A MiABLE account allows a disabled Michigan resident to save money in an account in their own name and not jeopardize eligibility for needs-based government benefits such as Supplemental Security Income (SSI) and Medicaid. Money can be withdrawn from the account to pay for “qualified disability expenses” and such expenditures will not be counted as income to the disabled individual to determine eligibility for SSI or Medicaid. Further, there is no income taxation of the gain in value of a MiABLE account.
The recently enacted Tax Cuts and Jobs Act includes two provisions that enhance the benefits of MiABLE accounts for disabled Michigan residents:
One provision of the new tax law allows families to roll over funds that they may have saved in a 529 college savings account to a MiABLE account, provided that the beneficiary is the same individual on both accounts. The money can be transferred from a 529 account into a MiABLE account and the individual may still enjoy the benefits of the account funds without jeopardizing their eligibility for government benefits. This can be an important benefit if a disability occurs after birth or is not readily apparent at birth, and it is not likely that the disabled person will not be able to attend college. For example, grandparents set up and contribute to a 529 account for their newborn grandchild. The grandchild is later diagnosed with autism at age 11. The money the grandparents have deposited into the 529 account can be transferred to a MiABLE account for the grandchild without penalty.
The second provision allows a working disabled individual to contribute more than the current annual contribution limit of $15,000 to a MiABLE account without jeopardizing their eligibility for government benefits. Many disabled individuals want to work and are able to, but are discouraged from doing so because they may lose their SSI or Medicaid benefits if they earn too much money from a job.