Another option to consider is establishing an ABLE account. This relatively new planning tool is a tax-free savings option for qualifying individuals that does not interfere with their eligibility for means-tested government benefits, including SSI. Only individuals whose disability appeared prior to their turning 26 are eligible. Up to $14,000 per year can be put into an ABLE account, including funds from the SSI-eligible individual, family members or any other source.
In effect, as long as the individual does not gift away the ABLE funds or retain the funds withdrawn from the ABLE account month-to-month in their own personal bank account, the use of the funds will not affect SSI eligibility. Funds from ABLE accounts may be used to pay for housing, food, transportation, clothing, utilities, cable subscriptions and many other basics without affecting SSI. ABLE funds used for certain housing expenses may create an IRS penalty, but it is usually very small. A key advantage to an ABLE account is that is it can be funded by family members, and the individual can then use the funds to pay for rent and food without having an SSI ISM reduction as described above.
With forethought, it’s quite possible for adults with disabilities to collect SSI while living in the family home. But doing homework ahead of time and understanding the rules is a must.