The government tried to include most Americans in the relief bills that were passed during the COVID crisis; however, a large swath of adults with special needs have been left out until now. The good news is that with this latest round of funding, twenty-six million disabled adult dependents have or will receive their very first stimulus check.
Parents should know that these funds can be placed in a regular saving account, but it may also be a wise idea to consider using an ABLE account to hold the benefits. This blog post explains some of the reasons why.
What is an ABLE Account?
ABLE (Achieving a Better Life Experience) Accounts give individuals who became disabled before age 26 increased independence and financial security. This type of account allows adults with special needs the chance to save money in a tax-free account without risking their eligibility for need-based government benefits. Using the 529 college savings plans as a blueprint, the federal government created ABLE accounts four years ago to allow savings beyond the $2,000 maximum threshold that an individual can have and still qualify for Medicaid health coverage or Supplemental Security Income (SSI).
ABLE vs. Regular Savings?
 Since stimulus money does not qualify as income, it can be spent any way the receiver wants it. But, after a year, the funds may be included in calculations by the government to determine eligibility for benefits and needs-based services.
Placing the money in an ABLE account can offer the individual with special needs more flexibility, control, and protection. You can save up to $15,000 per year tax-free without causing a problem with the individual’s benefits. Money in an ABLE account can also be used to save for long-term care, pay for out-of-pocket expenses (like recreation and trips), or housing. The general ability to save a maximum of $15,000 a year in an account that does not affect Medicaid eligibility is something all families should consider.
Have Further Questions?
If you live in the Tampa area, please call us at (813) 438-8503 to schedule a consultation with one of our Brandon Special Needs Lawyers. We can review your family’s situation and help you determine if an ABLE account is a tool that can be utilized to help your child independently save money for the future.