Hinkle, Prior & Fischer, Disability Attorneys

You may have read our previous articles regarding the Achieving a Better Life Experience (ABLE) Act. Briefly, the ABLE Act creates tax advantaged savings accounts for individuals with disabilities, which in most cases will not jeopardize means tested government benefits such as Medicaid and Supplemental Security Income (SSI). However, there are a number of limitations including:

1. the disability must have manifest before the age of 26,
2. individuals can only have one ABLE account,
3. the annual maximum contribution to an able account is currently $14,000,
4. if there is more than $100,000 in the ABLE account the individual will lose SSI benefits, and
5. there is a “payback” provision. The “payback” provision provides that Medicaid and other government agencies will be permitted to recover any funds remaining in the account when the beneficiary dies.

For more information on how ABLE accounts may be useful, you can find our previous article here, which also explained the next step was for New Jersey to pass both a statute and regulations.

On January 11, 2016, Governor Christie signed the bill into law approving the use of ABLE accounts in New Jersey.

Under this law, ABLE accounts are going to be managed by the New Jersey Division of Developmental Disabilities (DDD). Any New Jersey resident will be permitted to apply for an ABLE account, however, the beneficiary of the account must be an individual with a disability. The beneficiary of the ABLE account does NOT have to be DDD eligible, although many will be. An individual currently receiving SSI or SSDI from the Social Security Administration should automatically qualify for an ABLE account so long as their disability manifested before the age of 26.

To establish an ABLE account you will have to contact DDD and provide the requested documentation, including proof of residency in New Jersey. There will be some fees associated with establishing an account, and a minimum balance of $25 is required. DDD will also be able to collect a small amount of yearly fees for the management of the funds in the account. One particularly troubling provision of the New Jersey law is you will only be able to make withdrawals from an ABLE account by providing 60 days’ written notice to DDD.

Because of the various limitation of ABLE accounts, it will usually be more advantageous for families to create a special needs trust or use other savings vehicles. Please refer to our articles on special needs trusts for more information.

Tags: ABLE Act, Medicaid, NJ DDD, SSDI, SSI