Michigan Achieving a Better Life Experience (“MiABLE”) allows disabled individuals and families to have greater financial independence without jeopardizing their eligibility for means-tested governmental benefits, such as Medicaid; Supplemental Security Income (SSI); and Social Security Disability (SSD). The account is a 529(a) savings plan that is not counted as an asset when considering continued eligibility of the individual in these governmental programs. A MiABLE investment account can be opened by an eligible individual (or authorized individual) to be used on a wide range of expenses. To be eligible to establish a MiABLE account, individuals must show disability or blindness prior to their 26th birthday.
FUNDS FROM MiABLE ACCOUNTS CAN BE USED FOR HOUSING AND RENT
A substantial benefit of MiABLE accounts is the ability of disabled individuals to save earnings and to use those earnings to supplement their lives in ways never allowed before. MiABLE accounts specifically allow the use of the funds toward the payment of food and shelter, without causing a reduction in the disabled individual’s Social Security benefits. The payment of rent from the MiABLE account is not considered to be in-kind support and maintenance under Social Security’s guidelines. This is the only planning tool which allows a disabled individual to supplement costs associated with food and shelter, without causing a dollar-for-dollar reduction in Social Security benefits. MiABLE accounts provide the use of a debit card, also allowing additional flexibility and freedom to the disabled individual.
MiABLE ACCOUNTS HAVE TAX INCENTIVES
While ABLE accounts can be opened in another state, only one account is permitted. The good news is that ABLE accounts can be rolled over from state to state, so an individual just moving to Michigan can switch to a MiABLE account. Contributions to the account are tax-deductible up to $5,000 for a single taxpayer and up to $10,000 for a joint tax return. All investments earnings remain untaxed, provided money taken from the account is used for Qualified Disability Expenses (QDE) QDE include education, housing, employment training and support, transportation, personal support services and basically any expense related to the individual living life with a disability.
Each calendar year up to $15,000.00 can be placed into a MiABLE account by the disabled individual or a family member or friend. If the disabled individual is working, they can contribute their earnings in addition to the $15,000.00 limit, up to the maximum of $12,060.00. Furthermore, the first $100,000.00 held in a MiABLE account is not counted when determining eligibility for Supplemental Security Income (SSI). However, if the balance of the account reaches more than $100,000.00 those funds may result in disqualification for Social Security benefits.
A MiABLE ACCOUNT IS ONE IMPORTANT COMPONENT OF PROPER PLANNING
While the lifetime maximum contribution amount under IRS guidelines is $500,000.00, there are better strategies to contemplate aside from having a small fortune in a MiABLE account. The MiABLE account may be used along with a Special Needs Trust to provide the greatest benefit to your loved one. Additionally, upon the passing of the disabled individual, any funds remaining in the MiABLE account are subject to pay back to the state Medicaid agency which provided benefits. The MiABLE account should be carefully funded based on the expected needs of the disabled individual.
The use of a MiABLE account is an extremely effective planning tool to supplement the resources of a qualified individual. Consultation with one of our attorneys experienced in special needs planning can assist you to develop the most effective plan for the protection of your loved one.