What Is the Colorado ABLE savings program?

Based on the current framework of 529 college savings plans, Colorado ABLE allows disabled individuals and their families to open a savings account for their disability-related expenses. It is Colorado’s state-sponsored ABLE program. Created by the ABLE Act of 2014 (Achieving a Better Life Experience), these accounts are intended to provide a tax deferred savings option, to cover expenses while protecting their eligibility for Medicaid, Social Security, and other benefit programs beyond the current $2,000 income restriction.

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How does a Colorado ABLE savings account work?

An individual (or family) can easily open an account for themselves, or a designated beneficiary. The account owner controls the funds and distributions of the account for the beneficiary. An eligible beneficiary can only have one account.

Any person can contribute to the account though all contributions are treated as if they came from the account owner. Contributions are limited to a total of $14,000 per year.

The earnings are tax free as long as the funds are used for the qualified expenses of the beneficiary. Qualified withdrawals are not included in the gross income calculations for benefit programs.

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Who is eligible for a Colorado ABLE account?

An eligible beneficiary must meet these requirements:

A) their disability must have occurred before the age of 26,
B) the individual must be entitled to, or currently receiving Supplemental Security Income (SSI) or Social Security Disability Insurance (SSID),
C) OR, the individual submits a disability certification under the rules that the IRS is currently developing for ABLE programs.

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What expenses are covered by the Colorado ABLE?

Qualified expenses for the benefit of the designated beneficiary include: education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, and funeral and burial expenses.  The upcoming Internal Revenue Code will specifically identify all of the options.

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What are the impacts on Social Security and Medicaid benefits?

Assets in the account and qualified withdrawals from the account are disregarded when determining the beneficiary’s eligibility for most federal means-tested benefits.

Social Security Income (SSI):  The first $100,000 will be disregarded and have no impact on their SSI benefit. If the assets exceed $100,000 the individual’s SSI benefits will be suspended until the account balance falls below the $100,000 limit.

 Medicaid:  Assets and withdrawals from the Colorado ABLE do not impact Medicaid, even if the SSI is suspended (as above). However, in the case of the death of the beneficiary, any remaining assets within the account will be used to reimburse the state for Medicaid payments it made on behalf of the beneficiary.

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 When can I open an account?

The Colorado ABLE program is currently under development. Check this website periodically for more updates.