CMS Guidance on ABLE Accounts

September 13, 2017

At long last the Centers for Medicare & Medicaid Services (CMS) had provided guidance to states on how to treat “ABLE” accounts in Medicaid financial eligibility determinations.


The Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (the ABLE Act), enacted in 2015, created a program under which people with disabilities can save money for their disability-related expenses in tax-advantaged accounts. Because disability can serve as a basis for Medicaid eligibility, many individuals who apply for Medicaid on the basis of having a disability may be interested in opening an ABLE account, and this letter provides guidance to states on the treatment of funds in, contributions to, and distributions from an ABLE account for purposes of Medicaid eligibility.


The Link to the letter from CMS is here:


Of particular note is the section that seems to clear the way for Special Needs Trusts (particularly first party or payback trusts) to make contributions to ABLE accounts without negatively affecting the beneficiary's eligibility. The relevant part of the letter provides:


"Some ABLE account beneficiaries may also be the beneficiary of a special needs trust (SNT) or pooled trust, as described in section 1917(d)(4) of the Act. Distributions from such trusts made on behalf of the beneficiary to the beneficiary's ABLE account should be treated the same as contributions to ABLE acocunts from any other third party." CMS letter Page 4. 

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