Able Account California: Maximizing Public Benefits for Special Needs

The Able Account California is a tax-advantaged savings account designed to help individuals with disabilities and their families save for future expenses.

It's a great way to set aside funds for things like education, employment, and housing costs.

The account has a high contribution limit of $14,000 per year, making it a valuable tool for those who need it most.

By utilizing the Able Account California, families can ensure their loved ones with special needs have the financial resources they need to thrive.

An Able account is a tax-advantaged savings account designed to help Americans with disabilities.

Before Able accounts, persons with disabilities risked losing federal and state benefits if their assets or income were above a specified low threshold.

This limited the disability community from building savings accounts and financial security, creating a source of constant fear.

It often took complicated and time-consuming strategies to earn or save money and stay compliant with their benefit programs like Medicaid, Social Security Disability Insurance (SSDI), or Supplemental Security Income (SSI).

Now, qualified persons with disabilities can have an account where they can contribute and grow their savings without the constant concern of losing their federal or state benefits.

The investment earnings in an Able account are tax-free when withdrawn if used to pay for disability-related expenses.

To be eligible for an ABLE account in California, an individual must be eligible for SSDI or SSI because of blindness or a disability, as determined by the Social Security Administration, or have a disability certificate from a licensed physician.

An eligible individual can be someone who is entitled to SSI or SSDI because of a disability or has blindness as determined by the Social Security Act, or has a disability certification.

The disability or blindness must have happened before the individual's 26th birthday, but thanks to the ABLE Age Adjustment Act, passed in 2022, the onset threshold is set to increase to age 46, taking effect in 2026.

However, for now, only those with a qualifying disability that happened before age 26 can open a CalABLE account.

Here are the key eligibility requirements:

By opening an ABLE account, individuals with disabilities and their families can save money for qualified disability expenses without affecting eligibility for government benefits like SSI and Medi-Cal.

To be eligible for an ABLE account, you must meet certain requirements. You can open an account if you're eligible for SSDI or SSI because of blindness or a disability as determined by the Social Security.

To qualify, you'll need a disability certificate, which is a diagnosis signed by a licensed physician. This diagnosis must be related to blindness or a disability that happened before your 26th birthday.

An eligible individual is someone who receives SSI or SSDI benefits due to a disability or blindness, or has a disability certification. This certification must be a signed diagnosis by a licensed physician.

The age threshold for eligibility is currently 26, but a new law passed in 2022 will increase this to 46 in 2026. However, for now, you must have had a qualifying disability before your 26th birthday to open a CalABLE account.

Here are the key eligibility requirements:

An ABLE account offers numerous advantages for individuals with disabilities and their families. One of the most significant benefits is tax-free investment earnings and distributions for qualified disability expenses.

By using an ABLE account, individuals with disabilities can save money for qualified disability expenses without affecting their eligibility for government benefits like SSI and Medicaid. This means they can continue to receive these essential benefits while still having access to funds for their specific needs.

ABLE accounts offer flexibility in how the funds are used, allowing individuals with disabilities to use the funds in a way that meets their unique needs. For example, they can use the funds to pay for medical expenses, education, or even transportation.

In California, ABLE account holders have additional state-specific benefits. California has its own ABLE program, which provides even more advantages for residents.

Here are some of the key advantages of using an ABLE account:

CalABLE accounts are designed to help individuals with disabilities save for and pay disability-related expenses. These expenses can include a wide range of costs, from housing and education to transportation and health expenses.

Some examples of disability-related expenses include rent, mortgage payments, and property taxes, as well as the cost of medical equipment and rehabilitation services. You can also use your CalABLE account to pay for assistive technology, such as devices and adaptive equipment.

Here are some examples of disability-related expenses that can be paid for with a CalABLE account:

These expenses can add up quickly, but with a CalABLE account, you can save and pay for them without depleting your other resources.

An Able account is a tax-advantaged savings account designed to help Americans with disabilities.

Contributions to an Able account are tax-free, and earnings on qualified withdrawals are also tax-free.

The maximum Annual Contribution Limit is $15,000, tied to the annual federal gift tax limit.

Employed account owners can contribute up to an additional $12,140 to their respective account.

Anyone can contribute money to a CalAble account, including a trust.

The account balance will never affect eligibility for Medi-Cal.

Distributions from CalABLE accounts are tax-free as long as they are used for Qualified Disability Expenses.

A Qualified Disability Expense is an expense that relates to a disability and helps the account owner improve their health, independence or quality of life.

The account balance will affect SSI if it exceeds $100,000, causing SSI to be suspended.

Fees for ABLE accounts vary by state, with some waiving maintenance fees altogether. Florida, for example, waives maintenance fees until July 1, 2017, after which there will be a $2.50 monthly fee.

Some states charge a flat annual fee, like Nebraska, which charges $45 per year in addition to asset-based fees ranging from 0.50% to 0.56%. Ohio's fee structure is tiered, with residents paying $30 per year for account maintenance and asset-based fees of 0.19% to 0.34%.

If you're looking for alternatives to ABLE accounts, there are several options to consider. Special Needs Trusts, for instance, are a type of trust that holds assets for the benefit of a person with a disability without affecting their eligibility for government benefits.

Fees can vary significantly depending on the state you live in. Some states have relatively low fees, while others can be quite high.

Florida, for example, waives maintenance fees until July 1, 2017, after which there will be a $2.50 monthly fee for electronic withdrawals, plus an extra $10 annually for paper check disbursements.

Nebraska charges a flat quarterly fee of $11.25 ($45 annually), in addition to asset-based fees ranging from 0.50% to 0.56% of your account balance, depending on your investment choices.

Ohio has a tiered fee structure, with residents paying $2.50/month ($30 annually) for account maintenance and asset-based fees of 0.19% to 0.34% of your account balance, depending on your investments.

Tennessee takes a different approach, not charging for account maintenance, but instead having asset-based fees ranging from 0% to 0.63% of your account balance, depending on your investments.

Here's a breakdown of the fees in each state:

If you're exploring ABLE account alternatives, you'll find several options that can provide financial support for individuals with disabilities. One alternative is a Special Needs Trust, which doesn't affect eligibility for government benefits and offers more flexibility in how funds are used.

Special Needs Trusts can be more complex to establish and require ongoing management, but they don't have a contribution limit. Pooled Trusts, on the other hand, are managed by a nonprofit organization, reducing the administrative burden and cost.

Health Savings Accounts (HSAs) can be used to pay for qualified medical expenses and can be used in conjunction with other disability planning tools. Life insurance can provide ongoing financial support or a lump sum payment to a trust or other entity established to benefit the person with a disability.

Medicaid Waivers can provide significant support for individuals with disabilities and their families by allowing them to receive services and support in their homes or communities.

Here's a brief comparison of some alternatives:

The annual contribution limit for a CalABLE account is currently $17,000, which may not be sufficient for individuals with higher expenses related to their disability.

This limit may leave many people struggling to cover their costs, and it's essential to consider this when deciding whether an ABLE account is right for you.

Only individuals with a significant disability that was present before the age of 26 are eligible for an ABLE account, which may limit the availability of these accounts for individuals who develop disabilities later in life.

This eligibility criteria can be a significant drawback for many people, and it's crucial to understand the requirements before opening an account.

Distributions from an ABLE account for non-qualified disability expenses might impact eligibility for SSI and Medicaid, which can be a major concern for those relying on these benefits.

It's essential to carefully review the rules and regulations surrounding ABLE accounts to avoid any potential impacts on government benefits.