So, what are ABLE Savings Accounts? “The ABLE Act allows people with disabilities and their families to set up a special savings account for disability-related expenses. Earnings on an ABLE account would not be taxed, and account funds would generally not be considered for the supplemental security income (SSI) program, Medicaid, and other federal means-tested benefits.”
Who’s eligible? “An eligible individual is someone who becomes disabled before age 26 and (1) receives Social Security Disability Insurance (SSDI) or SSI; or (2) files a disability certification under rules that the IRS will write.”
So, what questions do you have about the ABLE savings accounts?
What are examples of “Disability Related Expenses?” Where would one set-up such an account? At a bank or other type of institution?
I think that a number of your questions can be answered on The Arc of PA’s ABLE Accounts website section. They have also had at least one webinar on ABLE Accounts. Regarding ‘disability related expenses’, there should be some answers located on there. Some specific answers to your questions: Entertainment is not an allowable disability expense, but that’s one of the few restrictions. Some examples of what’s allowable: someone is an Medicaid Waiver, Act 150 or other program that doesn’t include home modifications as a covered benefit. Another example is using ABLE funds to cover dental care not covered by Medicaid (dentist won’t take it) or additional out of pocket expenses. Upgrading a vehicle to make it accessible is another example. There are others, but I think you get the point. All expenses should be disability related. Folks with ABLE accounts need to keep receipts and document everything for each expenditure, similar to what you would do when itemizing your taxes for tax season. There is also a section on IRS tax forms regarding ABLE Accounts and you should check the IRS website for the most current guidelines.
Regarding your question on initial setup, you don’t go to a bank or other financial institution. Interested parties will go through the PA Department on Treasury which should hopefully have ABLE Accounts set up in Pennsylvania by the end of 2016. You can learn more here and get updates from them here at the bottom of the link.
Hope this helps.
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