On April 26, 2019, the U.S. Department of Housing and Urban Development (HUD) issued a Notice to state housing agencies concerning the impact of ABLE accounts on eligibility for Section 8 vouchers, public housing and a host of other federal housing programs.
ABLE accounts were created in 2014 by the passage of the Achieving a Better Life Experience (ABLE) Act. Under the ABLE Act, people with disabilities who became disabled before they attained age 26 may contribute up to $15,000 into these accounts annually. As long as the balance of the ABLE account does not exceed $100,000 and the funds are used for “qualified disability expenses,” the account holder’s eligibility for many public benefit programs based upon financial need is not affected.
The ABLE Act itself defines “qualified disability expenses” as “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.” The Act then goes on to list a range of categories of potential uses for funds set aside in ABLE accounts, including:
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 under regulations and consistent with the purposes of this section.
In subsequent Treasury Department and Internal Revenue Service (IRS) regulations issued, the term “qualifying disability expenses” in the Act is “broadly construed” to include any benefit related to the designated beneficiary “in maintaining or improving his or her health, independence, or quality of life.”
The HUD Notice is the latest development in the acceptability of ABLE accounts by public benefit providers. HUD’s Notice specifies that the agency will disregard any funds in a disabled person’s ABLE account when calculating the person’s assets. Specifically, the HUD Notice provides as follows:
Section 103 of the ABLE Act mandates that an individual’s ABLE account (specifically, its account balance, contributions to the account, and distributions from the account) is excluded/disregarded when determining the designated beneficiary’s eligibility and continued occupancy under certain federal means-tested programs.
The only exception concerns the account holder’s own wage income, which will continue to count as the person’s own asset when the money deposited into the ABLE account. However, the Notice specifies that wage income earned by a third party, such as a family member or friend, that is distributed into an ABLE account will not count against the ABLE account holder.
The HUD Notice is attached here –
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