The Achieving a Better Life Experience Act (ABLE Act) was enacted on December 19, 2014. Minnesota enacted ABLE accounts into law in 2015. An ABLE account is established through a savings plan known as the Minnesota ABLE Plan in compliance with Minn. Stat. § 256Q.01.
ABLE accounts are tax-exempt accounts (treated like 529 Plans) that allow a disabled individual who meets certain criteria to contribute to a designated account, spend funds from the account on qualified disability expenses, and remain on government benefits (such as Medical Assistance/Medicaid and Supplemental Security Income or SSI). The assets in the account do not affect eligibility for government benefits, and are not considered an available asset to the beneficiary.
Creating the Account
Minnesota is a member of the National ABLE Alliance and has a designated ABLE account website for the Minnesota ABLE Plan. Assets must be held in a separate account in the state treasury to be known as the Minnesota ABLE plan account or in accounts with the third-party provider selected pursuant to Minn. Stat. § 256Q.05, subdivision 4. The only way to create an ABLE account in Minnesota is by registering and going through the process on the Minnesota ABLE Plan website.
- The designated beneficiary must have become disabled prior to age 26.
- A designated beneficiary establishes and owns the account.
- Only one ABLE account per person.
- The ABLE account may be funded by anyone, including the designated beneficiary. However, there are limits on the total amount of contributions:
- $14,000 per year*
- $100,000 total for SSI
- $350,000 total for Medical Assistance
*Total annual contributions that any ABLE account can receive from all sources to the amount of the per-donee gift-tax exclusion in effect for a given calendar year, which is $14,000 in 2017.
ABLE Account Distributions
Distributions from an ABLE account may be made at the request of the designated beneficiary for Qualified Disability Expenses (QDE). QDEs are expenses related to the blindness or disability of the designated beneficiary and for the benefit of the designated beneficiary. In general, a QDE includes, but is not limited to, the following types of expenses:
- Employment training and support;
- Assistive technology and related services;
- Prevention and wellness;
- Financial management and administrative services;
- Legal fees;
- Expenses for ABLE account oversight and monitoring;
- Funeral and burial; and,
- Basic living expenses.
*CAUTION: If distributions are made for housing expenses, care should be taken that the distribution does not disqualify the beneficiary for SSI benefits, or affect the benefits by reducing the beneficiary’s SSI amount by one-third per month. Housing expenses for purposes of an ABLE account are the same as they are for in-kind support and maintenance purposes, except for food. QDEs for housing are payments for:
- Mortgage (including property insurance required by the mortgage holder);
- Real property taxes;
- Heating fuel;
- Sewer; or
- Garbage removal.
State Claim after Death
Upon the death of the designated beneficiary, funds remaining in the ABLE account are distributed pursuant to 26 U.S.C. 529A (section 529A(f) of the Internal Revenue Service). After payment of any outstanding qualified disability expenses, the funds are used to reimburse the State for Medical Assistance/Medicaid benefits that the designated beneficiary received. See also Minn. Stat. § 256Q.08, Subd. 2.