Building Your Finances and Independence ...



Building Your Finances and Independence with ABLE AccountsJuly 30, 2020Jane Skelton, Esq., Maine Elder Law FirmKathy Adams, OTL, ATP, Director, Maine CITE.Maine CITE is…Maine’s State Assistive Technology (AT) Act Program A program of the Maine Department of EducationFunded thru the federal AT ActPromotes AT through information, education, technical assistance, and AT services Collaborates with Maine AT providers, organizations, and policy makersAT Funding resources CITE works toPromote Assistive Technology for people of all ages, all disabilities, in: EducationEmploymentCommunity Living Information Tech & Telecommunications What is AT?Assistive ~ adaptive ~ (re)habilitative devicesAn AT Device is any item, system, piece of equipment, or product - commercial or customized - that will impact the functional capabilities of a child with a disabilityAT Services help a person learn about their AT options and decide if the AT will benefit themAT ServicesAT Assessment – by school-based professionalsDevice Demonstrations - learn how AT worksDevice Loans – borrow devices, “try before you buy”AT Reuse/RecyclingAlternative Financing – cash loansInformation & AssistanceTraining, workshops, webinars AT4MaineAT Device Demonstrations and Loans for: People with disabilitiesFamilies & Caregivers EducatorsTherapistsThe publicSearchable database 1200+ items and growingSpurwink ALLTECHPine Tree SocietyCARESUniversity of Maine FarmingtonFunding - Purchasing ATHealth Insurance programs – private (CIGNA, Anthem) or public (Maine CARE, Medicare).Social Security Administration.US Department of Veterans Affairs (VA) – service-related disabilities.Public Education – early intervention and special education (birth to 21) Bureau of Rehabilitation Services (BRS).Organizations offering funding, AT services or AT equipment for loan.Foundations and organizations offering grants.Affordable Financial loans.Maine Adaptive Equipment Loan Program – cash loansABLE Accounts – individuals with disabilities establish financial accounts that can be used to purchase AT.ABLE Accounts = New Tool for Special Needs PlanningWhat is the purpose of special needs planning?To enhance the quality of life for an individual with disabilities by maximizing resources available to him or her and protecting and administering assets so the individual remains or becomes eligible for means-tested public benefits. To supplement but not supplant means-tested public benefitsMeans-Tested Public BenefitsWhich public benefit programs are “means-tested"?Means-Tested Public BenefitsSupplemental Security Income (SSI)MedicaidVA Aid and AttendanceSubsidized HousingAsset limits, income limits, or bothNon-Means-Tested Public BenefitsSocial Security Disability Insurance (SSDI)MedicareVA CompensationNo asset or income limitsThe ChallengeThe challenge in special needs planning is to determine which tools will protect eligibility for means-tested public benefits when excess assets or income are available. If the individual was to hold the excess assets or income, eligibility for the means-tested benefits would be reduced or eliminated. Often, a combination of tools will be appropriate.This requires planning that is more focused on the individual than ever before. Spend DownSpend DownDoes the individual have current needs?Is the amount of assets received modest?YesSpend assets down below public benefit asset limit. Spend for the exclusive benefit of the beneficiary.NoConsider other alternatives, possibly in addition to spend down.Too Much for Spend-Down? A Special Needs Trust Has Been the Traditional Tool.The traditional tool has been a special needs trust (SNT).SNTs are valid planning tools recognized by the Social Security Administration and Maine’s Department of Health and Human Services.Assets transferred to a valid and properly established SNT will not be countable to the individual with disabilities. Assets are transferred to the trust so that they will not be counted against the individual’s eligibility for public benefits.Assets in a SNT are managed by a Trustee, and the individual with disabilities can have NO CONTROL of the assets in the SNT.First Party SNTFirst Party SNT or Third Party SNT?Whose assets are going to fund the trust?Individual with disabilities/beneficiary’s own assets (personal injury settlement, worker’s compensation award, direct gift or inheritance)?Create a First Party SNT, also called an “Under-65” or “Pay Back” Trust.Family member’s or other individual’s assets?Create a Third Party SNT.ABLE AccountsStephen Beck, Jr., Achieving a Better Life Experience Act (ABLE) was passed in December of 2014.Ohio launched the first ABLE program (called STABLE) in Ohio in June of 2016.Currently, most states have established ABLE accounts. Maine does not have an ABLE account - yet.Most of other states’ programs would accept enrollment by a Maine resident. ABLE Act AccountsABLE Act AccountDid the individual meet the SSA criteria before age 26? An actual SSA disability determination before 26 is not necessary!NoConsider other alternatives.YesLook into ABLE accountWhat is ABLEABLE accounts for individuals with disabilities Act of 2014 created savings and investment ABLE Accounts do not affect eligibility for benefits programs – to a point.Up to $100,000 not counted for SSIMedicaid limit is tied to 529 education account limit:Maine is $500,000ABLE Accounts have hybrid functionality529 College Saving Checking AccountSpecial Needs TrustABLE BenefitsOwnership: The account is owned by the individual with disabilities.Control: The beneficiary of the ABLE account can access funds in the ABLE account.Financial Independence: There are investment opportunities in ABLE programs.Tax Benefits: The balance in the ABLE account grows income-tax free. If the withdrawal is used for a “qualified disability expense,” no tax on the income will ever be paid.Eligibility ABLE accounts are – currently – only available to individuals with disabilities that occurred prior to age 26.Must be eligible to receive SSI or SSDI due to disability ORHave a condition listed on SSA’s “List of Compassionate Allowances Conditions” ORSelf-certifySelf-CertificationNeed diagnosis of a physical or mental impairment that causes “marked and severe functional limitations.”Condition has lasted or is expected to last for at least one (1) year.The beneficiary does not need to send in a written diagnosis but must have one on hand.Funding the ABLE AccountIf the individual is not employed, the maximum which can be deposited in the ABLE account from all sources in 2020 is $15,000.If the individual is employed, that increases to $27,490 in 2020.The ABLE account balance can grow with impacting eligibility for means-tested public benefits.The SSI resource limit is $2,000. Up to $100,000 in an ABLE account will not count against that limit.The MaineCare countable asset limit is $2,000 plus $8,000 in an interest-bearing account. If a Maine resident has an ABLE account, he or she will not lose MaineCare until the ABLE account balance exceeds that states maximum contribution for its 529 education accounts.Qualified Disability Expenses Distributions from the account must relate to the disability and help maintain or improve health, independence, or qualify of life or they will be subject to income tax. The list of QDEs is very broad:Housing and rentBasic living expensesTransportationEducationAssistive technologyFinancial managementHealth and wellnessABLE and “Pay Back"The federal law gave the states the discretion to include payback provisions for the ABLE accounts in their program. Most ABLE accounts include payback provisions. After the death of the individual, the remaining balance is first distributed to any state Medicaid plan which provided medical assistance but based only on assistance paid after the creation of the ABLE account.After payback, remaining funds may be distributed to family members or other beneficiaries.Maine’s ABLE program will NOT have a payback provision!ABLE RulesSubject to limitations in the trust agreement, a trustee can distribute funds to an ABLE account without penalty.Recommended Reading: POMS SI 02230.740; September 7, 2017 CMS letter SMD 17-002; new POMS issued in April of 2018 referencing ABLE accounts at SI 01120.200C1c, as a type of account that is not a trust, and stating that funds transferred from a trust to an ABLE account are not considered income to the beneficiary. See SI 01120.201Ic and SI 01120.201Ih.Maine’s LD 1637 Passed in June of 2019Governor Janet Mills signed LD 1637?which provides:ABLE balances are exempt for all means-tested benefit programs in Maine;Earnings remain?state?tax-free following distribution; andBalances are exempt from payback to the State of Maine.Thank youJane Skelton, Esq.jane.skelton@Tel: 207.947.6500Kathy Adamskadams@mainecite. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download