ABLE savings accounts, for those disabled before age 26, are now available in New York

November 10, 2017

Alexander Ryley

Director, Elderly Project

Dear Friends,

The other day I gave a presentation to a group of disabled people who had never heard of ABLE savings accounts.  Even though ABLE accounts are designed to be used only by disabled people, it’s not surprising that my audience was unfamiliar with them, because New York launched its ABLE program only three months ago. (It was the 26th state to do so.) For those who qualify, the ABLE account may represent a good and simple alternative to a supplemental needs trust.

What is an ABLE account?

“ABLE” Is an abbreviation for the Achieving a Better Life Experience Act of 2014, which allows qualified people with disabilities to save for qualified disability expenses without the risk of losing their benefits from assistance programs like SSI and Medicaid.  New York ABLE allows qualified disabled persons to save up to $14,000 a year in an ABLE account.  The funds in the account can be used for disability-related expenses that assist the beneficiary in increasing and/or maintaining his or her health, independence, or quality of life. The maximum account balance for a New York ABLE account is $100,000.  The New York ABLE Program is administered by the Office of the New York State Comptroller.

Who can use an ABLE account?

Perhaps the most important thing to know about qualifying for an ABLE account is that the disabled person must have become disabled prior to age 26

There are two ways to be considered an eligible individual.  Either:

  • a disability must be present before age 26, and the individual must be entitled to SSI or Social Security Disability Insurance (SSDI) because of his or her disability;

OR

  • a disability must be present before age 26 AND AT LEAST ONE OF THE FOLLOWING requirements must be met:
    • The individual has a written diagnosis from a licensed physician documenting a medically determinable physical or mental impairment which results in marked and severe functional limitations, that can be expected to last for at least a year or can cause death; OR
    • The individual is classified as blind (as defined in the Social Security Act); OR
    • The individual has a disability that is included on the Social Security Administration’s List of Compassionate Allowances Conditions

Proof of eligibility isn’t required to open an account. However, eligible individuals should maintain a benefits verification letter, a record of diagnosis, or other relevant documents should they need to prove eligibility at a later time.

Who can open an ABLE account?

Eligible people can open the account for themselves, or a parent or legal guardian may open one on their behalf.  An agent of the eligible individual can also open an account under a power of attorney.  The eligible individual is the Account Owner and the Beneficiary.

What can a disabled person spend ABLE account funds on?

A “Qualified Disability Expense” means any expenses eligible individuals incur that relate to their blindness or disability and are intended to maintain or improve their quality of life.

These qualified expenses include:

  • Education
  • Health and wellness
  • Housing
  • Transportation
  • Legal fees
  • Financial management
  • Employment training and support
  • Assistive technology
  • Personal support services
  • Oversight and monitoring
  • Funeral and burial expenses

The NYS Comptroller’s Office recommends that a record of expenses and payment receipts be maintained should they be needed at a later time.

If NY ABLE savings are used for non-qualified expenses, the earnings portion of the withdrawal will be treated as income – subject to federal and applicable state taxes.  In most cases, it will also be subject to a 10% federal tax penalty.

What about account maintenance fees?

There is a $45 annual fee payable at $11.25 quarterly. If paper statements are selected, the fee increases to $13.75 per quarter.  There is also a monthly maintenance fee of $2, which can be waived if the average daily balance is over $250 or by electing electronic statements.  The annual investment fee is 0.40%.

Want more information?

The website MyNYABLE.org provides much of what you’ll need to know.  And to learn about enrollment, click here.