Column: Financial resources for special needs individuals

Have you ever wondered how you could provide for your special needs child? Have you thought about whether it makes sense to leave your child a portion of your estate if that child currently qualifies for Medicaid due to a special need? What if you could place up to $15,000 a year in contributions in an investment account for your special needs child that wouldn’t render that person ineligible for Medicaid benefits?

There are a variety of ways to provide for a special needs child while still enabling that child to qualify for Medicaid and other government benefits.

A STABLE account is one such way. The STABLE account is an investment account specifically authorized by Congress through the ABLE Act of 2014. It authorizes Ohio residents to establish and then fund a STABLE account. The individual for whom the account is established must have developed his or her disability before the age of 46. The disability must have existed or is expected to exist for at least a year, and the individual must meet one of the following criteria:

—Be entitled to SSI or SSD.

—Have a condition listed in the Social Security Administration’s list of Compassionate Allowances Conditions.

—Experience blindness as defined by the Social Security Administration.

—Have a licensed physician diagnosis of a qualifying condition.

An additional benefit to the person contributing funds to the account is the contribution is eligible for a tax deduction of up to $4,000 a year. If the individual who is the beneficiary of the account works, that individual can contribute up to $15,600. The fund balance cannot exceed $100,000 at any one time without triggering and impacting the SSI entitlement for the individual.

Funds can be withdrawn through an online account with the requirement that withdrawals must be used to pay for qualified expenses, which means the expense must occur when the individual was eligible for the account, the expense relates to the disability of the individual, and the expense helps the individual maintain or improve his or her health, independence or quality of life. The good news is earnings on the funds in the account aren't taxed as long as they fall within the definition of a qualified expense.

In addition to the STABLE account, there is a Special Needs Trust. This allows third parties, as well as the individual himself/herself, provided he/she is mentally capable, of funding an SNT. An SNT allows a person with special needs to have a trust that supplements the public benefits they are receiving. Without the law allowing SNTs, people with disabilities risk losing public benefits if they have an inheritance, a personal injury award or receive other funds.

The SNT can pay for medical and dental care that is not otherwise covered by governmental programs; assistive technology such as wheelchairs, service animals or adaptive equipment; home modifications to make a residence more accessible; education and training; transportation including bus passes, car insurance or adapted vehicles; recreation and entertainment including vacations; personal care services; and other costs and expenses including legal fees, funeral and burial services and more.

It cannot be used for food, shelter or to make charitable or other gifts.

Both the SNT and the STABLE account can be excellent ways to ensure a special needs individual can have a more independent and fulfilling life.

Monica L. Miyashita is an attorney-at-law and can be emailed at kensingtonlawyer@gmail.com. Be advised the information contained herein is not a substitute for individual legal advice.