ABLE ACCOUNT: Is it the right tool for me? - Part Two

Financial Limitations on ABLE Accounts

There are currently limitations as to the amount of savings that can be held in an ABLE account.

The first such limitation deals with the annual contribution amount, which may not exceed the annual gift-tax exclusion amount (currently $14,000). In addition, ABLE accounts may only accumulate aggregate contributions up to the state’s limit on qualified tuition programs (i.e. 529 accounts), which ranges between $300,000 and $400,000 ($300,000 in Connecticut). And, finally, SSI exempts only the first $100,000 of an ABLE account.

Medicaid Payback

It is important to note that the ABLE account is a “Medicaid Payback” account. This means that the Act requires a provision in the account that upon the death of the beneficiary of the account, Medicaid payments made on behalf of the beneficiary subsequent to the establishment of the ABLE account must be reimbursed with any remaining funds.

As a professional serving those with special needs, attention to the client’s priorities should be weighed carefully when determining the amount of savings to place in an ABLE account given this payback provision. When a beneficiary of an ABLE account is receiving Medicaid, it is important to consider how much should be placed in the ABLE account to limit what may be recovered by Medicaid at the end of the beneficiary's life.

Please call us if you would like to learn more about an ABLE account and how it might help you or a loved one. We are always happy to hear from you! We can be reached at (203) 651-5521 or through the contact form on this Website.