Manage your spending without impacting your government benefits with an ABLE account. ABLE funds can pay for education, housing, transportation, employment, assistive technology and adaptive equipment, health, prevention and wellness, legal and financial services, funeral and burial, basic living expenses and more.
Be sure to keep good records of all your spending, because the IRS has the right to ask for verification for each expense. An expense is qualified if it meets all three requirements:
Qualified housing expenses make an ABLE account different from a Special Needs Trust (SNT), since distributions to pay for housing costs are not counted as income for SSI qualifications, if spent in the month received.
If ABLE account funds are used on non-qualified expenses, regular income taxes plus 10% additional tax on the earnings portion of those non-qualified distributions will need to be paid. And, those distributions may impact your eligibility for federal benefits, like Medicaid or SSI.
Most federal benefits disregard or favorably treat ABLE assets — so you have a better chance of becoming and remaining eligible for them.
SSI disregards up to $100,000 in ABLE account assets. SSI payments will be suspended if the beneficiary’s account balance exceeds $100,000, but SSI eligibility will not be terminated.
ABLE funds used for housing expenses will not affect SSI payments, as they’re not counted as income or in-kind support maintenance. ABLE distributions intended for housing must be spent in the month they are taken.
Medicaid disregards ABLE assets when determining eligibility, and Medicaid benefits are not suspended if the ABLE account balance exceeds $100,000.
At the end of the designated beneficiary’s life, the ABLE account becomes part of the estate and is subject to Medicaid payback. Each state’s Medicaid payback policy may differ, and some choose not to recapture at all. Medicaid may become a creditor of the account but is not the beneficiary, so Medicaid can only ask for payback for expenses incurred while the account was open.
Executors can pay outstanding (QDE) bills and funeral and burial expenses from the ABLE account prior to Medicaid payback. There is no “named beneficiary,” so a will, executor, and the probate process will dictate where any remaining funds go.
Your financial plan for special needs is made up of many parts. A Letter of Intent (LOI), government benefits, employee benefits and legal or financial structures — like a Special Needs Trust (SNT) and an ABLE account.
An ABLE account is a qualified, state-established savings account that receives preferred federal tax treatment. It enables people with disabilities to budget, manage spending and save employment income or other funds to pay for disability-related expenses without jeopardizing their public assistance eligibility.
An ABLE account may be easier to access for short-term spending; it allows broader spending power — like for food and housing, all earnings are tax-free, and individuals can manage their own money. Plus, state tax deductions apply, where available.
Special Needs Trusts (SNTs) can hold unlimited assets, and a third-party trust may be used for estate planning and family wealth transfer. Special Needs Trusts even allow distributions to fund an ABLE account, which offers families some unique planning opportunities to use both vehicles together.
If you’re an individual with a disability, the account is owned by you. If you’re a caregiver your loved one with a disability is the owner.
While each eligible individual may have only one ABLE account, a personal representative (guardian, conservator, agent of Power of Attorney or parent) can help manage it, and multiple individuals may make contributions to it.
Contributions to an ABLE account are made with post-tax dollars, so ABLE programs and distributions for qualified disability expenses are generally exempt from federal taxation. With certain exceptions, non-qualified distributions are subject to an additional 10% tax on the account earnings.
Some states provide significant tax incentives for contributions to ABLE accounts. Check your state’s plan to see if it applies to only its own plan or to any ABLE account.
Contributions to ABLE accounts can also now qualify for the “Saver’s tax credit,” which can help you save on federal income taxes.
An ABLE account requires low or no startup costs, and lifetime maximums vary by state. While many are at least $300,000, some states go as high as half a million dollars. You won’t need an attorney or a trust administrator — only a minimal opening deposit, often as low as $50, and some states are even waiving the initial setup fees. Investment costs vary, so check with your ABLE plan for details.
Up to 4 million children and 8 million adults are estimated to be eligible for ABLE accounts, based on disability status and age of onset.¹
You may be eligible at any age, if your disability occurred before age 26.
There are multiple ways to prove eligibility for an ABLE account:
If you meet one of these requirements, you may be eligible for an ABLE account. Talk to a financial advisor today to see if an ABLE account could improve your financial future.
As a caregiver, you are the most important advocate for your loved one. You’re the actual witness to and often the force behind their experiences, history, wishes and habits. A critical part of being a caregiver is making sure your loved one will continue to thrive, when you’re no longer able to care for them. Taking the steps to complete a Letter of Intent (LOI) can communicate valuable information about their life, as well as your shared vision for their future.
An LOI isn’t a legally binding document, like a will, but it can be an important precursor to a special needs plan. Also known as a “Letter of Instruction,” it is a guidebook-like reference for future guardians and caregivers of your loved one. Additionally, it is an important part of your overall life care plan, providing a road map of your and your loved one’s hopes and dreams for their future, a foundation on which to build a long-term plan. Lastly, it can be a companion piece to a special needs trust or an ABLE account, to ensure assets are used to best supplement your loved one’s quality of life.
A Letter of Intent should regularly be updated to keep the information current, at least every year or as things change in your loved one’s life, for example, new schools, graduation, marriage or change in diagnosis or prognosis. The document is a living one — never complete but as up-to-date as possible.
Before you start, gather the supporting documentation needed to complete the LOI, including legal documents like trusts or Powers of Attorney, financial statements, insurance policies, birth certificates and identification cards. Equally important, bring your loved one into the process to make sure to include their own hopes and dreams about their future.
Remember, the more detailed you are, the better prepared future caregivers will be to provide continuity of care. Using a Letter of Intent template (download PDF) to help complete the LOI may be helpful. Or create your own document to include the following information.
Of all the categories of content in the LOI, this is the one that will allow you to personalize and bring your loved one to life. Explain how your loved one’s day-to-day activities and life are, including:
Again, because this part of the LOI is flexible, you also may want to include names and contact information of siblings and family members who are a source of information about your loved one, as well as other general insights that a future caregiver or guardian would find valuable.
Include any type of behavior management programs that have had a positive impact on your loved one, but don’t forget to document programs that have been unsuccessful, as well.
Does your loved one prefer hot dogs with ketchup, but hate mustard? Highlight their favorite foods, how those foods should be prepared, those they dislike and any food allergies.
Include in this section all medications and medical professionals whom your loved one currently works with, but equally important is including details about how your loved one interacts with them. Are they frightened by the stethoscope or dental drill? Be sure to include solutions that you and the professionals have implemented to mitigate these reactions. Equally important information is providing medical coverage and carrier information.
This is critical information to help understand how best to fund your loved one’s envisioned future. Assets include salary, employer benefits like retirement accounts and group life insurance coverage, as well individual savings and checking accounts. Include banking identification numbers and contact information for financial planners whom you work with, and don’t forget passwords to access online accounts. Also list all of the government benefits your loved one receives and any important recertification dates.
Because of the impact that education can have on every aspect of their life, including a clear picture of current and future education plans for your loved one will be key. Provide detail about the current Individual Education Plan (IEP), what school they are attending and what a typical day is like. Include your and your loved one’s desires for their educational future, as well.
As current and future plans for education are detailed, a next step may lead to employment. Describe the different types of work your loved one enjoys, place of employment, if they work, and supervisor.
Your loved one’s environment encompasses a complex set of social and cultural conditions that influence their day-to-day life and shapes their future. Do you prefer that they live in the same community where they live now? Make sure to explain your loved one’s ideal living arrangements and other related information, including:
Depending on your loved one’s life stage, the legal components of a long-term estate plan may vary from family to family. It’s important to provide detail about what legal and estate planning documents are in place, including trusts, Powers of Attorney, medical directives and wills. Be sure to list contact information for the attorney or law firm that drafted the documents and in what state. Where are these documents stored? Include any passwords needed to access them.
It’s never easy to think about the need for final burial arrangements, but having your and your loved one’s wishes carried out at this critical time are paramount. Describe any final arrangements that are in place for your loved one and list contact information. If none have been made describe your preferences and favored final resting place.
The initial process of writing an LOI may be an emotional experience and prompt a level of planning and consideration for future events that you may not have had the time and need for, in the past. You may want to enlist an experienced financial or legal professional to guide you through the process. Once complete, however, make sure your hard work is not overlooked. Take these steps to put the LOI into action:
While no one can ever replace you, the LOI is a critical step toward ensuring the wellbeing and care of your loved one, now and in the future.
Download your own copy of our letter of intent template below, and get started today.
Creating a lifetime of continuous care for a child or loved one with disabilities requires careful consideration and planning. The journey can seem confusing at first glance, but getting started is much easier when you’re organized.
Download your own copy of Voya Cares Checklist for Individuals and Caregivers (PDF).
One out of every four people in the U.S. (approximately 66 million people) live with a disability1, while one out of every five workers assist with caregiving.2 Even so, people with disabilities and their caregivers are often overlooked.
Our central mission is to help all Americans retire better — one person, one family, one institution at a time. And providing solutions and services to the special needs community and their caregivers is a natural extension of our goal. In the process of doing so, we’re looking to help advisors make a difference in the lives of millions living with special needs and disabilities as well as their caregivers.
How does Voya Cares help financial professionals navigate the journey?
Each of these pieces are designed for you to use with your clients in the planning process, or for prospects as a handout to start the conversation.
Confidently checking all of the boxes means individuals with special needs and caregivers can plan for a better future.
Caregivers and individuals with special needs will often require more income replacement in retirement.
Naming loved ones with special needs or disabilities as beneficiaries could have an unintended impact on their eligibility for government benefits.
An easy-to-follow roadmap to government benefits for special needs planning and how to incorporate those benefits into an overall strategy.
A special needs trust can supplement government benefits and provide for a better quality of life for your loved one with special needs.
Voya Cares helps employers create an inclusive work culture and a more efficient workforce through solutions, educational resources and thought leadership. We’ll help you become more valuable to your employees.
Voya Cares helps employers create an inclusive work culture and a more efficient workforce through solutions, educational resources and thought leadership. We’ll help you become more valuable to your employees.
We’ve seen a shift towards a broader line of thinking when it comes to the role of the employer and the financial wellness of employees. The growth of employer student loan programs, emergency savings programs, health savings accounts (HSAs), 529s and other accounts that allow direct deposit — and in some cases employer match — can help employees achieve financial goals that are important to them. Unfortunately, many of these solutions, along with defined contribution plans, may unintentionally exclude an important and growing segment of the workforce: people with special needs, disabilities and caregivers.
To best attract the diverse talent offered by people with disabilities and caregivers, employers are trending toward more inclusive employment practices, such as offering accessible workplaces and employer-sponsored benefits.
Employers now have the opportunity to reverse years of disadvantages faced by people with disabilities and special needs and caregivers in the workplace.
People with disabilities or special needs have been at a financial disadvantage for years, in part due to restrictions imposed by government benefits programs that are often critical to managing care needs. Many government benefits require qualifying individuals to limit their income and keep accumulated assets — including retirement accounts, HSAs, and 529 plans — below strict limits, or risk losing their eligibility.
As a result, employees with disabilities or special needs often opt out of valuable employer-sponsored benefits — including 401(k) and 403(b) plans — to maintain government benefit eligibility. Opting out of one’s employer-sponsored retirement plan may have serious ramifications for savings accumulation and tax benefits. In addition to giving up the ability to save an individual’s own money for retirement and other goals, those with disability or special needs situations may also be giving up the employer match, which is a significant benefit to those employees who participate.
As noted in Voya’s own research (PDF), financial challenges extend to caregivers in the workplace as well. Caregivers and loved ones who are employed face additional stress as they attempt to balance their financial goals with the needs of their loved ones.
As employers recognize the needs of people with disabilities, special needs and caregivers in the workplace, a potential alternative to opting out of valuable employer benefits to maintain government benefit eligibility is emerging in the form of ABLE accounts. ABLE accounts (PDF) are state-sponsored, tax-deferred accounts under the same tax code as 529 education plans. However, instead of being strictly for higher education, they can be used for nearly anything related to quality of life for a person with a disability. Individuals with disabilities that began prior to age 26 may be eligible to contribute to an ABLE account. Caregivers, loved ones and even employers can also contribute to an ABLE account for an eligible individual.
Perhaps most importantly, assets accumulated in ABLE accounts are not counted toward government benefits resource tests. Account holders can accumulate up to $100,000 in an ABLE account without affecting their benefit payments from Supplemental Security Income (SSI). Depending on specific state limits, ABLE account holders can accumulate $300,000 or more without interrupting their medical coverage and other supports through Medicaid.
With plans available in every state, many with low-cost investments, low minimums and easy access that often includes debit cards, ABLE accounts are an easy, cost-effective way for families and individuals to save and invest for short-term needs and long-term goals. Contributions are limited to $15,000 for 2019, but individuals who are employed and not participating in employer retirement plans can contribute an additional $12,140 for a total potential contribution of $27,140 for 2019. It’s easy to see how employees can really make progress towards their financial goals with ABLE accounts.
ABLE accounts are a relatively new development but are gaining traction as an option for parents to save for their children with special needs or disabilities. But, in the workplace, ABLE can be a viable complement to an employer-sponsored retirement plan for employers who want to be inclusive of people with disabilities and caregivers. Here are a few steps employers can take to offer ABLE account support to eligible employees:
Communication, education and assistance are key to this process, as there’s a hurdle to overcome in the form of an understanding gap. Given the fact that ABLE accounts are relatively new and legislation has been evolving, there’s a need for quality educational content and guidance. Some individuals with disabilities are accustomed to strictly adhering to the asset limitation and are worried about saving even though the vehicle is designed for that purpose.
As use of ABLE accounts grows amongst the disabilities and special needs community, employers should consider how to incorporate ABLE into their benefits programs in order to help attract and retain quality employees. In doing so, they can make progress in financial inclusion and help all employees save for their own financial goals.
For more information on ABLE accounts, visit VoyaCares.com or ask your Voya relationship manager.
This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. Please consult an independent legal or financial advisor for specific advice about your individual situation.
In times of crisis, Americans pull together and work to support at-risk communities. The COVID-19 outbreak and the corresponding shutdown have changed the lives of nearly every American, but the disabilities and special needs community is particularly affected. Through its Voya Cares® program, Voya is here to help with some specific ideas, resources and solutions that you can take action on today.
Below are just a few of the ways in which the lives of those in the special needs community are being disrupted — and tips on how to address them.
Those who are employed may be experiencing a cut in hours, layoffs or furloughs as businesses, including those that employ people with disabilities, are forced to cut back. Individuals who are still employed are facing the challenges of working remotely. For those who are self-employed or are business owners, there may be lost or delayed revenue as customers are staying home and reducing spending. For caregivers who are balancing working from home with caring for loved ones, it may be a particularly stressful time. If they have lost wages, it can be an even bigger challenge because of additional expenses often related to caregiving.
As many service providers are forced to close, and in-home professional service providers may limit or cancel visits, many in the disabilities community who rely on personal attendants, nurses, social workers, respite providers and public transportation may struggle to get the day-to-day help they need.
So many of the things we enjoy in life are being interrupted, from cancelled sporting events and social gatherings to closed movie theaters and restaurants. It’s easy to see how people’s quality of life is at risk or on hold.
Below are some useful links from the Centers for Disease Control and Prevention (CDC), the Social Security Administration and other resources for your reference:
A growing subset of employees in the workforce is going unnoticed — caregivers and employees with disabilities and special needs. This group of employees is not only growing, but also made up of significant numbers of top-level staff members who are increasingly costly to replace in an organization.
Through our Voya Cares program — which advocates for and offers educational and planning resources and solutions to help people with disabilities, special needs and caregivers, plan for their futures — we conducted extensive market research to assess the complex realities and needs of caregivers and employees with disabilities to help inform employers on how to best support them.
The results showed that almost half of surveyed employers lacked awareness of the increasing numbers of caregivers and people who have disabilities and special needs in their workplace. One in five American employees is a caregiver, but 44% of all employers are unaware that so many of their employees are caregivers, as the national statistic indicates.
Nevertheless, 80% of employers recognize that their company could be doing more to help caregiving employees. They say the biggest barrier to doing more, however, is making a compelling business case to invest in additional relevant benefits.
But why is the number of caregivers in the workforce worth paying attention to?
There’s a significant physical, emotional and financial impact on caregiving employees and employees with disabilities. Four out of five caregiving employees said that they experienced increased stress or anxiety as a result of their dual roles, and a majority also report using sick, personal leave, or vacation time to provide care. As a result, common issues reported by caregivers include trouble sleeping, depression and anxiety.
In addition, compared to the general population of employees, caregivers and employees with disabilities and special needs are in a more uncertain financial situation. More than half of caregivers and employees with disabilities surveyed are concerned that the money they have or the money they will save won’t last.
Employers cannot afford to ignore the needs of caregivers and employees with disabilities. The minutes, hours and days of productivity that are lost because of stress, reduced concentration, doctors’ appointments and more can add up very quickly over time. Consider the following:
Note that none of these points suggest employing caregivers and people with disabilities has a negative effect on a company. In fact, recent research has shown that a majority of employee caregivers are senior level and likely some of the highest-performing talent in an organization.
However, there is a “caregiving crisis” in the workplace, and employers are increasingly realizing they have a role to play in solving it.
Strong benefits packages appeal to all workers, and they appeal as much — if not more — to employee caregivers and employees with disabilities.
When asked to rate which benefits are most important to them, all employees list three typical top choices: medical insurance, retirement plan and Paid Time Off (PTO). In addition to the benefits that are typically top choices, there are benefits and resources that especially appeal to caregivers and employees with disabilities and special needs. These benefits include:
This information intends to raise awareness among employers of the prevalence of caregivers and people with disabilities and special needs in the workplace, foster understanding of their unique circumstances, and suggest actions — actions that are valued by all employees — that companies can take in order to avoid the high cost of employee turnover.
See For the Benefit of All: How Organizations Win When They Recognize and Support Caregivers and Employees with Disabilities for five specific recommendations to help employers address the needs of caregivers and employees with disabilities.
See Infographics: Caregivers in the workplace, Employers make a difference (download PDF) for a quick look at the Voya Cares market research that assesses the complex realities and needs of caregivers in the workplace to help inform employers on the effects and how to best support them.
See the Voya Cares Checklist for Employers (download PDF). From inclusive hiring practices, to communication, to employee benefits, this checklist can be a guide to see where your company is today, and where you might be able to improve.
