THE ABLE ACT: ACT NOW & START A SMALL BUSINESS!

It seems most parents and caregivers are fearful that their adult child with a disability, who relies on public benefits, may lose those benefits if their child earns too much income or has more than $2,000 in assets. The thought of their child owning a business is therefore, rarely considered. We are not alleging that the fear is not justified. We are simply advocating for proper planning to help overcome that fear and encouraging parents to seek real, sustainable independence for their adult child.  Did you know that according to the 2014 Allsup Disability Study, they found that unemployment rates for the last quarter of 2014 for people with disabilities was 53% higher than for people with no disability? How can anyone have an optimistic outlook for their child’s future with those kinds of statistics? There is however, a possible solution for those families willing to think outside the box.

We always recommend a good, benefits analysis to put parents at ease. Why? A benefits analysis allows you to conduct accurate and helpful benefits planning, as part of the sustainability piece of self-employment. A thorough peer into your current and potential government benefits can offer valuable assistance and advantages to new entrepreneurs and actually increase the feasibility of businesses for people with disabilities. Certain programs are specifically designed to provide income support to new entrepreneurs while their businesses are starting. Too many families have come to believe that people can’t own a business and receive benefits. With good planning, there are several ways you can use benefits while working on your new business. Let’s learn a little more about our favorite; PESS.

There are programs such as the Social Security PESS (Property Essential to Self Support) program (not to be confused with PASS), which most families have never even heard of and Social Security representatives will not willingly share with you, but are essential for entrepreneurs receiving public benefits. According to PESS policy, if the business is a partnership or a sole proprietorship and is in current use, any property, equity, resources owned by the business and/or held in the business account(s) are excluded from counting against the personal resource limit (See SSA - POMS: SI 01130.501 for more information: https://secure.ssa.gov/poms.nsf/lnx/0501130501).

In addition to the PESS policy, the ABLE (Achieving a Better Life Experience) Act became a federal law on December 19, 2014. This Act may also put parents at ease about their child surpassing the SSI resource limit. The ABLE Act will allow tax –advantaged savings accounts to be established for individuals with disabilities. Funds in the account could be used to pay for essential expenses for individuals with disabilities such as education, housing, transportation, community based supports, medical and dental care, employment training, assistive technology, legal fees, personal support services, financial management and administrative services, expenses for oversight and monitoring, and others approved by the Internal Revenue Service (IRS). While the yearly contributions to this account are limited to a gift tax exclusion amount ($14,000 in 2015) the total contributions to the account will have a limit for SSI recipients in the amount of $100,000 but, not for Medicaid.  The ABLE Act therefore, may eliminate barriers to work (including self-employment) and savings by preventing money saved through ABLE accounts from counting against a person’s eligibility for any federal benefits program.

While this Act was passed for the benefit of persons with disabilities, unfortunately, not everyone will have the opportunity to benefit from this new law. There are eligibility requirements that a beneficiary must meet to qualify for an ABLE account. The beneficiary must be entitled to benefits based on blindness or disability under Title II or XVI of the Social Security Act and the disability must have occurred before the date on which the individual attained age 26. (Internal Revenue Code §529A)

Since this Act was only recently passed, there are still a few items pending before it can be up and running in the sunshine state. Each state is required to adopt or create an account before residents of the state can contribute. Luckily that’s not an issue for Florida, since The Florida Senate Committee on Banking and Insurance, chaired by Senator Benacquisto  passed Senate Bill 642 to get this process started (for more information: http://www.flsenate.gov/Media/PressRelease/Show/2179 ). We also need to wait for the IRS and Social Security Administration (SSA) to finalize their regulations. Hopefully the establishment of the account in Florida and the finalized regulations will answer some questions which are still pending, i.e. Will Florida ABLE accounts have a Medicaid payback provision? Will reimbursements to the beneficiary of the account for qualified expenses create income problems for SSI purposes? May there be a loss of eligibility if distributions are used for something other than a qualified expense?  There’s still a lot we need to know but, nonetheless this new law provides a very positive and promising opportunity for those with disabilities.
We encourage you to do your research, think outside the box, and don’t underestimate your child’s potential: self-employment can be a viable option for sustainable independence.