Florida Tax Free ABLE Accounts to help Persons with Disabilities Save Money
On May 21, 2015 the Florida ABLE Act became law. The law is pursuant to the 2014 federal Achieving A Better Life Experience Act of 2014 (the ABLE ACT) which allows states to establish tax free savings accounts for certain people with disabilities. The ABLE Act allows eligible individuals with disabilities to save money, up to $100,000, without affecting SSI and Medicaid benefits. An “eligible individual” is one who was disabled prior to age 26. Disability can be shown by either the receipt of SSI or SSDI benefits or certification of disability by a physician. Only one ABLE account is allowed per eligible individual; however, anyone can make contributions to the account. The maximum for all contributions per year is the annual gift tax exclusion ($14,000 in 2015) and the maximum aggregate total for the account will be the state’s limit for qualified tuition plans- in Florida $418,000, although a total over $100,00 will jeopardize SSI benefits. Account money can be used to pay “qualified disability expenses” including education, housing, health and wellness, and transportation. Earnings, cash contributions, and qualified distributions will not count as taxable income or resources for the individual with disabilities. There is a Medicaid payback provision relative to any remaining funds upon the death of the eligible individual. The Florida ABLE Act will be administered by Florida ABLE, Inc. and is to be implemented by July 1, 2016.
If you have any questions, please feel free to call our Elder Law attorney, Elizabeth P. Allen.