Special needs
An ABLE account lets a person with a disability save without the usual SSI and Medicaid resource limits. Here is who qualifies.
A Colorado ABLE account is a savings and investment account for a person whose disability began before age 46. Money in the account can pay disability-related expenses, and SSI and Medicaid do not count the balance the way they count an ordinary bank account.
Who can have one
The person has to meet the disability standard used for SSI or SSDI, and the disability has to have begun before age 46. Some people already receive those benefits. Others qualify with a physician certification. A person can have only one ABLE account.
The Colorado program is run by CollegeInvest. The beneficiary can open it, or an authorized person can open it for them.
What the money can pay for
Qualified expenses include housing, transportation, education, job training, assistive technology, health care, and other costs that support health, independence, and quality of life. A withdrawal that is not a qualified expense can make the earnings taxable and add a penalty.
How benefits are treated
SSI generally disregards the first $100,000 in an ABLE account. Medicaid eligibility is not cut off just because the balance grows past that amount. Other benefits can have their own tests, and these rules can change, so the account should be part of a larger plan rather than the whole plan.
How much can go in
Federal law sets a yearly contribution limit, and that number changes. An account owner who works, and who is not putting money into a workplace retirement plan, may be able to contribute additional earnings. A 529 plan can roll into an ABLE account, and that rollover counts toward the yearly limit. Check the current Colorado ABLE figures before you contribute.
What happens after death
After the beneficiary dies, the state can ask to be repaid from the account for Medicaid benefits paid after the account was opened. Anything left generally goes through the estate. This is one reason an ABLE account and a special needs trust are not substitutes. Many families use both.
Before you open one
CollegeInvest publishes the current investment options and fees. Read that schedule before you open the account. You can usually open it online with the Social Security number of the beneficiary.
An ABLE account is a savings tool. It does not name a trustee, set ages for distributions, or replace a special needs trust or a will.
This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Laws change, and every family is different.