special needs can take when it comes to covering the cost of support while preserving benefits they may receive through the Supplemental Security Income (SSI) program and Medicaid.

Supplemental Security Income and Medicaid are instrumental in special needs planning, but disabled individuals are subject to “means testing” to obtain those benefits. This year, the monthly maximum for SSI benefits is $771 for an eligible individual and $1,175 for a couple.

In late 2014, after nearly a decade of lobbying from disability advocacy groups, Congress passed the Achieving a Better Life Experience Act, creating a tax-advantaged account for people with disabilities. A PA ABLE account gives individuals with qualified disabilities (Eligible Individuals), and their families and friends, a tax-free way to save for disability-related expenses, while maintaining government benefits.

What is the PA ABLE Savings Program? Watch and find out!

Overview of PA ABLE

You may choose to direct your contributions to one or any combination of seven investment options offered by the PA ABLE Savings Program. Six are Asset-Allocation Options with varying blends of stocks, bonds, and cash – with the combinations ranging from conservative to aggressive. Eligible Individuals who can enter into contracts are Account Owners with complete control of their account – a trustee or representative is not needed. To establish an account for minors or adults who cannot contract, a parent, guardian or person with a Power of Attorney must open the account. Learn More.

PA ABLE Benefits

PA ABLE Savings Program accounts are an addition to, not a replacement of, government programs and do not affect eligibility for any federal need-based programs, including Medicaid. There are tax advantages, exclusive benefits, and accounts can be used for a wide variety of qualified expenses. Learn More.

PA ABLE Eligibility Overview

An “Eligible Individual” qualified to have an ABLE account must meet two requirements. Learn More.

You must have a qualifying disability. Demonstrated by one of the following:

  • Entitlement to Supplemental Security Income (SSI) benefits based on blindness or disability; or
  • Entitlement to Social Security Disability Insurance (SSDI) benefits based on blindness or disability; or
  • Self-certification of a similarly severe disability, if not entitled to SSI or SSDI. Demonstrated by the following:
    • Blindness as defined by the Social Security Act (SSA); or
    • A medically determinable physical or mental impairment with a marked and severe functional limitation that has lasted, or is expected to last, at least 12 continuous months or result in death; and
    • Have a written disability-related diagnosis signed by a physician.

The qualifying disability must have started before age 26

Qualified PA ABLE Expenses

PA ABLE accounts can be used for a wide variety of qualified expenses. Qualified Disability Expenses are not limited to items that are “medically necessary,” and they need not be for the sole benefit of the Eligible Individual. Proposed Internal Revenue Service regulations state that basic living expenses are also qualified disability expenses. You will be able to access the funds at any time for any purpose. You will not be required to submit documentation showing whether withdrawals are for Qualified Disability Expenses. Learn more.

More Resources:

Interested in learning more about PA ABLE?

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