Missourians with disabilities can now save money tax-free without jeopardizing eligibility for benefits like Medicaid and Supplemental Security Income (SSI). In June, Matthew Panik from the State Treasurer’s office presented information about the ABLE program to a room full of interested parties at Woodhaven’s Billy J. Palmer Health & Training Center. Achieving a Better Life Experience or ABLE accounts are made possible in Missouri by legislation filed last year by then Senator Eric Schmitt. Now State Treasurer Schmitt is spreading the word about ABLE, statewide. For information about eligibility and program guidelines, and to open an account, visit the MO ABLE website.
Matt answered numerous questions at the event, and promised follow up on numerous others. He recently provided that follow up, summarized below:
Q: Is there a limit on the number of contributions to and transfers from an account (monthly or otherwise)?
A: No limit on number of contributions or withdraws to and/or from an ABLE account. Only limit is annual limit for contributions ($14K).
Q: Who can set up and administer accounts and who cannot?
A: Four people can set up accounts:
Individual with disability
Someone with power of attorney
Payee reps cannot set up accounts. Very similar to a Chase banking account or US Bank account, anyone who has the password can operate the account. So if a parent had the password, but wanted a sibling to administer the account on behalf of the individual, they could.
Q: If someone uses ABLE money to buy something, does that item become a countable asset?
A: No. SSA will exclude from the Beneficiary’s countable resources a distribution for all Qualified Disability Expenses, except for housing. (For housing, an individual could get around this by withdrawing and spending funds in same month).
Q: If someone becomes ineligible for SSI, are they also kicked out of ABLE?
A: It depends. If they are ineligible for SSI but maintain their disability, it is most likely they can keep their ABLE account. If their disability is no longer continued though, then that is the tricky part. They can maintain their ABLE account, but at the beginning of the next calendar year they can no longer make contributions or make expenditures.
Q: How often can someone change their investment strategy?
A: You can change twice per calendar year.
Q: How can we help impoverished people get started saving? Seeding accounts? How can they decide if they should open an account considering monthly fees?
A: This is a more challenging question. Given the recent launch of the program, I think that is an important question to ask, and its one we struggle with on the MOST 529 college savings program that the Missouri State Treasurer’s Office also administers. There is a lot of research in regards to college savings programs coming out of WashU, but given the relatively recent launch of the MO ABLE program and the small number accounts, a lot of research has not occurred. If you have any ideas, feel free to reach out to us at the State Treasurer’s Office.
To your last question, there are a great deal of costs that are associated with having a disability. Whether it is high medical bills, additional educational materials, or assistive technology purchases, individuals with a disability have a lot of expenses. Given this, a lot of national groups like the National Down Syndrome Society and local groups like BCFR advocated for this program to help families. This program allows families to set aside funds in the name of the individual for long term needs. And given the generous tax advantages in Missouri (no tax on earnings + $8K state income tax deduction for single filers, $16K for joint filers), it may make sense to consider opening an account. But each family needs to make a decision like that on their own.
Q: What can Public administrators do or not do?
A: If a public administrator falls into one of the following four categories [(1) individual with disability, (2) parent, (3) guardian, (4) someone with power of attorney], they can open an account for an individual with disability. Given many public administrators are guardians legally, they would be able to open an account.
Q: Is e-gift up and running?
A: Yes. We have already had thousands of dollars of gifts occur. A very easy process to use online.
Q: Is the annual limit based on the calendar year or from when the account opens?
A: Calendar year.
Q: We talk about using the debit card to live independently, but what the card be used for when we use the example of going out with friends? Restaurant probably doesn’t qualify, correct?
A: The card can be used for a qualified expenditure. Given each disability has wide ranging expense needs, and that is why IRS has signaled they will be lenient with determining what is and what isn’t a qualified expenditure.
When making expenditures, one needs to think about two things:
Does this expenditure relate to my disability, or
Does this expenditure improve my life experience?
Q: What fraud protection are on the debit card? I knew some of front end protections – $15k limit, no cash withdrawals, put on as much or as little as you want; but what if card with $10k is stolen and fraudster uses it to go on vacation? How does STABLE account for that – is ABLE participant reimbursed?
A: In summary the card is covered by normal MasterCard fraud zero liability protection. As long as the account holder reports the card lost or stolen as soon as possible they would be covered for the chargers.
Q: If an ABLE participant is gifted $5k (and deposits into his/her checking account), and then deposits it into ABLE, is that money an asset before it is put into the ABLE account?
A: Yes, unless an individual transferred it within the same month. For example, if an individual received the $5K on August 3rd, and then transferred it on August 5th, it would not be a countable resource.
More from Matthew
I think I covered all the questions about clawback, but I sensed a lot of uncertainty on that topic, may want more detail. A common question is what happens if the account holder passes away. Two things can happen:
The account can either pass to a sibling with a disability, or
To the account holder’s estate (the estate administrator notifies STABLE and can take over account access)
If Beneficiary was on Medicaid, Medicaid can ask for payback in some cases. BUT, Medicaid does not get first bite at the apple. The estate can first:
Pay any outstanding bills for qualified expenses,
Pay for funeral and burial expenses, or
Deduct Medicaid Buy-In premiums you paid
Medicaid Payback is only from date the account was opened.
For information about eligibility and program guidelines, and to open an account, visit the MO ABLE website: https://www.moable.com/.