Understanding ABLE Account Savings and Public Benefits

Medicare: A Federal Health Insurance Program

In general, Medicare includes Part A (Hospital Insurance Plan), Part B (Medical Insurance Plan), and Part D (prescription drug benefits). Some plans are called Medicare Part C plans because they are Medicare Advantage Plans similar to a HMO or PPO which are offered by private companies approved by Medicare. Many part C plans offer extra coverage including vision, hearing, or dental programs in addition to Part D prescription drug coverage. We focus on two special benefits that help with Part A, B and Part D expenses.

Medicare Savings Programs (MSPs)

There are four MSPs administered through a state’s Medicaid agency (or its designee): the Qualified Medicare Beneficiary (QMB) program, the Specified Low-income Medicare Beneficiary (SLMB) program, the Qualified Individual-1 (QI-1) program, and the Qualified Disabled and Working Individuals (QDWI) program. QMB, SLMB, and QI-1 can pay for Part B premiums; QMB can also pay for Part B deductibles, coinsurance, and copayments; and both QMB and QDWI can pay for Part A premiums, deductibles, coinsurance, and copayments. See https://www.medicare.gov/your-medicare-costs/get-help-paying-costs/medicare-savings-programs and https://www.medicaid.gov/federal-policy-guidance/downloads/cib031821.pdf for information on eligibility and benefits for the four MSPs.

MSP eligibility is based on a person’s income and resources (a few states have opted for higher resource limits and some have opted not to have resource limits). Since MSPs are considered a form of Medicaid, assets in the ABLE account are not a countable resource for purposes of determining MSP eligibility. See Centers for Medicaid and Medicare Services (CMS) SMD# 17-002 (Sept. 7, 2017), referenced above.

1. ABLE Account Distributions

→No impact on MSP eligibility when asset test applies.
→Distributions not counted as income, whether payment is for QDEs or non-qualified expenses. However, federal SMD# 17-002 provides that states can treat distributions as resources if retained after the month of receipt and used for a non-qualifying expense or housing expense.

3. Medicare Part D’s Extra Help Benefit

Extra Help, also known as the Low-Income Subsidy program, pays for a range of Part D out-of-pocket expenses depending on whether the person qualifies for full or partial Extra Help. See Social Security publication, Understanding the Extra Help With Your Medicare Prescription Drug Plan, Publication No. 05-10508, https://www.ssa.gov/pubs/EN-05-10508.pdf (February 2021).

ABLE distributions for qualified disability expenses do not count as income. In most cases, the ABLE account balance will not count as a resource/asset up to $100,000 of ABLE savings. See POMS HI 03020.001C: “For purposes of determining countable resources for Medicare Part D Extra Help eligibility, we apply the exclusions applicable to the SSI program, unless a specific exception is noted in HI 03030.020B.”

4. Deemed Extra Help Categories

These categories result in automatic (“deemed”) eligibility for the Full Extra Help benefit with no application needed: person receives SSI benefits (including 1619B); has full Medicaid coverage; person is dually eligible for Medicaid and Medicare; and person is enrolled in one of three Medicare Savings Plans (QMB, SLMB, or QI-1). Qualified Disabled Working Individuals (QDWI) are NOT deemed for Extra Help. See POMS HI 03010.005 D.

• Deemed Extra Help & ABLE Assets    
  • →If based on SSI status
    ABLE savings will not count up to $100,000. This is because SSI program excludes ABLE savings up to $100,000.
  • →If based on Medicaid status
    (i.e., based on “dual eligibility” for Medicare and Medicaid benefits).ABLE savings will not count. Since federal Medicaid policy will not count ABLE savings, those savings have no bearing on this basis for Extra Help.
  • →If based on MSP eligibility
    ABLE savings will not count. Since MSP is considered a form of Medicaid, Extra Help eligibility is based on “dual eligibility” for Medicare and Medicaid. The same federal policy referenced above, CMS Dear State Medicaid Director letter, SMD# 17-002 (Sept. 7, 2017), also applies to MSPs meaning ABLE accounts will not be a countable resource in states that use a resource test in MSP eligibility determinations.
• Deemed Extra Help & ABLE Distributions
  • →If based on SSI status or MSP status
    ABLE distributions will not count. See discussion immediately above.
  • →If based on Medicaid status
    ABLE distributions will not count. Since federal Medicaid policy will not count ABLE distributions, they will have no bearing on this basis for Extra Help.
• Extra Help for those Not Deemed Eligible
  • →Separate application required to establish income, resource eligibility for Extra Help.
• Extra Help Applications and ABLE Assets
  • →First $100,000 of ABLE assets will not count.
    Medicare uses the SSI program’s resource exclusions to determine countable resources in the Extra Help program and SSI will not count the first $100,000 in resources. See POMS HI 03030.020 A.
• Extra Help Applications and ABLE Distributions
  • →ABLE account distributions will not count as income.
    Medicare uses the SSI programs earned and unearned income exclusions to determine countable income in the Extra Help program. POMS HI 03020.030 and HI 03020.050. Since SSI excludes ABLE account distributions for QDEs and unqualified expenses, and ABLE savings in any amount, those will also be excluded in Extra Help applications.

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