ABLE Accounts and federal housing assistance

Federal officials are weighing in on how money saved in a relatively new type of savings account for people with disabilities influences access to housing assistance.

The U.S. Department of Housing and Urban Development recently issued guidance to public housing officials across the country clarifying how they should treat funds accrued in ABLE accounts.

The accounts, established under a 2014 law, are designed to allow people with disabilities the ability to save money without jeopardizing government benefits.

With the latest guidance, housing officials are spelling out how money in the accounts comes into play when individuals with disabilities seek public housing, rental assistance and other government-supported housing offerings. Traditionally, these programs have only been available to those with less than $2,000 in assets.

“Given that the ABLE Act creates a federally mandated exclusion for ABLE accounts applicable to HUD programs, in determining a family’s income, HUD will exclude amounts in the individual’s ABLE account,” the guidance states. “The entire value of the individual’s ABLE account will be excluded from the household’s assets. This means actual or imputed interest on the ABLE account balance will not be counted as income. Distributions from the ABLE account are also not considered income.”

ABLE accounts allow individuals with disabilities to save up to $100,000 without risking eligibility for Social Security and other government benefits. Medicaid can be retained no matter how much is saved in the accounts.

Money in ABLE accounts can be used to pay for qualified disability expenses including education, health care, transportation and housing. Interest earned is tax-free.

The accounts are available to those with disabilities that onset prior to age 26.