Author: Alabama State Treasurer Young Boozer
April is National Financial Literacy Month, a month dedicated to educating Americans on monetary concepts and skills.
April is a good time to provide more awareness and education about the Enable Savings Plan Alabama! The Resources tab on al.enablesavings.com has many educational tools and resources at your disposal. Below are some facts worth knowing:
Fact: Enable Alabama and ABLE are not the same thing.
ABLE, or the Achieving a Better Life Experience Act, was signed into law in December 2014 to allow individuals with disabilities to save for their current and future disability-related needs in a tax-exempt savings accounts. For those of you receiving resource-based benefits, a critical benefit is that you can save more than $2,000 in assets for disability-related expenses without impacting eligibility for resource-based benefits. ABLE provides the statutory structure that supported the creation of The Enable Savings Plan Alabama, a customized Alabama version of the national Enable Savings Plan.
Fact: Opening an Enable Alabama account is simple.
Accounts can be opened easily online or by filling out and mailing the enrollment form. The information you need to provide includes your name, address, Social Security or taxpayer identification number, birth date and email address. You will also need to select an Investment Option.
Fact: Enable Alabama accounts do not charge high fees.
There are no fees to enroll, withdraw, change Investment Options, or to transact online. However, there is a quarterly charge per account of $11.25 ($45 annually) regardless of the number of Investment Options you select. For long-term saving, the Target-Risk and Bank Savings Investment Options have total asset-based fees ranging from 0.50 to 0.56%. To learn more about these fees, click here.
For those with immediate spending needs, the Checking Investment Option gives you the ability to write a check or use a debit card. It is interest-bearing and does not have any asset-based fees. There is no charge to receive a debit card. There are some transactional fees such as a fee to request an image of a check, or to stop payment on a transaction. To learn more about the Checking Investment Option and its fees, click here.
Fact: Save in an Enable Alabama account and keep your benefits.
Any amount of assets in an Enable Alabama account is an excluded resource for Medicaid. Also, contributions to and money taken out of an Enable Alabama Savings Plan account are not in the calculation that determines eligibility for SSI, SNAP and Medicaid.
The first $100,000 saved in an Enable Alabama account is excluded from the SSI resource limit. When an Enable Alabama account’s value exceeds $100,000, Supplemental Security Income Benefit disbursements may be suspended. However, the individual still maintains eligibility for Medicaid.
Fact: Enable Alabama accounts are different from Special Needs Trusts.
Both Enable Alabama accounts and Special Needs Trusts (self-settled and third-party) provide individuals with disabilities a means of asset development without impacting SSI or Medicaid Benefits. However, there are several key differences:
- A lawyer or trustee has authority over trusts and controls their assets; the individual with a disability may have the ability to control an Enable Alabama account and own its assets.
- Trusts require higher fees, including legal fees to create the trust, trust administration fees and annual filing fees.
- Earnings in a trust are subject to compressed trust tax rates up to 39.6%; earnings in an Enable Alabama account are tax-free while in the account and when used for qualified disability expenses.
- Read the full list of differences here.
We hope this better explains Enable Alabama! Do you have any concerns we didn’t address? Click here to contact us or give us a call at 1-866-833-7949. Our client service representatives are available Monday-Friday from 8:00 a.m. to 8:00 p.m., CT.
Happy Financial Literacy Month!