Parents appreciate the generosity of grandparents, aunts, uncles and other family members who contribute to their child’s education. Holidays, birthdays and other significant life accomplishments are wonderful opportunities for families to honor their children with a cash donation directly into a 529 college savings account.
But a child with autism spectrum disorder or another developmental disability who might not attend higher education won’t always benefit from this generosity, even though their needs are just as important. When parents of a child with a disability establish a MiABLE account, family members have a way to contribute to their loved one’s future — and it’s just as easy as contributing to a college savings account.
MiABLE is an innovative savings tool that’s designed to help create financial stability for individuals who became disabled or blind before the age of 26 and are entitled to collect Social Security Disability Insurance or Supplemental Security Income (SSI). MiABLE allows for individuals to build net worth and save money for qualified expenses without having a negative impact on the federal benefits they need, such as Medicaid and SSI.
“MiABLE is a fantastic financial tool. It really is. And it’s key that it’s used properly,” says Kurt Davis, president of New Possibilities Financial Group, a purpose-based financial planning organization in Troy with a passion for special needs planning. Davis says he likes MiABLE because it’s an easy-to-access account that can be used in conjunction with other financial tools, such as a special needs trust, to meet the needs of kids with disabilities.
“I look at MiABLE as an account that can be used to pay for qualified expenses related to a child’s disability,” says Davis. “There’s freedom and flexibility.” Each year, individuals can contribute up to $16,000 to their MiABLE account, and when young adult account holders start earning money of their own but don’t have access to a retirement account with their employer, they can add additional funds equal to their current-year gross income, up to $12,880. MiABLE account holders can even elect to have a debit MiABLE Card.
Because MiABLE is a 529 account, contributions can be invested and grow tax-free, similar to 529 college savings plans. The account can be managed conservatively as a no-risk federally insured savings account, or it can potentially grow with various options and levels of risk.
Family members who want to help with the many expenses related to living with a disability — or even just to increase health or quality of life — can contribute to a child’s MiABLE account. They can contribute no matter where they live, but if contributors are Michigan residents, they can take a deduction from their Michigan income tax of up to $5,000, or $10,000 for joint filers. Making contributions is simple with Ugift, a convenient service that allows easy and secure contributions electronically or by mail.
What families should know about preserving benefits
What’s really important for kids with disabilities as they grow to adulthood is preserving their eligibility for government programs like Medicaid and SSI. But their eligibility is limited if they report more than $2,000 in financial resources. Their MiABLE account assets can reach $100,000 before affecting eligibility for SSI, which is an important feature, Davis says.
“These kids, especially as they become young adults and move away from their parents’ resources, really lean on the benefits. Their government benefits can mean everything to them,” he says.
Family members who simply want to make a birthday or holiday gift to their loved one may not recognize that doing this can impact those important government benefits, Davis says.
“If they receive money and it makes them ineligible for benefits, it throws a kink in the whole plan. They would have to spend down (to maintain eligibility), rather than spend on what they enjoy,” he explains. “If that money were to go into their MiABLE account instead, it makes more sense and would allow them to still be eligible for government benefits.”
Longer-term considerations
As parents make plans for their child’s long-term future, incorporating a MiABLE account into their financial plan makes sense, especially if a sibling or other family member will be involved in their care.
Circumstances that seem straightforward can become complicated, with potential negative impacts on finances. If a parent decides to simply leave money to a sibling, anticipating that it will be used for the care of their child with a disability after that parent’s death, there’s no obligation for the sibling to use the money as intended.
“They have no legal obligation to use the money for their sibling’s benefit. Leaving those funds in a MiABLE account or a special needs trust secures the fact that it will be used for that individual’s benefit, not for the electric bill at the sibling’s home,” Davis says. Assets saved in a MiABLE account belong to the beneficiary, which means they can’t be divided in a sibling’s divorce settlement, for example.
Parents who are making financial plans for their child with a disability — and encouraging family members to contribute to help support their child — should carefully consider a financial tool that will allow them to save for their child’s future and be used for qualified expenses related to health and quality of life. Alone or in combination with other financial tools, MiABLE is a smart, flexible option for families.
“There are multiple ways for a MiABLE account to be used to pay rent or compensate care providers, and it really offers additional benefits that you can’t necessarily get from a special needs trust,” Davis says. “In conjunction, they’re amazing.”
Content sponsored by MiABLE. Learn more at savewithable.com.
