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HUD Releases ABLE Account Guidance

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By Shannon Laymon-Pecoraro, Esq.

In December 2014, the Achieving Better Life Experience Act (ABLE) was signed into law, allowing persons with a disability onset prior to age 26 to establish tax-advantaged savings accounts. ABLE was designed to promote the health, independence, and quality of life of individuals with disabilities by allowing families to fund an account in which such an individual can secure funding for disability-related expenses. Similar to a special needs trust, the individual with the disability will have a beneficial interest, and the purpose is to supplement and not supplant other benefits. A qualified disability expense is defined as “any expenses related to the eligible individual’s blindness or disability which are made for the benefit of an eligible individual who is the designated beneficiary, including the following expenses: 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, funeral and burial expenses, and other expenses, which are approved by the Secretary .” While the treatment of ABLE accounts for the Social Security and Medicaid programs was established with the promulgation of ABLE, other means-tested benefits programs needed to clarify how they would treat ABLE accounts.

Many people with disabilities rely on assistance received through the U.S. Department of Housing and Urban Development (HUD) for housing. This assistance is most frequently received through public housing or rental assistance programs. As a general rule, eligibility is based on annual gross income, with established income limits based on area and family size. The individual receiving housing assistance will be responsible for rent, which is set at the highest of 30% of the monthly adjusted income, 10% of monthly gross income, welfare rent, or a $25-$50 minimum rent set by HUD. In calculating a household’s income, HUD will impute income to assets at the higher of actual income or calculate income from the asset based on the passbook savings rate, which is currently .06%.

HUD recently released guidance for the treatment of ABLE accounts for HUD assistance programs, clarifying that HUD will disregard amounts held in an ABLE accounts. In doing so, HUD states that under ABLE legislation, the account balance is specifically disregarded when determining an individual’s eligibility for federal means-tested programs, and that ABLE exclusion applies to HUD programs in determining a family’s income. As a result, the balance of an ABLE account will be excluded in the household’s assets, and there will be no actual or imputed income to such an account. Further, distributions from the ABLE account will not be treated as income. This favorable treatment is, however, not without limitations since HUD will continue to treat all wage income received as income, regardless of whether the income is paid into an ABLE account.

Ask Kit Kat: Tail-Tied Squirrels

Hook Law Center: Kit Kat, what can you tell us about the baby squirrels who got their tails tied together when they were in their nest?

Kit Kat: Well, this is almost unbelievable, but it really did happen. The squirrels in question were 5 baby Eastern gray squirrels. Their nest or drey was inside a tree in Milwaukee, Wisconsin. In the confined space of the nest, and with the fine hair of the babies’ tails coupled with the grasses the mother squirrel had used to line the nest, the babies’ tails became a gnarled mess. Someone rescued them and brought them into the Wisconsin Humane Society. Scott Diehl, Wildlife Director, was charged with untangling them. They resembled a star with 5 points that were pulling in all different directions. They were quite agitated, as one might expect. They had to be sedated using a tiny amount of ketamine and xylazine. Once that was done, he placed them on a heating pad. Then he set to the task of untangling them using a tiny, sharp-pointed scissors. In about 20 minutes, he got the job done. He said, “It was like untangling a ball of Christmas lights.” Because the tips of the tails had been deprived of circulation, 3 of the little ones lost a portion of their tails.

In another state (Nebraska), a similar situation played out. This time there were 6 tangled baby squirrels. Laura Stastny, Executive Director of Nebraska Wildlife Rehab, worked by herself. It was night, and she could not locate a veterinarian to do the sedation, so she wrapped them in a towel to keep movement to a minimum. She said, “I had them wrapped like a squirrel burrito.” It took her 90 minutes. 5 of the 6 squirrels ended up losing part of their tails, too. But, that’s not really a problem—tails are not essential.

Somehow, both stories got publicity through the Associated Press, and news of their feats even reached Europe! The important thing is that the tiny babies were relieved of their suffering. As Scott Diehl said, “For us, it all goes back to our mission. The mission of the Wisconsin Humane Society is to build a community that values animals and treats them with respect and kindness.” (John Kelly, “What do you do when five baby squirrels accidentally tie their tails together?” The Washington Post (Local Perspective), April 17, 2019)

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Posted on Monday, May 6th, 2019. Filed under Senior Law News.
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