Chances are, if you know someone with a disability from before the age of 26, you know someone who qualifies for a MiABLE account. Across Michigan, that’s potentially 300,000 people, says Scott de Varona, director of the MiABLE disability savings program of the Michigan Department of Treasury.
Passed in 2015, the ABLE Act allowed states to create the first financial product for people with disabilities to gain financial self-sufficiency without impacting their eligibility for support programs for health, food, housing and Supplemental Security Income. (For decades, individuals could have no more than $2,000 in assets to qualify for these programs.)
“Finally, Congress realized that we have encouraged a segment of the population to remain financially illiterate by not allowing individuals with disabilities to be economically sustainable,” de Varona says. “The ABLE Act allows individuals with disabilities to put money into an account specially designated for them and lets them build net worth, which they were unable to do prior to this legislation.”
When to start
Everyone has different financial needs and goals, but it’s never too late — or too early — to create financial stability through a lifelong financial savings and investment account, says de Varona. While a MiABLE account can be used just like a regular checking account to pay for activities of everyday living, it’s also a powerful tool to leverage the strength of the stock market to build earnings that can be used tax-free for eligible expenses.
“Those who are most successful are those who are planning long term. They start early and contribute regularly to build up their portfolio and compound their investments,” de Varona says. “It’s a great opportunity for those coming close to that $2,000 threshold to put money into their MiABLE account regularly. There will be expenses related to their disability, whether it’s $75,000 for a van that can accommodate a wheelchair or $5,000 for a wheelchair ramp for their home.”
Individuals, their family and friends, even strangers, can contribute up to $15,000 per year, more if the account holder is working, and the account can have up to $100,000 without negatively affecting disability benefits.
Although it is modeled after the 529 education savings program, which has a 30-year record of success helping people invest and save just for college expenses, MiABLE is much more flexible because funds can be used for a wide variety of expenses.
“The qualified disability expenses are intentionally broad because every disability is unique,” de Varona says. Funds can be used for medical expenses, assistive technology, rent, a mortgage down payment, utilities or transportation. “A number of people are left out of the workforce because they don’t have a reliable source of transportation due to their disability,” de Varona explains.
How MiABLE helps
One of the best benefits of a MiABLE account is peace of mind, he says. “This population has been told for far too long to stay broke, and this can be their first step into long-term financial planning,” he says. “Parents work for 18 or 20 years — sometimes even longer — to help kids become self-sufficient, so what happens when parents pass on? A MiABLE account can be a peace of mind to bridge that help, and can even just be a kicking-off point. Parents can have this account to plan for the inevitable, and answer those questions about how to plan and save for their child’s future.”
Anyone can contribute to an existing MiABLE account, and Michigan residents who provide this charitable contribution can take a deduction of up to $5,000 ($10,000 for joint filers) from their Michigan income tax. “It’s wonderful that tax deductibility is added as an additional incentive. Whether a person contributes to a family member’s account or to a complete stranger, it’s great that it can be a completely charitable contribution,” de Varona says.
While MiABLE accounts are currently limited to those who incurred their disability prior to the age of 26, during the past two terms, Congress has proposed unsuccessfully to raise the eligibility age to 46. “Unfortunately, until Congress passes the ABLE Age Adjustment Act, this account can’t help them,” de Varona says. If enacted in the future, this adjustment could extend eligibility to disabled veterans, those with traumatic brain injuries developed after the age of 26 and those with conditions that show up later in life, like ALS or MS.