​The Internal Revenue Service (IRS) has issued final regulations covering tax-free savings accounts that allow people with disabilities and their families to save and pay for disability-related expenses without jeopardizing eligibility for Medicaid, Supplemental Security Income (SSI) and other government benefits.

Passed by Congress in December 2014, the Achieving a Better Life Experience (ABLE) Act  allows families to set aside up to $15,000 annually (up to $100,00 in total) in so-called ABLE accounts.  The accounts function much like Section 529 college savings accounts, except that rather than paying for educational expenses, money in ABLE accounts is to be used for a wide range of “qualified disability expenses.”  And, unlike a special needs trust, an ABLE account can be managed and controlled by the beneficiary.

The IRS first issued proposed regulations for the ABLE Act in 2015, and then published revised regulations in October 2019 following passage of the Tax Cuts and Jobs Act (TCJA) in December 2017.

The final regulations contain no major surprises.  They incorporate most provisions in the earlier sets of regulations while clarifying certain other provisions.  As provided in the revised regulations, families may roll over money from 529 accounts into ABLE accounts. Account holders who are working may contribute their own money from their incomes above the $15,000 annual cap, up to the federal poverty limit.  The $15,000 cap is tied to the annual gift tax exclusion, which will rise in coming years. And certain low- and middle-income account holders may be eligible for a tax credit, known as the Saver’s Credit, for the first $2,000 in contributions ($4,000 for couples) to an ABLE account each year.

The final regulations, which total 174 pages, also further clarify numerous other provisions of the ABLE Act. For example, the regulations provide that an ABLE account may be set up by the beneficiary, by the beneficiary’s agent under a power of attorney, by certain family members, or by representative payees appointed by the Social Security Administration. The person creating the account is responsible for certifying that the beneficiary is a qualifying person with a disability for the purposes of coverage under the ABLE Act.  

The final regulations also preserve the broad definition of “qualified disability expenses,” referring to the type of expenses that funds in ABLE accounts can pay for. ABLE accounts can be used for a wide range of expenses, including food, housing, assistive technology, transportation, and educational services.
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Click here to read the full final regulations, which generally take effect January 1, 2021.
Click here for a directory of state ABLE accounts.
For more on ABLE accounts, click here, here, and here.

Katie Clancy was ​honored to be a part of this panel discussion about how to plan legally and financially for children and adults with disabilities, sponsored by PediaTrust

Parents of a child with special needs know that they must plan for the child’s care and support way into the future. This is especially so if the individual is unlikely ever to be able to earn an income.
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But what happens in cases of divorce? How does the issue of child support come into play, now and in the future, when the child is no longer a minor? Before you start the separation process, be sure to understand the answers to the following key questions.

What is the role of child support? Any divorce involving children must take their needs into account. Usually, the noncustodial parent is required to provide money to the parent who has custody of the children. The purpose of this support is to provide the same degree of financial security that the children had prior to their parents’ separation.

How long does child support last for a child with special needs? In most cases, child support ends when children reach the age of majority and can earn their own living. But for those who will never be able to earn an income due to a permanent disability, support obligations can continue into the future, beyond childhood.

Although family law varies from state to state, in most cases courts will recognize the parents’ obligation to support their special needs child even in the event of a divorce. This extends beyond childhood for those who require money for their care and support throughout their lives, and a portion of this funding is supplied by the noncustodial parent per the original divorce settlement.

Are there exceptions to child support once the person with special needs becomes an adult? Yes, depending on when the disability occurred. If the person became disabled as an adult, no child support payment would apply as part of a divorce settlement.

Courts will also look at the financial resources of the child with special needs. If these are sufficient to pay for that person’s care and living expenses into the future, the noncustodial parent may not face support obligations, unless the assets are all held in a special needs trust.

How would a special needs trust affect child support requirements? Courts generally don’t take income and assets in a special needs trust into account when determining the amount of child support to award the custodial parent.

Will ongoing child support affect the individual’s eligibility for Supplemental Security Income (SSI)? Because access to SSI depends on a beneficiary's income and resources, even small increases in income can cause a reduction or loss of SSI benefits. Unfortunately, when an SSI beneficiary’s parent is ordered to pay child support, those payments can end up ruining the beneficiary’s access to government benefits. To protect against this outcome, it may make sense to create a special needs trust for the child’s benefit. The court can then order the non-custodial parent to make support payments directly into the special needs trust. The trust will shelter the income and allow the beneficiary to retain SSI benefits, and, in many cases, the support payments can be retained in the trust if not immediately used.

How might estate planning figure in? In many cases, courts will require that the noncustodial parent provide for the special needs child in his or her will.
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If you are in the beginning stages of separation or divorce, and you have a child with special needs, it is important to plan long into the future. Make a point to fully understand these key questions as you talk to your special needs planner and your divorce attorney.

Like millions of other Americans, recipients of Medicaid and Supplemental Security Income (SSI) have received or should soon receive a one-time $1,200 coronavirus relief payments from the federal government.  And, if Congress can come to an agreement, a second round of economic impact payments will be coming.  (If you haven’t received your payment and did not file a 2019 tax return, click here to access the IRS’s page for non-filers.)

Although this money does not immediately affect eligibility for means-tested programs like Medicaid and SSI, if the money is not spent within 12 months it will count as an asset and could affect eligibility.

One solution is to put the funds in an Achieving a Better Life Experience (ABLE) account, where it can remain without affecting eligibility for programs like Medicaid and SSI.  Authorized by Congress in 2014, ABLE accounts are a tax-advantaged way to put money aside for dependents with disabilities.  Funds in the accounts can be spent on a wide range of disability-related expenses without compromising eligibility for government benefits. Unlike a special needs trust, an ABLE account can be managed and controlled by the beneficiary. 

Not everyone with a disability can qualify for an ABLE account, however.  Eligibility is limited to people who developed their disability before age 26. Also, total contributions to ABLE accounts are limited to $15,000 per year, although beneficiaries who work can make ABLE contributions above the $15,000 annual cap from their own income up to the Federal Poverty Level. If the value of the account exceeds $100,000, any SSI income is suspended until the account dips below that limit.  These savings plans may be used for a broad array of products and services related to the eligible individual’s disability.
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For help opening or investing in an ABLE account, please give us a call.

Among the challenges of raising a child with special needs is figuring out how to provide for that child once you’re gone. If the child will never be able to earn a living, how can you determine how much of your own money to set aside for her care and support, and for the rest of her life?

One way to answer this question is through a free online calculator launched this summer by Harty Financial, a Boston-area financial services firm that focuses on planning for families of special needs children.  Utilizing a three-minute questionnaire, the calculator is designed to guide parents through the estate planning process by assessing the cost of everything their child with special needs is likely to need for the duration of his life, anything from medical assistance to food and shelter, clothing, physical therapy, education, and entertainment.

Planning the long-term future of a child with special needs can be the source of enormous stress for parents embarking on the estate planning process, the company’s principals note. And while the calculator is not designed to replace one-on-one consultation with an experienced special needs planner, it can help answer some basic questions and move the process forward, they say.

What we think is really helpful about this calculator,” says Harty Financial co-founder Brendan Harty, “is that it utilizes our own observations about actual costs that parents face, such as housing and lifestyle preferences, rather than asking parents to supply those numbers themselves.”

The calculator, available at www.specialneedsmap.com, asks the user a series of questions about the child’s needs as well as the parents’ expected longevity and financial profile.

Though there is no substitute for planning with a family on an individual basis, we believe that this calculator has the potential to be transformative to the millions of Americans with a child with special needs,” says Caleb Harty, Brendan’s brother and a co-founder of the firm. “Our objective is to help parents check off the peace-of-mind box, and getting an idea of how much money parents may need to leave behind is one step toward that goal.”

Once the parents of a child with special needs have a clearer idea of this figure, they can begin their planning. They can set money aside in a special needs trust, for example, or apply for life insurance to make sure there will be adequate funds should they die unexpectedly. They may want to make decisions about ongoing care and housing for their child with special needs based on what they can afford now and into the future.

Despite being more than 500 pages long, the Coronavirus Aid, Relief, and Economic Security (CARES) Act contains little relief specifically targeted to support people with disabilities, disability advocates assert. And one provision in the bill could actually jeopardize the rights of special education students during the pandemic.  

“This is an unprecedented crisis for everyone, and everyone includes people with disabilities and their families,” Peter Berns, CEO of The Arc, said in a statement. “While this bill does provide some important support in this pandemic, there are huge risks facing people with disabilities, their families, and the direct support professional workforce that were largely ignored in this response.”

On the plus side, the $2.2 trillion stimulus bill entitles most low- to moderate-income people to a one-time $1,200 stimulus payment, including Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) recipients (although SSI recipients may have difficulty getting their checks). Unemployment insurance has also been expanded significantly and businesses will be eligible to apply for loans incentivizing them to avoid firing workers.

However, despite extensive advocacy from disability rights groups, the bill includes no new money for Medicaid-funded home and community based services. These programs are critical to keep the elderly and disabled from having to enter institutions like nursing homes, which continue to be a primary source of COVID-19 outbreaks.

Disability advocates, however, did receive a key temporary victory with a funding extension through November for the Money Follows the Person program, the federal government’s largest grant program for helping states transfer people with disabilities from institutions into independent living arrangements.

The Department of Housing and Urban Development (HUD) has also received $12 billion in funding that could potentially assist people with disabilities, many of whom live in units subsidized by HUD, such as Section 8 housing. Landlords participating in these  programs were ordered to suspend evictions.

The special education community has particular concerns as well. Under the bill, Department of Education Secretary Betsy DeVos has 30 days to submit recommendations to Congress to waive certain requirements under the Individuals with Disabilities Education Act (IDEA) during the COVID-19 pandemic. This law, passed in 1975, affords nearly seven million students the right to individualized instruction and other support services.  With schools shifting instruction online during the pandemic, DeVos could relieve school districts of their obligation to meet the special education needs of students with disabilities. However, unlike the case with earlier versions of the bill, DeVos would need to obtain congressional approval before issuing any such waivers, which would be unprecedented in the IDEA’s 45-year history.
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Click here to read the full bill.

As hospitals around the country brace for an expected surge of patients infected with the COVID-19 coronavirus, fears have been raised that health care providers will begin rationing treatment, with lethal consequences for people with disabilities. 

Reacting to protocols to ration care adopted by Washington State and Alabama, advocacy groups filed strongly worded complaints.  In response, the federal government has issued a bulletin warning health care facilities not to discriminate against people with disabilities when making treatment decisions during the COVID-19 health care emergency.
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Washington State, the first state slammed by the pandemic, released a plan March 16 to guide hospitals on treatment decisions if, as expected, they run short of ventilators and other life-saving medical equipment. The plan suggests that when allocating resources, hospitals should rely on a “utilitarian framework” and consider, for example, a patient’s "baseline functional status” and “loss of reserves in energy, physical ability, cognition and general health.”

In a March 20 letter to the U.S. Department of Health and Human Services (HHS), the Consortium for Citizens with Disabilities wrote, “The lives of people with disabilities are equally valuable to those without disabilities, and healthcare decisions based on devaluing the lives of people with disabilities are discriminatory.” 

Three advocacy groups -- Disability Rights Washington (DRW), the Arc of the United States, and Self Advocates in Leadership -- filed a federal complaint with HHS’ Office of Civil Rights (OCR) on March 23. They alleged the Washington State plan was created without input from the disability rights community and violates the Americans with Disabilities Act, Section 504 of the Rehabilitation Act, and the Affordable Care Act’s disability discrimination provisions.

The groups argued that the language in the plan, particularly without any guidance on federal anti-discrimination laws, will be interpreted to permit medical professionals to deny services to people solely based on their disabilities—without any individualized assessment as to how these patients, many of whom are already among society’s most vulnerable to COVID-19, will survive treatments for the coronavirus.

Even if disability discrimination is not overt, the advocacy groups worried that medical professionals will ration services based on outdated stereotypes of disabilities or other factors, such as a person’s need for subsequent accommodations or long-term survival prospects, which have no bearing on a patient’s immediate ability to survive the pandemic and legally cannot be considered.

“We will not sit by as members of our community are left for dead,” DRW Director of Advocacy David R. Carlson said in a news release. “We stand up for those with preexisting disabilities and those with newly acquired disabilities who are impacted by COVID-19. We implore OCR to rein in and provide urgently needed guidance to the health care professionals who are prepared to relegate members of our community to die.”

Meanwhile, the Alabama Disabilities Advocacy Program filed a separate complaint to OCR on March 24. Alabama’s emergency plan, if it goes into effect, explicitly orders hospitals to “not offer mechanical ventilator support for patients” with “severe or profound mental retardation,” “moderate to severe dementia,” and “severe traumatic brain injury.”
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Both complaints urged the federal government to “act swiftly” to investigate and issue nationwide anti-discrimination protocols.

The concerns were evidently heard.  On March 28 the OCR issued its bulletin reminding health care providers to "keep in mind their obligations under laws and regulations that prohibit discrimination" against those with disabilities, and OCR director Roger Severino announced his office was opening an investigation to ensure state rationing plans are fully compliant with civil rights law.

“Our civil rights laws protect the equal dignity of every human life from ruthless utilitarianism,” Severino said in the bulletin.  “HHS is committed to leaving no one behind during an emergency, and helping health care providers meet that goal.” “Persons with disabilities, with limited English skills, and older persons should not be put at the end of the line for health care during emergencies.”  Severino added.
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For more information on disability discrimination in medical decision-making, click here to read DRW’s 2012 report, “Devaluing People with Disabilities: Medical Procedures that Violate Civil Rights,” and click here to read the NCD’s recent “Bioethics and Disability Report Series.”

Just before the end of 2019, Congress passed and the President signed a spending bill that includes significant changes to retirement savings accounts. Known as the Setting Every Community Up for Retirement Enhancement (SECURE) Act, this legislation changes rules around retirement plans in several key ways. Families with special needs members should pay close attention, as these changes will have an impact on their estate planning.

Stretch IRAS
The biggest change eliminates “stretch” IRAs in most cases. To understand the change’s importance, a little background is needed.  IRAs are personal savings plans that allow you to set aside money for retirement and get a tax deduction for doing so. Earnings in a traditional IRA generally are not taxed until distributed to you. Any amount remaining in an IRA upon death can be paid to a beneficiary or beneficiaries, but the beneficiary is required to take a certain amount of money out of the account each year and pay taxes on it, called “required minimum distributions.”

Under the previous law, if you named anyone other than a spouse as the beneficiary of your IRA, the beneficiary could choose to take distributions over his or her lifetime and pass any remaining funds onto future generations (this was called the “stretch” option). The required minimum distributions were calculated based on the beneficiary’s life expectancy, so the younger the beneficiary, the smaller the annual distributions and the longer the inherited account money could be stretched. This allowed the money remaining in the account to grow tax-deferred over the course of the beneficiary’s life and to be passed on to his own heirs.

The SECURE Act requires most beneficiaries of an IRA to withdraw all the money—and pay the applicable income taxes—from the IRA within 10 years of the IRA holder’s death. In many cases, these withdrawals will take place during the beneficiary’s highest tax years, meaning that the elimination of the stretch IRA is effectively a tax increase on many Americans. This provision applies to those who inherit IRAs starting on January 1, 2020. 

An Exception for Beneficiaries with Special Needs
The SECURE Act makes exceptions for IRA beneficiaries who are considered disabled according to the IRS. These individuals can receive the funds in the form of required minimum distributions based on their life expectancy rather than within 10 years.  Also excluded from the 10-year rule are beneficiaries who are considered chronically ill or who are less than 10 years younger than the account owner.  

But what happens if an IRA owner wants to designate as the beneficiary a person with a disability who is also the beneficiary of a special needs trust (SNT)?  The new law states that the IRA owner can designate an SNT as the beneficiary, and the trustee can use the required minimum distributions to pay for the care and support of the person with special needs. The way to set this up is through what’s known as a “see-through” trust.

See-Through Trusts
On the IRA owner’s death, all the remaining money in the IRA goes into this trust and is distributed by the trustee according to certain structures and rules. The deferred taxes are due when the money is withdrawn from the trust in the form of required minimum distributions. If the beneficiary is a person with special needs (and certified as such by the IRS at the time of the IRA account owner’s death), distributions would be paid out over the beneficiary’s life (rather than within 10 years per the new rules in the SECURE Act). 

Note that there are two types of see-through trusts: a conduit trust, in which the money is distributed to the primary beneficiary immediately, and an accumulation trust, in which the money is distributed over time. Both are irrevocable trusts, and both must be permissible under applicable state laws. Accumulation trusts work well for special needs beneficiaries because they can also receive government benefits for their care and support.

Other Beneficiaries Who Do Not Have Disabilities
Planning gets even more complicated if there are multiple IRA beneficiaries (siblings and grandchildren, for example).  The trust will only be exempt from the 10-year rule if the individual with special needs is the only beneficiary of the trust during her life. If the trust also permits distributions to a spouse or children, it won't qualify and the IRA will have to be completely withdrawn within 10 years. The best solution may be to establish a see-through accumulation trust for the special needs relative, and set up a separate trust for other heirs.

In light of the new rules, consult with your special needs planner to review the language in your special needs trust (if you have one). You want to be sure that your retirement assets will be distributed in a way that best protects the money you have set aside for your loved ones.
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For more on the SECURE Act, click here.

The Department of Health and Human Services (HHS) will now give states the option to obtain a portion of their federal Medicaid funding via so-called "block grants." This potentially dramatic change is billed as a way to improve state flexibility in running Medicaid programs. Although beneficiaries with disabilities should not be directly affected, the change could result in significant service cuts for millions of adults who secured Medicaid coverage through the Affordable Care Act.
Since its launch in 1965, Medicaid has operated as an open-ended entitlement program, meaning it does not include any pre-set funding limits. It is a joint partnership between the federal government and the states: Each state runs its own Medicaid program with the help of matching funds from the federal government.


The Trump administration has been exploring options for block-granting Medicaid since last March. A block grant funding structure would end the open-ended nature of Medicaid’s federal-state partnership. Instead, states that choose the block grant arrangement would receive a pre-set amount of money in exchange for increased flexibility in how they administer their programs. 


The question of what increased program flexibility would look like is central to all debates surrounding block grants. Advocates of block grants—from the Reagan administration to former House Speaker Paul Ryan—have argued that block-granting is necessary to ensure the program's long-term funding stability. Disability rights advocates, among other groups, fear it is just a back-door way to slash benefits.


Announced on January 30, 2020, the new HHS plan, dubbed "Healthy Adult Opportunity," would allow states to apply for waivers to cover healthy adults under age 65 using a block grant.  This means that the states most likely to apply for the waivers are those that have not expanded Medicaid under the Affordable Care Act but may now do so given the increased flexibility in how to design their program, or those that have expanded Medicaid but wish to reduce costs. 
But funds designated to pay for services for children, pregnant women, and people with disabilities could not be block-granted.  Likewise, states cannot block grant services that are required under the Medicaid statute, such as emergency and hospital services. The Affordable Care Act—specifically its much-publicized 10 essential health benefits provision—significantly expanded this list of required services.


On the other hand, states have significant discretion when choosing to fund other services, for example, various prescription drugs and dental care. States that opt for a block-grant funding structure would likely impose cuts to these services. States that choose to block grant could also impose higher premiums and co-pays than those currently allowed under Medicaid, and as well as work requirements for beneficiaries, an effort that has largely been stymied in the courts.  Moreover, if enrollment in Medicaid dramatically increases due to a health crisis or a recession, states that received a pre-set amount of funding may not have enough money to cover everyone, resulting in additional cuts to services.


Opponents of the block grant concept contend it is illegal because only Congress can make such program changes, and litigation against the proposal is almost certain.  In addition, it is unlikely that a state could get a waiver before 2021, when there may be a new federal administration.
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For more on the administration's block grant guidelines, click here.

A proposal tucked into the Social Security Administration’s (SSA) 2020 budget, released March 18, is raising fears that people applying for government disability benefits will soon have their posts on Facebook, Twitter and other social media networks scrutinized. 

Since at least 2014, the SSA’s Office of Inspector General has used social media as a tool for tracking down cases of suspected fraud among those receiving Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). 

Until now, however, the SSA has never as a matter of policy reviewed social media accounts to make disability determinations when people are initially applying for SSDI and SSI. That may soon be changing. 

"We are evaluating how social media could be used by disability adjudicators in assessing the consistency and supportability of evidence in a claimant's case file," the agency said in the 2020 budget. 

For disability rights advocates, the use of social media in disability determinations is problematic on a number of grounds. 
To begin with, pictures, videos and other things posted on social media can be taken entirely out of context, providing a misleading view of a person’s physical abilities or other functions. 

In addition, advocates argue, the timing of photos may not always be clear from social media posts, raising the possibility that posts could not reflect a person’s abilities at the time they file their disability benefit applications. 

Social media monitoring could also further slow the application process, especially for appeals, which regularly take nearly two years. 

“The proposal to allow disability adjudicators to monitor or review social media of disability claimants is an unjustified invasion of privacy unlikely to uncover fraud,” Lisa Ekman, director of government affairs at the National Organization of Social Security Claimants’ Representatives, told Reuters. 

In fiscal year 2018, the SSA issued about $197 billion in payments to SSDI and SSI recipients, but recovered just $98 million in overpayments from all Social Security programs combined,  a small fraction of its spending, according to Reuters. Moreover, not all of that $98 million is necessarily fraud, as some recipients were overpaid simply due to administrative errors. 

Click here to watch a video from CBS News about the SSA’s proposal. 

​If you'd like to discuss this issue with us, please call our office.