ABLE Accounts in Connecticut: A Disability Savings Plan

Connecticut has enacted the ABLE Act, although ABLE accounts in Connecticut are not currently accessible.

ABLE accounts are bank accounts that enable persons with special needs to save money while still receiving disability payments. The federal ABLE (Achieving a Better Life Experience) Act inspired ABLE accounts, however they are formed and administered at the state level.

ABLE accounts are not yet available in all jurisdictions, and each state will have somewhat different laws and processes for creating and utilizing an ABLE account.

Connecticut citizens do not yet have access to ABLE accounts. Connecticut, on the other hand, has approved the Connecticut ABLE Act (see Public Act 15-80) and is working on developing a scheme that would enable people to form ABLE accounts. More information on the Connecticut program and its current status may be found at the state treasurer’s website: http://www.ott.ct.gov/about ABLEAct.html. If you need to start an ABLE account sooner, you may do it in another state.

Save Money Without Being Punished

People with special needs must demonstrate that they do not have enough money to maintain themselves independently when applying for disability payments. Any money in a typical bank account counts against a person’s eligibility for disability payments.

As a consequence, persons with special needs are unable to save money that they earn or acquire via inheritance or gifts. On a daily level, this implies that persons with special needs must live on very little money in order to get government assistance.

One solution to this problem is to utilize a special needs trust, which gives a location to preserve money for the benefit of the person with special needs (without affecting his or her eligibility for benefits). Special needs trusts, on the other hand, must be governed by a trustee, not the individual with special needs who benefits from the trust. This not only gives a special needs person minimal control over his or her resources, but it also inhibits the individual’s independence.

ABLE accounts cover this need by allowing persons with special needs to manage a small bank account without jeopardizing their eligibility for SSI, Medicaid, or other government assistance.

Federal ABLE Account Regulations

The federal ABLE Act establishes the fundamental guidelines for all ABLE accounts. (The federal act may be found at https://www.congress.gov/bill/113th-congress/house-bill/647/.) When states approve and execute the ABLE Act, they must follow federal guidelines while also adding their own. Here are a few examples of federal regulations:

Qualifications due to disability To be eligible for an ABLE account, a person must have a debilitating condition that started before the age of 26.
There is just one account. Each individual may only have one ABLE account.
Anyone may deposit funds into the account. Anyone, even the owner with a handicap, may contribute to an ABLE account.
Contributions are yearly limited. The 2022 limit is $16,000.
Many people limit their accounts at $100,000. The amount of an ABLE account cannot exceed $100,000 for persons who qualify for SSI. See the state regulation, below, for people who do not qualify for SSI.
The use of money is restricted. Funds in an ABLE account must be used for Qualified Disability Expenses (QDE)—expenses “connected to the account holder’s blindness or disability.”
If utilized appropriately, account money are not taxed. Income generated from ABLE account money is not taxed. Contributions are paid after-tax money, and QDE dividends are tax-free.
Medicaid is paid using unused monies. When a disabled person dies, any assets left in an ABLE account are used to pay Medicaid for services provided by that program.
Learn more about the federal regulations governing ABLE Bank Accounts.

When individual states enact the ABLE Act and establish ABLE accounts for its inhabitants, they may additionally establish regulations and procedures concerning:

Minimum deposits are needed to start an account.
Fees
Accounts are available to non-residents.
Contribution deductions in state income taxes
Account transfers
Credit cards
Portfolios of investments

Connecticut ABLE Accounts

Connecticut is in the process of developing its own ABLE account program. Connecticut ABLE account laws may be found in Connecticut Statutes 3-39j through 3-39r. While ABLE accounts are not accessible in Connecticut, you may establish one in another state that allows non-residents to open one. However, keep in mind that each individual may only have one ABLE account.

For ABLE account members who do not qualify for SSI, the account may grow to the state’s 529 plan maximum. The Connecticut 529 account ceiling is $300,000; however, since Connecticut does not currently offer an ABLE account, the amount would be determined by the provider-state of the plan you choose.

The ABLE National Resource Center’s website allows you to learn about and compare ABLE accounts around the nation.