A change in federal law last year allows for a disabled person on Supplemental Social Security Income (SSI) or Medicaid to open an account which can be used for their benefit and which can accumulate funds which will not affect their Medicaid or SSI eligibility.
This concept is very similar to a “Medicaid Payback Trust,” which became law in 1993. For those individuals who already have Medicaid Payback Trusts in place, they do not need to open a STABLE, also known as an ABLE account. For those that have no trust in place, if they start to accumulate savings or inherit a small sum of funds, opening one of these accounts would be relatively easy.
They key to the implementation of these accounts is that they have very significant restrictions on expenditures. The moneys from these accounts cannot be used for rent or for food. They can be used for transportation, entertainment, or purchases, such as furniture.
Particularly for those who are disabled and employed, it is possible for them to accumulate funds through frugality or working overtime on occasion. Particularly for those who have seasonal employment, these accounts may be very useful.
These accounts do not affect Medicaid or SSI limitations on earnings, but rather only affect limitations on accumulation of assets. Thus, if an individual earns $7,000 during the year, all between September and the end of the year, annual earnings will impact both SSI and Medicaid eligibility but would only count as $7,000 of income, as opposed to $1,600 per month of income earned in the last few months.
However, earning those funds and placing those funds in an individual’s checking or savings account will terminate Medicaid and SSI eligibility by way of the asset test, which is now $2,000 for both programs.
Benefits of STABLE Accounts
A STABLE Account of ABLE Account will therefore be very useful in those circumstances if a Medicaid Payback Trust was not already in place. Particularly in those circumstances where the amount retained is less than $20,000, such an account will be meaningful and appropriate, although careful review of expenditures is essential.
When using either a STABLE, aka ABLE account or a Medicaid Payback Trust, we recommend that the individual or the Trustee consult with their attorney at least once a year to review the probable expenditures for the upcoming year.
The expert Elder Law, Estate Planning and Special Needs Trust attorneys at Browning & Meyer Co., LPA, stand ready to help you today. Contact us through our website, ElderLaw.us, or by calling 614-471-0085.