Life with a disability can be expensive, and most rely on a variety of government programs such as Medicaid and Supplemental Security Income (SSI) to pay for much-needed medical care and help with everyday expenses like food and housing.
However, many of these government programs limit eligibility if the individual reports more than $2,000 in resources.
Through the ABLE Act, MiABLE accounts allow eligible individuals to build net worth and save money for qualified expenses without negatively impacting their eligibility for benefits they need, such as Medicaid and SSI.
In its simplest terms, a MiABLE account allows individuals to contribute funds and the money invested can grow over time. Money invested in a MiABLE account can be withdrawn without tax penalty if used for qualified expenses. The MiABLE program is administered by the Michigan Department of Treasury and investment services are managed by TSA Consulting Group.
Who is MiABLE for?
Individuals are eligible to open and fund a MiABLE account if they become disabled or blind before the age of 26 and are entitled to collect Social Security Disability Insurance or Supplemental Security Income — though they do not need to be receiving either of these benefits to qualify for a MiABLE account. There are some 27,000 different diagnoses and conditions that a person can have to qualify for a MiABLE account. The IRS allows for self-certification with a doctor’s certificate.
What is a 529?
MiABLE is designated as a 529A account under Internal Revenue Service Code and it’s similar to the 529 college savings plan. MiABLE account owners can select from five investment options based on individual risk tolerance, and funds can be spread across any or all of these five options. MiABLE also offers a Federal Deposit Insurance Corp. savings account with risk-free savings. All 529 accounts, including ABLE accounts, are administered individually by states, and you don’t have to be a Michigan resident to have a MiABLE account. Individuals are not permitted to have more than one ABLE account.
The dollar amounts
Individuals can contribute up to $15,000 per year to their MiABLE account, and beneficiaries who are employed but don’t have access to a retirement plan, like a 401(k), can contribute on top of this amount, equal to their current-year gross income up to $12,060. These numbers are subject to change according to adjustments and modifications by the IRS.
MiABLE assets are not taken into account when determining Medicaid eligibility. However, Medicaid does reserve the right to “claw back,” or claim the amount in the account, when the benefi¬ciary dies. There are, however, ways that beneficiaries can mitigate this clawback, and individuals should seek the advice of a financial planner to learn more.
Assets in a MiABLE account that exceed $100,000 do affect eligibility for Supplemental Security Income. That means when the account exceeds a value of $100,000, the beneficiary could lose monthly SSI benefits. Individuals can use the funds on eligible expenses to keep the total value of the account at the $100,000 level so they don’t lose their SSI benefits.
Using the money in the MiABLE account
The funds in a MiABLE account can be used for expenses that relate to an individual’s disability and help them improve or maintain independence, quality of life or health. They are not limited to items that are considered medically necessary. Qualified disability expenses include education, housing, legal fees, assistive technology, employment training, transportation, and many other approved expenses.