Episode 23: ABLE Account Updates with Paul Curley, CFA

We are joined once again by Paul Curley, and he comes bearing NEWS! The ABLE Age Adjustment Act has finally made it into a bill. Now, it just needs to make it into law.

Green and pink abstract shapes with a white flower on a tan background. Picture of a man in the center. Text reads 'ABLE Account Legislative Updates Paul Curley, CFA MomAutismMoney.com'

Upping the age of onset of disability from 26 to 46 means about 7 million more people would qualify for ABLE accounts, including one million veterans. A larger pool of eligible account holders means lower fees on ABLE accounts and more bargaining power in Washington for things like removing Medicaid clawback provisions — in ALL the states.

To help increase the odds that the ABLE Age Adjustment Act passes into law, contact your senators and House representatives.

Also learn about final ABLE rules and regulations, the future of ABLE to Work, and the newest state to open its own ABLE account program.

Paul will also be answering listener questions in an ABLE account Q&A session.


Show Notes

Subscribe to Paul’s Newsletter.

Find your senators and representatives.

Track the bill that will include the ABLE Age Adjustment Act after Senate updates.

The latest Senate Finance Committee Meeting. ABLE accounts starting at 1:14:00.

If you want to mention ABLE to Work extension beyond 2025, it’s Section 11024 under the Tax Cuts and Jobs Act:

IRS publication 907 for education on ABLE accounts.

Compare ABLE accounts across state lines.

CalABLE Youtube channel.

Florida residents get $50 when you open an account with ABLE United.

Safety Sleeper

Full Episode Transcript

Brynne: Hi, everyone. Welcome to the Season Two Finale of Mom Autism Money. Today we’re going to talk to Paul Curley, CFA to get some exciting news in the world of ABLE accounts. But before we dive into it, we just wanted to take a minute here to remind you of the guests we’ve had on throughout this season so that you can catch up on any episodes you’ve missed over the summer.

We kicked season two off with the founder of the first neurodiversity library, Lei Wiley-Mydskey. And Lei joined us to talk about autism awareness versus autism acceptance month. This happens every year during the month of April. And a lot of times you see organizations looking to get you to donate during this time.

So Lei gave us some great tips on how to identify the best organizations to give your money to, and when maybe you should hold onto your dollars and put them elsewhere.

In episode two, we talked to Shalese Heard, AKA The Autistic Travel Goddess about her travels and how she affords them. We also discussed how she built her business and some different funding resources out there for autistic people who are building their businesses.

Over the next two weeks, we talked to Dena Gassner about two different topics. The first was how to successfully apply for SSI. And this ended up being one of our most popular episodes to date. Dena is literally writing a thesis on the process and she was super generous and shared her proven format to getting people in the door when it comes to SSI applications and the appeal process.

The next week, we talked with Dena about vocational rehab, which can both help pay for college and fund entrepreneurial ventures for disabled people. And the different programs are gonna vary a little bit, depending on your state. We get into all that. In that episode, we also talked a lot about the college selection process and what worked for Dena’s son specifically.

Episode five was another really popular episode. We talked to Blake Baumann of ASPIE-R coaching about career and life skills for Aspie young adults. There were so many great takeaways from this one, but at the core of everything, it came down to this idea of supporting our young adults in creating a vision for the future that they can get excited about.

Over the next two weeks, we talked to Joe Saul-Sehy of the Stacking Benjamins Podcast and co-author of the new book Stacked. We also talked to financial planner, Brenton Harrison, and we talked to them about a whole lot of different aspects of retirement planning when you have an autistic child. We got into things like retirement accounts, asset tests, life insurance, and just a whole lot more.

There’s some really important information in those episodes. So if you haven’t listened to them yet, definitely go back and catch those.

In weeks eight and nine, we were joined by editor and self-advocate, Arianne Garcia and policy researcher, Kristina Lopez. Joyce led this just phenomenal discussion on autism in the Latino community, where we talked about everything from diagnosis to transition to adulthood.

And we talked about all of that in context of culturally-informed interventions, and other ways, we can systemically up our game when it comes to serving the Latino community, when it comes to autism.

For episode 10, we sat down with Rich Davis, a retired Navy veteran. And we talked to Rich a little bit about his family’s experience raising an autistic child in the military.

We also get into how his family is currently accessing Virginia’s Medicaid program. We talk about ABLE accounts, supplemental needs trusts. There’s actually a little bit of a precautionary tale in that episode, when it comes to family members saving money for your children. Rich and his family found out that there was a secret fund and SSI found out about it before they did.

And it led to all these troubles with their son actually continuing to get SSI. It’s a really important story. And one that happens a lot. So you’re gonna wanna listen to this episode, whether you’re military or not. Wanna have grandma and grandpa listen, anybody else in your extended family who might be trying to do a nice thing by saving money for your kid, but maybe doesn’t know how to do it in a way that shelters it from those SSI asset tests.

And last season, we actually only had 10 episodes. So this season we are growing. We actually have three more. The last two episodes over the past two weeks, we talked to Corinne Schmitt of Wondermom Wannabe. In episode 11, we learned about the system Corinne uses to teach her children financial literacy skills.

We also took a deep dive on money minset. And we talked about ways that you can actually cultivate an abundance mindset, even when you’re living in forced poverty. And that was really interesting because the way you apply it is gonna be a little bit different, but it can still open up a lot of doors for you.

Corinne also has a really effective color coded organizing system that she uses for everything from organizing her house with her five children all the way through organizing her financial paperwork. It’s really smart and effective. And we discussed that last week in episode 12. Then today, of course, we’re talking to Paul.

As we prepare for season three, we wanna hear from you. If there are any topics that you’d like to hear covered here on Mom Autism Money, let us know by dropping a comment in the Facebook group, or you can shoot us an email at [email protected].

Fun story. We actually do have fancy email addresses with our domain, momautismmoney.com integrated into them. But the one that we actually check is that Gmail address. So again, that’s gonna be [email protected]. Once we have your topics, we’ll find an expert to address it and be sure to let you know when it goes live.

We’d like to thank this season’s sponsors CalABLE out of California and ABLE United out of Florida. CalABLE has some fantastic educational resources on their YouTube channel. And while some of the content is geared specifically towards Californians and California state law a lot of it can be a great resource regardless of where you live in the country. So be sure to check them out.

And if you are a Florida resident thinking about opening an ABLE account, be sure to visit ableunited.com in the next couple of days. Because right now through June 30th, you get a free $50 contributed to your ABLE account when you open it with a deposit of at least $25. So let’s say you open an account, put at least $25 in before June 30th, the state of Florida will actually give you a free, extra $50 to keep in that new ABLE account.

If you’re listening to this podcast because you work in this space professionally and you’re interested in joining our sponsor list, definitely reach out to us over the summer. We’ll be lining up sponsors for season three, which we’re planning on launching in the fall. We have individual episode sponsorships, but if you’re interested in a full season sponsorship like Safety Sleeper did last season for season one, we do have bulk discounted rates for those season-long sponsorships.

You can learn more about Safety Sleeper and what a great nighttime intervention it is for kids with elopement concerns at safetysleeper.com/mam . That’s short for Mom Autism Money. So safetysleeper.com/mam .

Alright. There’s been a lot of exciting stuff happening in the world of ABLE accounts since we last talked to Paul in the Fall. We are going to have lots of links in the show notes today for you so you can see which laws we’re talking about, how to find your congressional representatives, and places where you can compare plans across state lines. Without further ado, let’s talk to Paul.

(whooshing sound)

Brynne: Hi everyone. We are here today with one of our favorite guests, Paul Curley. How are you doing Paul?

Paul: Doing great. And thank you for the opportunity.

Brynne: Ah, thank you so much for joining us again. Now we are going to be talking today about ABLE accounts, all things ABLE accounts, and we have some really exciting news. There’s some legislative movement going on, even just in the past few days here.

And I’m wondering if you can tell us a little bit about that particularly about the SECURE 2.0 Act. I know there was stuff in there about ABLE accounts and potentially about even raising SSI asset tests. So I’d love to hear what made it in.

Paul: Sounds great. And, and great question. SECURE 2.0 is, is a continuation of a prior retirement focused bill. The title is, is EARN act and it’s really focused on a lot of different things that relate to retirement.

One, uh, critical component, you know, to that bill related to ABLE is, is the ABLE age adjustment act, which was included in the final, uh, bill as of today. It would increase the age of onset for eligibility to open an ABLE account from 26 years old to 46 years old. And there’s, there’s a couple different impacts.

One is that it would increase the number of eligible users from currently 8 million eligible users, you know, to 14 million eligible users. So, so 7 million more people would be able to open up an ABLE account. And also that it, it is, um, you know, broadly speaking very well supported on the hill, you know, because there’s 1 million newly eligible veterans.

So, so, so it does increase the overall users. It is, it is a pro veteran bill. The interesting ins and outs of the addition was that it, it originally did not include the wording, but Senator Casey of Pennsylvania did include the amendment to have the ABLE age adjustment act included. So it’s great momentum.

There’s, there’s a lot of ins and outs and things that happen between, you know, bill passage. It did pass the Senate. Of course, there’s a lot of, you know, ins and outs between where it stands today and where it passes. But broadly speaking, it is, it is moving towards actual passage. And broadly speaking, what, what people can do is that I do believe that this is an important component, you know, to, to contact your members of the house, members of the Senate and just, you know, voice your, your support and your perspective.

And especially if you’re, if you’re calling your own representative, they, they should be responsive and, and they do record it down and, and they do take note of all the calls and it does go up to, to your members of Congress and Senate.

Brynne: Awesome. Awesome. Now, is this a bill that’s originating in the Senate?

Paul: Yes.

Brynne: Okay. Gotcha. So it’s still, so it still has to go through the house. So it’s still helpful to contact all of, all of the people that represent you and when people are doing so they should probably get really specific, right? They should probably be like, “It’s important to me that the ABLE age adjustment act is included in secure 2.0.”

That the representatives understand that that’s really important is that accurate?

Paul: That is accurate. A lot of what goes on is that the, the Senate component of the bill was passed and it still needs to pass the house. At that point, there’s a lot of negotiation between which versions pass and which ones are included.

So as much as it has already passed the Senate, to the extent that you’re, that you are making the calls to the members of house, that it also makes sense to also reach out to your members of Senate, just to make sure that it doesn’t get lost in translation, transition that you know, all, all different members are, are contacted.

And of course, uh, as a quick side note, I, before living in Pennsylvania, I was in New Hampshire. So it, it is very easy. There was only two Senate members of the Senate. There was only two members of the house. So four phone calls, it was pretty easy. Perhaps Brynne knows how many members are in Pennsylvania, but it is a much bigger state with more population.

So if one has to call down the list and start with your own members of the house for your district and, and your own senators.

Brynne: Absolutely. Absolutely. And if you’re listening to this and you’re thinking, ‘Why are we talking about the ABLE age adjustment act? My kid is autistic when you’re autistic, you’re autistic from birth.

So this doesn’t really affect me because they were definitely had an age of onset before 26. Right?’ First of all, it’s good to care about other people. That’s the number one thing. It’s important to care about the veterans and everybody who has those later onset disabilities. Another big reason to care that we’ve talked about on the show before is after the ABLE age adjustment act is passed, which we are super hoping for.

But after that happens, is the next item on the docket, still the Medicaid clawback provisions? Will that be the next kind of advocacy effort? So once we get that ABLE age adjustment act taken care of, I know a lot of you live in states where you do still have to care about those Medicaid clawback provisions on ABLE accounts.

So is that kind of the next thing, Paul, I guess?

Paul: Absolutely. I, I do think on a separate though related note that there was final regulations that, that were created for ABLE, you know, as a context. It’s great that ABLE has final regulations. For 529 plans, for example, they didn’t have fi they didn’t have final regulations for 20, 30 years.

So it’s, you know, obviously it was a priority at the federal level for IRS, for Congress, for house that there were, you know, final regulations for, for ABLE, and the reason why that I bring that up is that there is, there continues to be that hanging clause around the Medicaid clawback provision. And so that the, your members of, of state treasurers.

Through the national association of state treasurers is working to really cap that to to six months. Right now there’s just open ended in the final regulations, but the state treasurers are really trying to move that time period to, to a six month cap. And so it, it is a, it continues to be a, a federal issue.

Also what’s intriguing is that there’s a number of states, I believe very top of mind, there’s 11 states that already sort of wave that provision. So, so there’s. There’s a federal level. And so you try to do it for all states in, in, in one occurrence. But in the meantime, the states are also proactively trying to remove that those provisions.

So I, and so that that’ll be another item that that’ll be on our list. And I think that your perspective is, is absolutely right where the, the history of ABLE is really let’s just get this live and then we can repair it and improve over time. And. I, I, I think that it’s also, and I, and I’ll, I’ll borrow Senator Casey’s words along the lines of like, it, it, they may not relate specifically to, you know, certain types of, of disabilities just as it’s very much of a scale game where if you have a product for 8 million people, 8 million people versus 15, that there’s just more infrastructure.

There’s, there’s more, better product, better platform, better features, just a lot of the ease of, of use, um, implementation sort of things can be put into place a little bit more effectively. It just reduces the costs, you know, for everyone, it just expands the, the eligible users just to make it ease of use, really.

And so it is, uh, it’s a great proponent and it’s a great bill. And then, then from that perspective, when one goes to the hill for representing a, something that impacts, you know, 15 million people, your voice gets heard even that much more. So it’s a, it’s a great momentum builder for, for everyone.

Brynne: That’s really smart. That is incredibly smart. Now, also in the SECURE 2.0 act, I don’t know if we wanna talk about this, Paul. Um, we can skip if it didn’t pass or if it’s not relevant, but there was also something in there about potentially raising SSI limits significantly, at least for the asset tests, not income as far as I understand, but allowing people to build up more savings, to put their money into more assets and still qualify for SSI.

What happened with that part? Did that make it in or?

Paul: And broadly speaking, we’re, we’re talking about the impact of assets of having over $2,000 for, you know, federal, you know, benefits. And, and so it’s $2,000 for, for an individual, uh, $3,000 per couple currently. And we’re looking to for the SSI limits, you know, increase that to potentially $10,000 for an individual and $20,000 for a couple.

So if it were to be passed, it would have a meaningful impact and just really ease up the rules and, and just allow families to get up up and start it a little bit easier. Between the lines, as I look at the interpretation, this bill was also, uh, introduced in 2019. It’s introduced again today and it, it, it did get introduced.

That being said, it seemed a lot more murky as to whether or not it would actually pass. And so that that’s sitting in a little bit more of a wait and see mode while it’s very clear that the ABLE age adjustment act has a clear supporter of Casey speaking on, on the hill in committee live recording that, that it is something that’s meaningful and everyone, you know, does gravitate around it.

The SSI limit didn’t really have as much clear delineation of, of passage. That’ll be something that we’ll be talking about in July, right. To, to see, see if that really does go through. But that being said, it is great that, you know, more flexibility, more saving. And of course, that, that, that provides a, a longer running ramp.

You know, for, for opening up an ABLE account as well. So it’s, it’s, it’s broadly speaking, you know, continues to be a, a proposal that’s in the works. We’ll see if it passes. It also makes me think that because it was introduced in 2019 that it’s introduced again this year that it, you know, the fact that it just, you know, continues to have sustainability in terms of just continues to be around and a topic of discussion.

That if it were not to pass in this bill, that it would be something that would be on the docket for, for a future conversation point, it would be, you know, potentially be added into a future bill.

Brynne: Gotcha. Gotcha. Are there any other, even since the last time you spoke, I think the last time we spoke was in the fall, has there been any news or any changes that people should be aware of since then?

Paul: I have four, you know, Brynne.

Brynne: Awesome.

Paul: I have a list. I, I I’d like throw it one very quick item of, of interest across the industry is really the ABLE  to work act, which allows people to save even more each year. You know, if they’re working currently. Apparently that is still on course to sunset in 2025. There’s a lot of support to continue that legislation, um, you know, broadly speaking it is, it is not being abused.

It is being supportive to the industry, so, and the families. So, so that’s, um, you know, something that the industry is focusing on, on, on as well. From a product perspective. I, I, I don’t know how many listeners you have in Hawaii, but there there’s a new Hawaii ABLE product out there on the shelf. And so it’s, you know, they still haven’t had a, a product to use.

So it’s great to have, you know, Hawaii jump in the ring. And, and launch a, a new plan. There is, there was an interesting twist around the savers credit and, and, and ABLE accounts. You know, for ABLE accounts, it was saver’s credit eligible, and that was special carved out, cut out special language to, to have it basically continue on.

That i would not be impacted. There’s a couple of, um, you know, for. For other types of vehicles being used for the savers credit, there were, there were tweaks and, and changes from let’s, let’s just say credits to matches and all these different things. And it has to go into a retirement account, but there was not an impact for ABLE.

So from that perspective, ABLE will continue and has language in there for, you know, being, um, savers, credit eligible, and so more to come on that one. Let me in the last one, you know, just broadly speaking as I focus on market data a lot, but you know, broadly speaking, ABLE, you know, continues to grow that the assets continue to grow.

The, the number of accounts continue to grow. People are putting their money in through, through automatic contributions. About two thirds of accounts have, you know, made a contribution. Um, and about one fourth of the accounts made distributions. So there’s, you know, money’s going in, money’s being used and saved and, and money’s, money’s coming out from the accounts.

That’s great to see that it is being used. That’s being used automatically, continues to grow, uh, about what’s very intriguing. And this is my note on, on all the market volatility and inflation, about two thirds of the assets are, are in conservative investment options, meaning that it’s not really impacted by all this market volatility.

So we’re talking about money market FDIC-insured type of accounts where it’s just not like there’s just minimal impact or just very small impact on, you know, the value of the accounts. One third, the accounts are, are in more, you know, moderate and aggressive investment types. So, so those are impacted a little bit more, but, but broadly speaking, when you talk about one, one investment vehicle versus another, for ABLE accounts, they are invested in, in target risk where as opposed to age based or, or different type of investment.

So I think out of all the investment products, ABLE accounts were probably the most protected from all the different market volatility, which is great to see.

Brynne: No, that is wonderful. And are we still seeing these accounts functioning largely as people stashing away money for short-term needs, like things that might come up in the next six months to a year?

So the balance is, I think the last time we spoke, they were, the average was around $8,000? And so people aren’t necessarily, if you’re investing for the long term, then all of the volatility isn’t necessarily an immediate concern, right? Cause the market’s gonna go crazy over a 30 year time period in short bouts.

But overall, hopefully it goes up, but when we’re talking about investing for those shorter-term goals, that’s why those investments are more conservative. And so I’m just wondering if that’s still kind of what we’re seeing, how people are using them, kinda just for those day-to-day needs?

Paul: It’s really about half.

And that that’s sort of what, what we’re finding is that half the assets are being saved for, for longer term needs, half the assets and accounts are being used for those shorter term needs. About one third of the accounts are, are making transactions at least once a month. And what’s intriguing is that when we, when we first saw that it’s like, oh, it is just once a month.

That’s that’s not really high volume. But then what, what we’re noticing is that, so people are making the transfers from the ABLE accounts to their debit cards once a month and then they’re they’re then they’re probably using like, say like 20, 30 transactions. So, so when we saw it originally, it was like, oh, there’s just one transaction a month, which is about, you know, more or less, you know, about half, half the accounts are doing like less than one, but it’s like, like on, on the industry side we see like one transaction.

But then like at the debit cards, like most ABLE accounts now have a, have a debit card function. And then it’s like, you put the money to the debit card and then you, then you use the debit card pretty frequently. And a lot of those expenses are, you know, for, for food, for travel, for Uber, for going out to eat for all these different living expenses for clothes.

And so it’s, it’s great to see that there is a high volume, as you said, it’s good that there’s a high transaction focused. And then, then of course, as you correctly, point out that that’s why that, you know, more than half the assets are in conservative investment options.

Brynne: Now, with ABLE to work, I’m gonna try to circle back to all the things you mentioned.

Cause it was all great news. So with ABLE to work, is there any specific legislation, like as people are, are contacting their senators and their Congress people for the ABLE age adjustment act, which is of utmost importance, it’s immediate importance and potentially the SSI part of it. But it sounds like the ABLE age adjustment act is the more viable thing to talk to them about in this moment.

For ABLE to work, is there any like legislation that we should be keeping an eye out on? That we should be contacting our representatives about?

Paul: And that’s a good, great question. There’s probably two different, you know, ways to sort of answer that question. There’s probably looking at the original legislation that, that did pass and, and, you know, cause there was the provision at the end that says it sunsets in 2025.

And so when you talk to someone on the hill, you can reference here’s the bill that passed. In sunsets in 2025, we would like to extend. But currently I, my understanding is that there isn’t a, a new legislation or proposal that, that, that would extend it that would most likely get introduced in 2024 for passage in 2025.

That, that being said, it’s, you know, I wouldn’t be surprised if it gets introduced in 2025. And then, then backdated that like, oh, this is just sort of like road repaired, right? So it’s, it’s really, I think a lot of it would sort of like come down to the timing of what happens in, in DC, but, but, but lo and behold, you know, as everyone talks to the hill, you know, finding the original legislation.

Brynne: Awesome. So I did have one other question this year, the limit for contributions used to be $15,000 and then this year in 2022, that limit jumped up to $16,000.

Paul: That that is accurate, that is live. And I think that not too many accounts, you know, hit the limit every single year. That it’s really it it’s, it’s a more of a, of a comfort item.

You know, that being said there, there is that, that small impact to the ABLE to work because it’s, you don’t really have to worry about the ABLE to work, you know, component until you kind of max out your, your standard, you know, $15,000 and now $16,000, you know, contribution limit per year. And then from there, there’s the, there’s the ABLE to work component that that would be sort of tacked on onto that, that number.

Brynne: All right. And we do have some listener questions. So our first question is from a listener who says, ‘I like to keep things simple and flexible with financial planning. Retirement accounts and a brokerage account is all I have, but an ABLE account may make sense to add to the mix. I would love to know when it does not make sense to have an able account for your child.

And this listener is in Pennsylvania.

Paul: I do know that there are slightly different qualified expenses between ABLE accounts and trusts and, and that, and there are certain scenarios where the assets that are in a trust can be invested in an ABLE account and it gets pretty detailed pretty quick. And so I, I, I do think that there’s, that there’s pros and cons of, of every, every single vehicle.

And so just, I, I, I would recommend the reader just to really fully, you know, look at their plan disclosure. And of course, another great resource is, is IRS publication 907, um, lo and behold, a lot of the questions that do come through, you know, come from there, but the downsides of ABLE accounts that there are.

Eligibility type of, you know, requirements, you know, ABLE age adjustment, not be been a great example of if, you know, as of today, right now, if the age of onset was, you know, 30 years old, you’re not able to open up up the account. I, I do think, um, you know, what’s, what’s intriguing that that just sort of floats in the back of my mind is also that for ABLE accounts there are, there are a number of states that have state tax deductions.

So the extent that, you know, in Pennsylvania, there’s only three ways to reduce your, your state income tax or, or, or, or three great ways to reduce it. So like one is the 401k contributions. The next one is more that the health savings or FSA and, and the third one is the 529 ABLE, so I, I do think it’s you just thinking in the context of, of putting it into, um, just a, a brokerage account versus an ABLE account that there’s, that there’s certain tax incentives.

Brynne: Yeah, definitely in Pennsylvania… I think there’s only Pennsylvania and Mississippi are the two states that allow you to do full deduction on your state taxes. So however much you contribute, you can deduct that from your income for the year. And then there’s like a whole lot of other states that have like a percentage based system. But for Pennsylvania, that makes a lot of sense.

I also love that the ABLE accounts allow you to use that money for housing expenses. I know that’s something that those trusts don’t let you use the money for. So I think it kind of sounds like sitting down with a financial planner and a lawyer who understands these type of accounts and investments, just because it’s really hard to answer without knowing all the nuances of an individual situation.

Like, are you trying to avoid asset tests? Are you trying to set things up so that after you pass away, your child will be provided for? It really depends on your goals. And then within that, all of those little intricacies of your own personal finances, I think.

Paul: Yep. And I, and I think my only add on would, would also be to say, to be conservative in the definition of qualified expenses.

Right? So it’s, there’s, it’s pretty clear on the IRS language, in the plan disclosures, what what’s eligible, what what’s not, but things are a little bit more gray. Perhaps one, one would wanna yse the assets from the brokerage accounts or, and of course that that’s always, you know, part of the fun side of the different types of the qualified expenses.

What, what is, what’s what what’s clearly not and what what’s more gray and for those gray, like it, it may be a better idea to use a more, uh, brokerage account as opposed to ABLE.

Brynne: Now what if you are, we have our next question here. What if you’re living in Pennsylvania, but you get relocated for work, or you wanna move to be closer to family, or you wanna move to a state where Medicaid is more accessible.

So if you move, what are the impacts of having your ABLE account in your home state?

Paul: I mean for me, I think about it as a state income tax, you know, perspective of does your current state have a tax deduction for using your state’s ABLE account? And so if the answer is, yes, there’s a couple different options.

Like one is to just keep your, keep your current account, say in Pennsylvania, if you do move outta state, you can either. You know, keep the Pennsylvania account. Just one can only have one ABLE account. So it’s, it’s really, you know, but to the extent of one can roll over, you know, the assets from, from your current state plan to, to the other state plan.

And you’re just looking at, at the platform, look at the fees. Is there initiation or open account fees? Is there ongoing fees? Are, are the investment options sort of the ones that, that, you know, know and love? And look at the call center. So it’s, it’s a couple different elements. So I, I do think there’s there’s options.

I, I think one could either keep your current, you know, account or, or roll over to, to a new one. So I, I, I think those, those are the two primary options there.

Brynne: With Medicaid, clawbacks, so in Pennsylvania, we’re relatively well protected in most cases from those Medicaid clawbacks. Another state where that’s true is like Florida, I know, Kansas to a certain extent.

So let’s say I’m moving away from Pennsylvania. And I moved to a state like Tennessee, where they still do Medicaid clawbacks. If I kept my account in Pennsylvania, would it be protected from those clawback provisions, even though I myself am in Tennessee?

Paul: That’s a really good question.

I think that, I think that that drives pretty deep into the details of, of looking at, at, at one state law versus another. I do think that there’s a point that some states are very proactive in following up with the Medicare clawbacks, where other ones have the clawback provision, but don’t really enforce it whatsoever just as a practice.

And there’s a third bucket. Like, you know, Oregon and the other 11 or so states that just have removed it. I do think that there is an interesting kind of twist as I, as I was watching some other presentations on ABLE as I do track and, and post and share. But one of the eligible expenses is burial fees.

So to the extent that then no one can find a way to spend down the assets, you know, as opposed to being, you know, eligible for the clawback provision. I mean, I obviously it’s a very kind of sad storyboard, but I, I, I do sometimes it’s, it’s good to be serious and good to kind of be mindful about how we kind of approach the topic.

So to the extent in the back of your mind, barrel fees is a qualified expense. And to the extent that you would, one would want to have a good final, you know, send off and resting place for the family and for you, that is that it is something that, that is a, a nice comfort clause in there that you don’t spend it down.

It all goes like, no, there is that, that stop gap of burial fees. And, um, you know, to the extent that that’s a very open clause that perhaps there’s things that fall underneath the burial fees that can be sent down, like, you know, like a, like a food, like a gathering or, or things like that, that, that it would be able to be spent down accordingly.

So  hopefully it’s less of an issue for families, you know, knowing that clause, but it is there.

Brynne: Yeah, absolutely. And I, I think, again with that, with just the average account balance, not being in the hundreds of thousands of dollars or anything, it’s very possible to actually spend down the money and actually have that go towards expenses that you might incur so that there is no money left for the state to take.

And then the money you have in other accounts might be protected in different ways. Our next question, we’ve talked about this a little bit before, and I think this comes with a lot of nuance. I, I don’t know that there’s one specific answer, but the question is if there are specific income windows that an ABLE account makes more or less sense.

Paul: Great question. And one way that I like to think about it is that for ABLE accounts, they were really made to help all families, you know, save for these types of qualified expenses that there was even, you know, before ABLE, you know, trusts are and continue to be a great vehicle for those of, you know, higher income and asset levels, but it is expensive in pricing.

That’s why for ABLE accounts, I’ve seen a number of plans where there’s no minimums and it’s no initiation fee. Like there’s just very inclusive of the types of folks that they’re looking to appeal to. So I, I, I think while it’s not a specific number, I think as one glides up the scale a little bit for assets in income, that they do tend to gravitate more towards trusts.

And then maybe at some point gravitating towards using the trust with, with ABLE accounts. Where for a lot of families that ABLE, you know, makes a whole lot more sense for the middle and average family to moderate and lower income kind of families. And to that, that extent, there’s that, you know, just helping out that, that $2,000, you know, threshold, of course, we talked earlier about the, you know, that potential, you know, limit, you know, increasing to $10,000, but, but neither here nor there it was really meant to be much more of a, of an inclusive conversation for all families.

Brynne: For sure, for sure. And then our final question here, what are some of the potential consequences if you open an ABLE account and later on down the road, for whatever reason you find out it wasn’t really the best choice for our situation? Are there ramifications that. I guess people should watch out for?

Paul: I think it’s a great question.

I think people and families need to evaluate their, their ABLE account, you know, product to see if it’s the best choice, you know, perhaps annually every or every of the year, just to make sure that they’re not paying too much in fees. And to that extent that the best solution is to roll over the assets from one ABLE account to another.

I do think it’s an ongoing conversation that as, as the ABLE industry grows, and as we think about how much it, it has grown over the past five years and it continues to grow, to grow rapidly that the, that the product offerings will change, that the plans will change, that the fees will change. And so I do think that that is the end result.

I, I, I guess, but the answer, your, your question, what are the consequences? Perhaps just finding out that well, you know, perhaps you’ve been paying a, a slightly higher monthly, quarterly annual fee that perhaps probably, you know, should, or, or would have otherwise. So I think that’s where the consequences sort of end right there.

Perhaps, as we were talking about before that there’s a number of states do provide state tax benefits for contributions for, for a number of plans. So perhaps you were missing out on, on those types of, you know, state tax benefits as well. So that, that that’s another component about the potential consequences.

And I, I think, you know, based on, on my understanding that that sort of where, where the conversation kind of goes, I do know a number of plans also provide sort of like matching you open account, you put $50 in, and then the program will put in $50. So there’s a couple different, you know, more marketing facing type of one off, relatively ancillary in nature benefits that one may lose if one were not to use a specific plan. So that there are a number of levers, you know, there are a number of different, different features to plans.

I would suggest people to, if you don’t have a plan or review and learn more, if you, if you have a plan, it’s a great opportunity to, to learn more. Take a look at, at your state’s plans, looking at, at other state’s plans and, and just learn more and, and have the conversation with others, as well. Because at, at this point in June,2022, a lot of it is that the, the product has been launched that a lot of the rules and regs are, are there are improving.

And then really it’s just about how do we get the message out there to the base. When ABLE was first launched, it was, it was put in perspective of, you know, compared to HSAs and FSAs. If you have FSA, you know, with your employer, like you don’t pay it, but your company pays it. Right. So just sort of like to the extent of, of how to, how does one compard to, you know, that, and in 529s you know, do costs less than, than HSAs and FSAs, but also trusts. Trusts are just, you know, a lot of them do cost several thousand a year, once they are set up.

From a comparative standpoint, you know, you know, fairly expensive. And I do think, and, and I, and I do know that as the assets increase and accounts increase, and as we kind of talked about that 8 million eligible users versus 15, once we kind of get to 15, those costs of the, of initial and ongoing fees will, will drop, uh, rapidly and precipitously.

That is part of the whole, you know, startup costs, you know, to just get a program and plan up and running the infrastructure, the accounting, accountants, the lawyers, just to sort of like get the plan up and running. But now that it is up and running, it’s really just a, a scale game. So as that scale increases that the, that the fee is, you know, will come down.

I think if we do check-ins on an annual basis, as we do with, with any product, it’ll, it’ll just come down, you know, fairly rapidly. So more to come on that front, but fees are coming down for ABLE accounts.

Brynne: Thank you so much, Paul. Paul puts out a great newsletter every week, covering some of the updates on all of this news.

And we will link to that down in the show notes below. I would highly, highly recommend subscribing to that because it’s just chock full of great information. We hope we’ll be able to invite you back next season for another update. And of course, reach out to us anytime if there’s any news we should know about.

Paul: Sounds great. Thank you so much.

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Brynne: Thank you so much to Paul and thank you so much for listening. We are going to go back to our behind the scenes work here over the summer at Mom Autism Money, but we’re looking forward to seeing you guys again in the fall. Make sure you don’t miss out on those new episodes when they launch and the way to do that is to take a second right now, whichever platform you’re listening on, whether that’s apple podcasts, Spotify, Google podcasts, maybe some other platform.

Take a second and click the button to subscribe to the show. That way you’ll be notified when we start dropping new episodes of Mom Autism Money again in the fall. All right. We hope you guys have a great summer.

Joyce: Bye.

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