What is an ABLE Account?

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Utah residents with special needs cannot receive certain public benefits if they have too many assets. Generally, to qualify for medical help through Utah Medicaid and SSI (Supplemental Security Income) the person with disabilities cannot have over $2,000 dollars total. Going over this amount causes a lapse in benefits and can be extremely costly. 

The ABLE Account is exempt from the asset limit of $2,000. The ABLE account can receive between $18,000 and $32,000 per year depending on individual circumstances. The account balance can be up to $100,000 and still be totally exempt from the general asset limit.

Setting up an account can be done in a matter of minutes. Simply visit www.ABLEUT.com to get started. For clarification, you may notice the account referred to at times as a STABLE Account rather than an ABLE Account. This is because Utah joined with a number of other states to administer ABLE Accounts together. The STABLE program is the partnership program developed by these states to administer ABLE Accounts. 

To qualify for an ABLE account, the disability qualifying the account holder for benefits must have begun before age 26. A doctor may need to certify that symptoms began before age 26 in cases where there is doubt as to when the disability began. Important to note, this disability must meet the Social Security Administration’s criteria for substantial functional limitations.  This means that a person does not necessarily have to be receiving public benefits prior to opening the ABLE Account, merely that they meet the definition of someone who qualifies for public support.

One of the primary attractions of ABLE accounts is their tax-favored status. Contributions to the account are made with after-tax dollars, but any earnings, interest, or growth within the account are tax-free. Additionally, withdrawals are tax-free as long as they are used for qualified disability-related expenses.

Funds withdrawn from an ABLE account must be used for qualified disability-related expenses. These can include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services, legal fees, and other expenses that improve the beneficiary’s health, independence, or quality of life. Importantly, this list is far broader than what is allowable under a standard Utah Special Needs Trust.

ABLE accounts empower individuals with disabilities to make decisions about their financial resources. This control is pivotal in fostering a sense of autonomy and self-determination, crucial elements in the journey toward greater independence.

The financial security provided by ABLE accounts can play a pivotal role in promoting employment and workforce participation among individuals with disabilities. With the ability to save and invest without jeopardizing benefits, individuals may feel more encouraged to explore employment opportunities and contribute to the workforce.

While the Utah ABLE Account is an important tool, there are some limitations.

Because a Utah ABLE account is the property of the person with disabilities, the accounts include a mandatory Medicaid payback provision, which means that the state Medicaid agency will likely seek reimbursement for certain Medicaid expenses from the account upon the beneficiary’s passing.

While ABLE accounts protect Medicaid and SSI eligibility, other means-tested benefits may be affected. Individuals should carefully consider how contributions and withdrawals may impact other benefits, such as housing assistance, Temporary Assistance for Needy Families (TANF) or SNAP benefits such as food stamps. It is important to evaluate each individual situation to ensure that the benefits of using a Utah ABLE Account outweigh the costs.

While a Utah ABLE Account can serve similar functions to a trust, it is not a replacement for a Utah Special Needs Trust. In cases where a Utah resident with special needs is using their own money such as from an inheritance or a settlement, the annual contribution limits on the ABLE Account often require the need to create a First Party Special Needs Trust.

The Utah Supplemental Needs Trust should generally be used to shelter funds first. A Supplemental Needs Trust is permitted to make contributions to an ABLE Account up to the annual contribution limit. This means that a parent, for example, would be much better served putting the funds they have designated to leave to their child with special needs in a Supplemental Needs Trust because when the beneficiary dies, the funds outside of the ABLE Account would not be subject to a Medicaid Payback to the State of Utah and could then be distributed back to the parents’ other descendants rather than to the state.

A Third-Party SNT and an ABLE account are a powerful team. While the trust safely holds large amounts of money, using it to pay for rent or food can actually trigger a reduction in SSI benefits. To avoid this, the trustee can move funds into an ABLE account first. Because ABLE funds are exempt, your loved one can then pay for housing or groceries directly without any penalty to their monthly check. This gives them more independence and ensures they receive the maximum amount of government support possible.

Stores the bulk of inheritance (no limit on size).

Acts like a “spending account” for daily needs like rent and food.

Your loved one keeps their full SSI check and gains a debit card for personal expenses.