In Special Needs

The Social Security Administration (SSA) has issued a new Program Operations Manual System (POMS) section reflecting guidance by the Internal Revenue Service (IRS) and clarification on ABLE accounts, effective March 8, 2018. 

In 2014, the Achieving a Better Life Experience (ABLE) Act became law, allowing some people with special needs or their families to establish tax-free savings accounts that would not disqualify them from receiving federal disability benefits. Since then, implementation of the Act has resulted in operational changes and identified areas that required further clarification or explanation.  Found at SI 01130.740, the new POMS addresses several of those points.  Below are some highlights of the more significant changes.

As ABLE has expanded, states have found different ways to administer ABLE accounts.  Subsection A explains the types of arrangements or partnerships that might exist across states.  It also clarifies the parameters of the one-account rule and the policy regarding Medicaid reimbursement.  Subsection B, Definitions, updates the annual contribution limit to $15,000.  It redefines the qualified disability expense (QDE) formerly known as “housing” to “housing expenses,” likened to “household costs,” excepting food.  Specific timeframes relating to rollover contributions to ABLE accounts are provided, including a 60-day time limit from withdrawal from one account to contribution to another.

Subsection C offers more detailed guidelines on the treatment of ABLE account contributions and distributions.  Contributions are excluded as income.  However, income received by a designated beneficiary who then deposits it into her ABLE account is treated as income: “the income is income in the first instance, but the contribution is not income.”  Third-party contributions into an ABLE account are treated as a completed gift.  Distributions from an account for QDEs not related to housing are excluded as countable resources when retained longer than a month.

At the request of the IRS, the SSA simplified the QDE examples contained in Subsection D. They illustrate the impact of ABLE account balances over $100,000, including the potential for a special SSI suspension when SSI resource limits are exceeded.  Several different examples also demonstrate how distributions for housing expenses or non-QDEs that are retained beyond the month of receipt are treated as a countable resource to the beneficiary.

Finally, subsection G addresses ABLE prepaid debit cards that are allowed by some ABLE programs.  SSA will receive reports about debit card activity through a data exchange.  Debit card recipients are required to record the card in the SSI claim system and follow specific directions provided.

In some respects, the POMS update is extensive.  A line-by-line analysis of the ABLE POMS changes by ASNP member and POMS guru David Lillesand helps clarify what’s new and different.  He’s generously shared it with ASNP and a copy can be downloaded here.

To see the SSA’s new ABLE Account POMS, click here.

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