Five Advantages of an ABLE Account for Long-Term Care

In 2014 congress passed the ABLE Act which is an acronym for “Achieving a Better Life Experience.” An ABLE account is a tax-advantaged savings account for families with disabilities, and is suitable for both children and adults. According to the New York ABLE Web site, the act “allows those with disabilities to save for qualified disability expenses without the risk of losing their benefits from assistance programs like Social Security Income (SSI) and Medicaid.”

As the father of two sons with autism, CJM Wealth Management CEO Charles Massimo knows first-hand the unique concerns and obstacles that families with special-needs children face as they plan for their future.

“As children with autism grow, they tend to “age out” of the system – and unfortunately there are far fewer public programs and assistance for adult children impacted by autism,” said Massimo. “With ABLE accounts, one of the rules is that the beneficiary’s disability must be diagnosed before their 26th birthday,” he added. For families impacted by autism, this is great news – since about 20 percent of children with autism are diagnosed by age 2, and more than half of school-aged children are approximately five years old when first diagnosed with autism spectrum disorder.

There are many benefits of utilizing ABLE accounts to supplement funding and provide support for your child with autism. We outlined five major advantages below:

  1. ABLE accounts are similar to traditional 529 plans, but the rules for utilizing the funds are more flexible. For example, parents may be able to use funds from an ABLE account to cover summer camp for their young child, or to cover housing and utility expenses for an adult child. Because there is so much uncertainty when raising a child with autism, planning for the future can be difficult. ABLE accounts provide the much-needed flexibility to use funds for various purposes throughout your child’s life.
  2. Distributions from an ABLE account are tax-free, and allow up to $15,000 per year to be saved. Contributions can be made from any source, including your child, or family members.
  3. As long as the account balance is less than $100,000, the ABLE account assets are not counted in asset calculations to determine your child’s qualification for public benefits programs – such as SSI and Medicaid. This allows individuals to benefit from a range of government programs, even if they have other savings.
  4. Using an ABLE account can help alleviate the burden of trustees who had to go through significant efforts to pay expenses, and cannot give money directly to the beneficiary.
  5. Qualified expenses can be paid using an ABLE account, without triggering SSI’s In-Kind Support Maintenance (ISM), that would otherwise be incurred if a third party made the same expenditure. These qualified expenses can include: education, housing, health and wellness, financial management, assistive technology, legal fees, transportation, employment training and support – and more.

To learn more about ABLE Accounts, be sure to sign up for CJM Wealth Management’s upcoming Webinar, “The Benefits of an ABLE Account.” For details and to register, click here.

We understand that families with special-needs children face specific challenges in planning for the long-term care and happiness of their loved ones. Additional information about ABLE accounts can be found by visiting the ABLE National Resource Center.

If you’re interested in scheduling a complimentary consultation to discuss your family’s financial future, contact CJM Wealth Management at 631.777.1030 or simply click here to send us a message.

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