You may be eligible. You must have a written diagnosis regarding your disability signed by a physician who meets SSA criteria. You must be able to provide it, if requested. You do not need to submit it with your enrollment form.
Please call 855-529-ABLE (2253) with any additional questions or to talk with a customer service representative.
The intended beneficiary may be eligible. They must have a written diagnosis regarding your disability signed by a physician who meets SSA criteria. They must be able to provide it, if requested. They do not need to submit it with their enrollment form.
Please call 855-529-ABLE (2253) with any additional questions or to talk with a customer service representative.
The Pennsylvania ABLE Savings Program (PA ABLE) is a state-offered program that gives individuals with qualifying disabilities a tax-advantaged way to save or invest without impacting their government benefits. All federal benefits are protected, including Medical Assistance (Medicaid) and, with some limitations, Supplemental Security Income (SSI) benefits, as are many Pennsylvania benefits. As savings earn interest or returns over time, neither federal nor Pennsylvania income tax is owed; and, when a withdrawal including that growth is taken, no income tax is owed as long as the withdrawal is used to pay for Qualified Disability Expenses. PA ABLE was made possible by the passage of both federal and Pennsylvania laws – the Achieving a Better Life Experience (ABLE) acts.
An ABLE account is a financial account that is opened by or for an Eligible Individual with a Qualifying Disability. Money contributed to the ABLE account can be put in several different types of financial products including mutual funds and such as an interest bearing checking account options. (See below.) While you are able to withdraw and spend your money any time for any reason, one of the best benefits of an ABLE account is being able to save over time allowing your account to grow so you can pay for more major or future disability expenses.
The PA ABLE Program details are still being developed. However, PA Treasury anticipates that several mutual-fund-like options will be offered with varying blends of stocks and bonds – ranging from conservative to aggressive. An interest bearing checking account is also expected to be offered at a later date.
Because the details of the PA ABLE Savings Program are still being finalized, fees are not yet known. However, PA Treasury’s goal is to offer a program that is affordable.
PA Treasury anticipates there will NOT be an enrollment fee and an initial contribution of as little as $25 will open the account.
An annual account maintenance fee of $45-$60 is anticipated. The annual fee will be paid in quarterly installments taken from the account. There will also be a small annual percentage fee (likely to be less than 0.40%) on the account balance, taken from the investment earnings (an “asset-based fee”). Normal banking fees will apply for the checking account option when available.
This depends on individual circumstances and the type of special needs trust. There are a number of different factors to consider. These include expenses associated with establishing each, whether the growth is tax-free and whether or not there are limits on contributions, the permitted uses, whether Medical Assistance (Medicaid) repayment can be claimed and who maintains control of each. An additional consideration is that some special needs trust must be used for the “sole benefit” of the Beneficiary while there is no such restriction on the use of ABLE accounts. In addition, please keep in mind that a person can have both a special needs trust and an ABLE account. For additional details, you may wish to consult a tax or legal professional.
Yes, but there may be tax consequences. You could move funds from a 529 college savings account to an ABLE account -- subject to the ABLE annual contribution limits. However, there would be tax consequences. You would need to take a Non-Qualified Withdrawal from the 529 college savings account and deposit the proceeds into the ABLE account. You would owe state and federal income taxes on the earnings portion of the 529 account withdrawal but not the additional 10% tax penalty applicable to most 529 college savings account Non-Qualified Withdrawals if the reasons were due to the disability of the named Beneficiary.
Yes it can. An ABLE account can be transferred, without tax consequence, if the new Beneficiary is a sibling of the old Beneficiary and has a disability that qualifies them to be an Eligible Individual. Otherwise, the transfer would be a Non-Qualified Withdrawal subject to federal and state income taxes on the earnings and an additional 10% federal tax. The annual contribution limit restricts the amount placed in the new Beneficiary’s account.
Yes. The maximum yearly contribution limit is currently $14,000. It is a per account limit; so no matter how many people contribute, the maximum per year from all sources cannot exceed $14,000. This limit is set by federal law and is tied to the amount that can be excluded from federal gift taxes (currently $14,000); so it may be increased from time to time as a result of inflation. There is also a maximum value that your account can have. Currently that is $511,758. By law, the maximum value is the same maximum that a PA 529 College Saving Account can have, which may also increase as a result of tuition inflation.
Yes. You will need to provide them with information about your account so that their contributions can be properly credited to your account. PA ABLE anticipates having an easy-to-use gifting application later in 2017.
No federal means-tested benefits will be affected -- with the exception of some special Supplemental Security Income (SSI) limitations (see below). Your ABLE program account funds do not count against you for purposes of determining your eligibility for any federal means-tested benefits. For example, if you have $5,000 in your ABLE account, that $5,000 does not count as an asset for purposes of determining your eligibility for means-tested federal benefits programs, such as SSI or Medicaid (Medical Assistance). Similarly, funds in your ABLE account will not affect your eligibility for Pennsylvania means-tested benefits if they are health or disability related benefits or state student financial aid.
Residents of states other than Pennsylvania should check with their state benefits agency to verify that a PA ABLE savings account will not affect their home state-based benefits.
Your SSI benefits are not affected except in two situations:
when the value of an ABLE account exceeds $100,000
when you withdraw funds for housing or Non-Qualified Expenses and do not use the money in the same month of withdrawal
In the first situation, your SSI benefits will not be impacted as long as the amount in your ABLE account does not exceed $100,000. Any amount over $100,000 is counted as a resource. If the excess over $100,000 in your ABLE account puts you above the SSI non-ABLE resource limit (currently $2,000), your SSI benefits will be suspended but not be terminated. The suspension will not affect Medical Assistance (Medicaid) eligibility. The suspension is lifted when your resources fall below the SSI non-ABLE resource limit.
For example, if your ABLE account has $101,000 and you have no other countable resources, your SSI will not be suspended because the excess over $100,000 is only $1,000 and does not exceed the $2,000 limit. However, if your account has $101,000 and you have $2,000 in other resources, your SSI will be suspended because the $1,000 ABLE excess plus the $2,000 in other resources is $3,000 and exceeds the $2,000 limit.
It is important to remember that only the $100,000 in your ABLE account is not counted as a resource. For example, if you have $3,000 in non-ABLE assets and $90,000 in your ABLE account, your SSI benefits may be suspended then terminated and your Medical Assistance (Medicaid) benefits might be impacted because your $3,000 in non-ABLE assets exceeds the $2,000 non-ABLE resource limit. This result could be avoided by moving $1,000 in non-ABLE assets into the ABLE account if doing so would not exceed the annual contribution limit (currently $14,000).
In the second situation, money you withdraw from your ABLE account and use for housing expenses or Non-Qualified Expenses may also affect your SSI benefits if you do not spend the money within the same month you make the withdrawal. For SSI purposes, housing expenses are:
mortgage (including property insurance required by the mortgage company)
real property taxes
To avoid any impact to your SSI benefits, be sure to spend funds withdrawn for housing or non-qualified uses within the same calendar month that you withdraw the money. For example, if you withdraw $800 from your ABLE account on June 3 for rent, you should pay that money to your landlord by June 30. As long as you do not hold housing or Non-Qualified Withdrawals over from one calendar month to the next, the funds will not affect your SSI benefits. For more information on how the Social Security Administration will treat ABLE accounts, see their guidance here. [Note, while funds withdrawn for non-qualified expense will not affect your SSI if used in the same month they are withdrawn, there may be tax consequences for taking such a withdrawal.]
First, remember to report circumstances that might affect SSI benefits to the Social Security Administration (SSA) -- this includes ABLE account activity if it could impact SSI benefits. SSA will also be aware of your ABLE account activity because federal law requires that ABLE programs report account information to the SSA monthly, including the account value and withdrawals.
Second, gifts to SSI recipients can impact the recipient’s benefits. To avoid any potential impact, gifts can be made directly from the gift giver to the recipient’s ABLE account. For example, if a relative gives an SSI recipient $100 and directs the recipient to put it in the ABLE account, the $100 may be considered income to the recipient. However, if the relative contributes $100 directly to the ABLE account it is not considered countable income to the SSI recipient.
Third, income from the SSI recipient’s work is considered countable income even if it is directly deposited by the employer into the recipient’s ABLE account.
The PA ABLE account can be used to pay for any outstanding Qualified Disability Expenses, as well as funeral and burial expenses.
Under proposed Internal Revenue Service (IRS) regulations, if a Beneficiary dies, the ABLE account becomes part of the Beneficiary’s estate. Those regulations are not yet final or in effect. States have asked the IRS to consider other options. Specifically, as allowable under Pennsylvania law, the other option would be to transfer the account to the Beneficiary’s sibling, if any, who is also an Eligible Individual.
When the assets are transferred to the estate, any growth on the contributions will be subject to income tax but not the 10% additional tax applicable to Non-Qualified Withdrawals. For this reason, it usually will be best to pay any outstanding Qualified Disability Expenses, including funeral and burial expenses, from the ABLE account, which will be tax free, before the assets are transferred to the estate.
Under federal law, if the Beneficiary received Medical Assistance (Medicaid), the state that provided the Medical Assistance (Medicaid) is permitted to file a claim seeking repayment from the ABLE account in an amount up to the amount of Medical Assistance (Medicaid) provided during the time the beneficiary had an ABLE account. However, under Pennsylvania law, the state agency responsible for administering Medical Assistance (Medicaid) (Department of Human Services-DHS) may not file a claim against a PA ABLE account. However, once the assets in the PA ABLE account have been transferred to the estate, DHS may seek repayment from the estate. But whose funds may be subject to repayment and the amount that must be repaid are different from claims against an ABLE account itself. In Pennsylvania, DHS may seek repayment from a PA ABLE account proceeds in the estate of the deceased Account Owner only if the deceased was 55 or older and only for Medical Assistance (Medicaid) consisting of nursing facility services, home and community-based services, and related hospital and prescription drug services paid once the Account Owner turned 55. Repayment is postponed if the deceased has a surviving spouse, child under 21, or disabled child of any age.
No. Being entitled to disability benefits under the Social Security Act, Title II (Social Security Disability Insurance) or Title XVI (Supplemental Security Income) based on a disability that began before your 26th birthday are just two of the ways that a person may be eligible to have an ABLE account (that is, be an Eligible Individual.) The third way is to self-certify that you have a similarly severe disability that began before your 26th birthday.
You can self-certify during the enrollment process by indicating that:
You have a Qualifying Disability. Meaning that you are (1) blind, within the meaning of the Social Security Act, or (2) have a medically-determinable physical or mental impairment which results in marked and severe functional limitations, and has or is expected to last 12 continuous months or result in death; and
Your Qualifying Disability began before your 26th birthday; and
You have a written diagnosis related to your disability that is signed by a physician who meets Social Security Act criteria.
No. But you should keep documentation in case you are asked for it by a federal or state agency. For example, if the Internal Revenue Service audited your taxes, you might be asked to provide your documentation.
You must be eligible each year. In the enrollment process, you will be asked to certify that if your condition ever changes so that you would no longer be eligible for an account that you will notify PA ABLE. Based on that certification, PA ABLE will assume that your eligibility continues until you notify PA ABLE of any change.
You can keep your account open in case your condition later worsens and you become eligible again. However, additional contributions cannot be made to your account and any withdrawals you make while you are ineligible will be considered “Non-Qualified.”
No. Federal law restricts the number of ABLE account a person may have to just one – even if the accounts are opened in different states.
Example: Divorced parents can only open one account for their minor child. Once one account is opened, a second cannot be opened until any open account is closed. There is one exception to this rule: If you want to move your ABLE account to another state’s ABLE program, you can open the account in the new state while the money is moved from the old state. But the old account must be closed within 60 days of the new account being opened.
You may keep your PA ABLE account. There is no need to switch to a different program. You can change to a different program at any point in time as long as you don’t change programs more than once every 12 months and you put the funds in the new program within 60 days of withdrawing them from the old program. If you move, you may want to check to see if the new state offers benefits to residents available only if they use the home-state ABLE program.
Yes, as long as the individual meets the eligibility requirements for an account. Please note, however, that work income is treated as income for some government benefits, including Supplemental Security Income (SSI), even if it is directly deposited into an ABLE account, and, therefore, may affect eligibility for those benefits.
To receive the protections and benefits of ABLE, use your account to pay for Qualified Disability Expenses. An expense is “qualified” if:
You incurred the expense at a time when you were considered an Eligible Individual (see “Eligibility” above);
The expense relates to your disability.
The expense does not need to be “medically necessary” nor does it need to be for the sole benefit of the Eligible Individual.
While you can use your ABLE account at any time for any purpose, if you use your account for purposes other than Qualified Disability Expenses (Non-Qualified Expenses), there are likely to be tax consequences. You may need to pay federal and state income tax at your ordinary tax rate on any growth your contributions earned as well as an additional 10% federal tax on that growth. Additionally, the Non-Qualified funds you withdraw could be counted against you for purposes of determining your eligibility for means-tested public benefits programs, like Medical Assistance (Medicaid) or SSI.
The IRS has indicated that it will broadly interpret “Qualified Disability Expenses” and, in its proposed regulations stated that “basic living expenses” are included. However, the IRS has not provided any other guidance in addition to the 11 categories listed in the federal ABLE Act. Depending on the Eligible Individual’s disability, the following are a few examples of expenses that might be qualified:
Tuition for preschool through post-secondary education
Supplies and educational materials
Expenses for a primary residence
Purchase of a primary residence
Real property taxes
Expenses for transportation
Use of mass transit
Purchase or modification of vehicles
Expenses related to obtaining and maintaining employment
Health Prevention and Wellness
Expenses for health and wellness
Premiums for health insurance
Mental health, medical, vision, and dental expenses
Habilitation and rehabilitation services
Durable medical equipment
Long term services and supports
Communication services and devices
Assistive Technology and Personal Support
Seat lift chairs
Financial management and administrative services
Expenses for oversight
Home improvement, modifications, maintenance and repairs
Funeral and burial expenses.
*NOTE: SSI benefits can be affected if you use ABLE funds for any housing expenses. See the Benefits section of our website for more information.
PA ABLE will not require you to submit any documentation of how you are using your ABLE account. However, for tax purposes it is important that you keep records. For each tax year, if your Qualified Disability Expenses are the same or more than the amount you withdraw from your ABLE account, you will not owe any federal or state taxes on the withdrawals. However, if your Qualified Disability Expenses are less than the amount you withdraw, you may owe taxes on the earnings portion of the excess withdrawals. Because of this federal tax treatment, it is important for you to keep track of all your Qualified Disability Expenses – whether or not you used your ABLE account to pay for them. Additionally, in the event IRS audits your taxes you may need to provide documentation of your Qualified Disability Expenses.
Yes. But if you receive SSI benefits, to avoid any negative impact to your SSI be sure to spend any money you withdraw for housing expenses in the same month you make the withdrawal. As long as you spend the housing funds within the same calendar month that you withdraw the money, the housing payments will not affect your SSI benefits. (Government Benefits Section)