Raising a child who has special needs presents parents with many difficult choices and considerations. One of the most commonly encountered issues that parents face is how to provide for their child without affecting their needs-based benefits. An ABLE account may be the answer.
A person living with a disability incurs many costs throughout their life related to their disability. Indeed, it is estimated that, while the average cost of raising a child is approximately $233,000, the cost of raising a child with a serious disability can exceed $2.4 million. The government helps those experiencing disabilities through various public assistance programs, including Supplemental Security Income (SSI) and Medicaid. However, both SSI and Medicaid are needs-based programs, meaning that there are asset and income limits that must be met before an applicant can receive benefits. Historically, this has made it very difficult for family members to provide financial support to loved ones living with disabilities.
In 2017, Colorado joined many other states in offering a tax-advantaged savings plan for individuals living with disabilities. The program, entitled Coloradans Achieving a Better Life Experience (ABLE), allows account holders to save money in a tax-deferred status while keeping their needs-based benefits. In this way, an ABLE account is an additional tool that families can use in creating a comprehensive plan for a loved one living with a disability.
To be eligible for a Colorado ABLE account, an applicant must 1.) demonstrate that they live with a qualifying disability, and 2.) provide evidence that the disability began before the age of 26. Those who are blind or who have a written disability diagnosis signed by a physician qualify. Alternatively, an applicant can show that they have a “physical or mental impairment with marked and severe function limitation that has lasted, or is expected to last, at least 12 continuous months or result in death.”
The primary benefit of an ABLE account is that it allows account holders to save money that will not be counted toward their asset limit when it comes to determining eligibility for needs-based programs. Specifically, the first $100,000 will not be considered by the Social Security Administration. Any amount over $100,000, however, will count toward the asset limit and may result in SSI benefits being suspended.
Below are some other important facts about Colorado ABLE accounts:
- Funds in an account can be placed in a variety of investment options;
- Anyone can make a deposit into an ABLE account;
- Up to $15,000 per year can be deposited into the account, unless an account holder is working, in which case they can contribute more;
- The minimum deposit to open the account is $25.
Colorado ABLE accounts offer families a great option for providing for a loved one living with a disability. However, an ABLE account is just one aspect of a comprehensive special needs plan, and other measures may be necessary.
Do You Have Questions About Special Needs Planning?
If you are curious about how you can help a loved one living with a disability plan for their future, contact the Braverman Law Group. At our Colorado law firm, we help families navigate the complexities of the state and federal needs-based assistance programs, working to create comprehensive and effective special needs plans. To learn more, call 303-800-1588 to schedule a free consultation today.