Jan Neal Law Firm, LLC

Alabama Estate, Elder and Special Needs Law

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Alabama ABLE Act to Provide Planning Opportunity for Disabled Persons

Husband and handicapped wife taking stroll in park alley

On June 9, 2015, Governor Bentley signed ABLE Act legislation into law in Alabama permitting the state to implement a program to permit developmentally disabled persons to have limited tax free savings without losing public benefits.  ABLE stands for Achieving a Better Life Experience, and the act was passed on the federal level in December 2014 permitting each state to set up its own program.  Though the program in Alabama has not yet become operable, it will be getting underway in the coming months.

The ABLE Act will permit up to $14,000 per year to be placed in one approved bank account set up for a developmentally disabled person living in Alabama (one who became disabled prior to age 26) with those funds exempt from counting as resources for public benefit purposes.  This means that the disabled person can have these funds to use for disability-related expenses without losing his or her public benefits such as SSI or Medicaid.  Up to $100,000 can be accumulated in an ABLE account without loss of SSI, and $350,000 can be accumulated in such an account in Alabama without loss of Medicaid (note that this is state specific, and some states may permit an accumulation as high as $425,210 or as low as $235,000 before loss of Medicaid).  At the death of the disabled person any funds left in the ABLE account will be payable to Medicaid to repay that agency in amounts up to what the agency paid for the disabled person’s health care costs.

Contributions to an ABLE account are not tax deductible, and income earned by an ABLE account is not taxable.

Stay tuned for more information about these accounts in the coming months or go to the Alabama State Treasury’s ABLE website and sign up for an update notification when accounts are available.    

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Medicaid Estate Recovery

The Alabama Medicaid Agency is required to recoup funds it spends paying for health care for certain eligible individuals after those service recipients die.  Those Medicaid recipients are:

  • people who die in nursing facilities, intermediate care facilities for people with intellectual disabilities or other medical institutions;
  • persons who were 55 years of age or older when medical services were covered by Medicaid; and
  • persons who had a special needs trust.

If any assets (real or personal property, bank funds, vehicles, cash, etc.) remain in the estate of those Medicaid service recipients, the agency will try to recover an amount of money up to what it spent for care.

When estate recovery is initiated by Medicaid, a letter is sent to family members from the Medicaid Estate Recovery Program Recovery Unit in Irving, Texas.  A questionnaire is provided to determine what the individual owned at the time of death.  While the questionnaire may appear to be straightforward, care in completing is advised.  Challenges to estate recovery may exist based on what is in the probate estate and whether the family qualifies for an undue hardship.  Estate recovery may be delayed based on the status of the surviving family members.   Legal advice is recommended to assure that family members know their rights.