Comparison of ABLE Accounts and Pooled Special Needs Trusts
Both an ABLE Account and a Pooled Special Needs Trust (PSNT) are intended to protect Medicaid and Supplemental Security Income (SSI) eligibility and are used to pay for expenses that can enrich the quality of life of an individual with special needs. Each have advantages that require careful considerations to determine which option best meets the needs of the beneficiary, or if it would be beneficial to have both.
Criteria to Consider for ABLE Accounts:
- Onset of disability must have occurred before age 26.
- Documentation of disability.
- Funding maximum of $15,000 per year.
- Medicaid will not be jeopardized regardless of account balance
- Responsibility of the designated beneficiary or the person with signature authority to make qualified disbursements decisions without the need of professional oversight.
- Medicaid payback upon the death of the account beneficiary for any funds remaining in the account.
- Suspension of SSI if account balance goes above $100,000.
- Responsible of the designated beneficiary or the person with signature authority for selecting investment options which can be changed twice per year.
- Knowledge about qualified disability-related expenses.
- Minimal fees to set up.
- Providing report to the IRS and other government agencies, such as Medicaid and SSI, upon request.
- Ability to pay for housing. (*To avoid any impact to a beneficiary’s SSI benefits, funds from an ABLE account used to pay for housing must be spent within the same calendar month that funds are withdrawn from the account.)
Criteria to Consider for CCT’s Pooled Special Needs Trust :
- Available to individuals who have special needs, regardless of age.
- No limit on the amount deposited into the trust.
- Professional oversight and decision-making to ensure that disbursements are for the benefit of the beneficiary, are prudent, protect benefits, and to prevent misuse or fraud.
- Professional financial management of trust funds with greater investment opportunities as trust funds are pooled.
- Flexibility with how funds can be used (expenses do not have to be directly related to a beneficiary’s disability).
- Set up fees are more costly but ongoing administrative fees are low.
- Medicaid and SSI benefits will not be jeopardized regardless of account balance.
- A Third-Party Pooled Special Needs Trust does NOT have a Medicaid payback upon the death of the beneficiary.
- A First-Party Pooled Special Needs Trust requires a Medicaid payback upon the death of the beneficiary.
- Handles reporting requirements to government agencies, such as Medicaid and SSI.
- Available nationwide.