Cal ABLE Accounts and Their Unparalleled Benefits—What You Need To Know
Ever feel like managing finances gets a bit more complicated when disabilities are involved?
From the medical expenses to specialized care and accommodations, there are so many additional financial aspects to take into consideration that it can be a bit overwhelming.
But not to worry…here's where Cal ABLE accounts come in!
They're like a helpful tool specifically designed to make managing money easier for individuals and families facing these challenges.
Have you ever wondered how Cal ABLE accounts work and how they could benefit you or your loved ones?
Let’s take a closer look at what it entails.
Understanding What Cal ABLE Accounts Are
Cal ABLE accounts are tax-advantaged savings accounts for individuals with disabilities that were established as part of the federal Achieving a Better Life Experience Act of 2014 (the ABLE Act), which allows qualified individuals to create savings accounts for disability-related expenses.
The purpose?
To increase participation in the workforce and improve the quality of life for those living with disabilities.
Can anyone qualify for an Able account? Unfortunately, no.
Who Qualifies for California ABLE Accounts?
In order to be eligible for a California ABLE account, an individual must have a disability that occurred before the age of 26.
Eligible individuals can open an account for themselves if they have the capacity to do so, or a parent, guardian, or authorized agent can open an account on their behalf.
While this restriction is impactful, it does cover a large segment of the special needs community and acts as a channel through which many people can gain advantages.
Can they be used for anything? Yes and No.
Any expense that contributes to maintaining or enhancing the health, independence, or overall quality of life for people with disabilities can be considered a qualified expense.
For instance, these expenses include, but are not limited to:
Education- Tuition, books, supplies, and expenses related to educational programs and services.
Housing- Rent, mortgage payments, utilities, and expenses related to maintaining a primary residence.
Healthcare- Medical, dental, and vision expenses not covered by insurance, as well as mental health services and therapies.
Transportation-Costs associated with transportation, including public transit, rideshare services, and vehicle modifications.
Assistive Technology- Expenses for purchasing, maintaining, and repairing assistive technology devices and equipment.
Personal Support Services-Costs related to hiring aides, attendants, or caregivers to provide assistance with activities of daily living.
California ABLE accounts also offer some key benefits as well. Such as,
Tax Advantages: Although contributions to a Cal ABLE account are not tax-deductible any earnings on the account grow tax-free, and withdrawals for qualified expenses are tax-exempt.
Asset Protection: Funds in an ABLE account are generally not counted when determining eligibility for means-tested government benefits such as Supplemental Security Income (SSI) and Medicaid so you don’t have to worry about the risk of losing this type of eligibility.
Financial Independence: ABLE accounts empower individuals with disabilities to save and manage their finances independently, enhancing their financial stability and self-determination. It can mean the difference between 'getting by' and having the means to engage more fully in life.
Cal ABLE accounts offer unparalleled benefits for those with disabilities, providing a pathway to financial independence and security.
With their tax-advantaged savings options and flexibility in covering qualified expenses, this type of account can empower you and your family to plan for the future with confidence.
Need help setting up a Cal Able Account? Reach out to our offices today!
DISCLAIMER: The content contained herein is for general informational purposes only. These materials do not constitute legal or other professional advice. We do not accept any responsibility for any loss that may arise from reliance on this information. No reader should act or refrain from acting based on information contained in this article without seeking advice of counsel.