In California, many people with disabilities and their families rely on a variety of public benefits provided by state and federal governments to make ends meet. They include Supplemental Security Income (SSI), MediCal, CalFresh, and other state health insurance programs.
These programs provide critically important services to people with disabilities but often do not allow individuals to save more than a total of $2,000, or earn more than $680 a month.
These restrictions are a disincentive for people with disabilities and their families to save for long-term needs, leaving them vulnerable to changes in health, living arrangements, unexpected emergencies, or to pay for the cost of care.
The new CalABLE Program opens up life-improving opportunities for people with disabilities and their families. CalABLE allows individuals with disabilities to contribute to tax-free savings and investment accounts without losing their benefits. Eligible individuals can contribute $15,000 a year into an ABLE account and maintain benefits like Medi-Cal and CalFresh.
Contributions to an ABLE account can be made by family, friends, or the beneficiary themselves. The account’s earnings are allowed to accumulate tax-free, and the withdrawals, provided they are applied to qualifying disability expenses, are tax-free.
One of the largest benefits afforded by the ABLE Act is the ability to exclude certain assets from federal means-tested programs. As an example, in order for an individual to obtain Supplemental Security Income (SSI), the countable resources must be worth not more than $2,000 for an individual or $3,000 for a couple. Savings held in an ABLE account, up to a $100,000 limit, are not counted against the $2,000 limit on personal assets for individuals to qualify for SSI and other public benefits.
In essence, the ABLE Act has increased the cap for countable assets from $2,000 to $100,000 for people with disabilities seeking eligibility for SSI.