A person with a disability can only have $4,000 to keep the Medicaid assistance that he or she has. That’s because those receiving Supplemental Security Income, Social Security Disability Income and/or participating in programs like Medicaid or Medicare have limits placed on their assets. If they go over the limits, their benefits will be suspended. In some cases, these limits can be as little as $2,000.
Mississippi Today’s recent article, “New tax-free accounts allow Mississippians with disabilities to save without the risk of losing benefits,” explains that it’s common for a grandparent of a child with a disability to die and provide an inheritance for the child in their will. It may not a large amount of money, but $5,000 will disqualify them from government programs. Until now, it meant that those who wanted to support family members with disabilities were often limited to buying groceries.
On July 1, Mississippi started a program that allows residents with disabilities to set aside money without risking the loss of government benefits. Income earned from the accounts is tax free “if spent on qualified disability-related expenses,” according to the Mississippi Department of Rehabilitation Services. The program was created under the federal Achieving a Better Life Experience (ABLE) Act signed by President Obama in 2014 and the Mississippi ABLE Act signed by Governor Phil Bryant in 2017.
In addition to the financial benefits, the mental health of participants and their families might also improve from the ABLE program. That’s because financial independence is very helpful psychologically, but the reverse is also true. Not having financial independence can be detrimental psychologically. The ability for parents to save for their disabled children might also decrease stress.
Eligibility is restricted to those who were disabled before age 26.
“There was originally not an age limit in the legislation but whenever they ran it through the budget office and they scored the cost in the legislation it was going to be … like $20 billion or something that it was going to cost the federal government if there wasn’t an age limit in there, which was going to kill the bill,” Mississippi Department of Rehabilitation Services chief of staff Billy Taylor told Mississippi Today. So (age limit) was put in there … to drive the cost of the program down.”
Mississippi is part of the National ABLE Alliance. It’s a partnership of states that utilize the same program. The program allows out of state residents to create ABLE accounts, allows contributors to ABLE accounts to deduct contributions from their taxable income, allows account holders to use debit cards and to choose from seven different investment options.
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Reference: Mississippi Today (July 8, 2019) “New tax-free accounts allow Mississippians with disabilities to save without the risk of losing benefits”