What are ABLE accounts and how can they help you?

Steve: 0:10

Hi, this is Steve in a sad song too much fun country singer Daryl Singletary croons too much fun. What's that mean? That's like too much money. There's no such thing. Well, if you're the parent of an adult child living with disability on Medicaid and collecting SSI, you understand that too much money is a real thing. But money is also a necessity in life and providing adequate resources for our young adults to live a full life becomes a challenge when essential benefit programs are conditioned upon living near or below the poverty level. A few years ago, a new savings program became available for individuals subject to asset and earnings restrictions that helps them stay qualified for Medicaid. This new savings product is called an ABLE account. The acronym stands for achieving a better life experience. Attorney Sara Kirkpatrick is here with us today to explain how ABLE accounts work, how they are different from special needs trusts and how they can be advantageous for people living with disabilities in the management of their money. And now on to Sarah. Sara, welcome to navigating life as we know it.

Unknown: 1:24

Thank you for having me. Well, thank

Steve: 1:25

you for participating tell us everything seems to be an acronym. What does Abel stand for?

Sarah: 1:31

abl stands for achieving a better life experience. It was a Act passed into federal legislation A few years ago,

Steve: 1:40

you think there's a think tank in Washington that just works on acronyms.

Unknown: 1:44

Seems to be the case, I don't know.

Steve: 1:47

There seems to be like an endless supply of acronyms. And sometimes they use the same acronym for two different things. And it gets to be very confusing, but an ABLE account. So tell us more about an ABLE account and how it works.

Unknown: 1:59

Enable account just put succinctly as a savings tool for people with disabilities. It's a savings or investment account. And it was really modeled after college savings accounts or 529 plans. That's where the idea stemmed from. People with disabilities often have a lot of expenses associated with that. And if there aren't any needs based public benefits, they have to have a low asset amount that's in their own name. So for for parents and others who are doing financial planning, they often realize that there may be expenses associated with their loved ones disability that they want to be able to save for, and saw college savings accounts and thought, Gosh, we need a tool similar to that to be able to save for our child or a loved one with a disability and have the same tax advantages that other other families get when they're doing saving is for long term expenses like college. So that's where ABLE accounts came from. And they are similar to 529 plans or college savings accounts in some ways, but very different and others so we can talk about some of the differences.

Steve: 3:14

What are the differences in terms of countable assets attributed to a person?

Unknown: 3:19

Yeah, so for someone with a disability, they may very likely be on means tested or needs based public benefit. And that could be supplemental security income, or SSI, through social security, it could be Medicaid, those are probably the two biggest means tested public benefits. And what I mean by that is that the the government is monitoring how much the person has an income and assets. And the asset limit for SSI and for traditional Medicaid is $2,000. So there are many things that are considered to be countable assets. And I think it's things like cash in the bank or investment accounts or savings bonds or retirement accounts, things of that nature. So an ABLE account is a way of sheltering money in a way that it's not a countable asset. So it is sort of a uncountable asset or resource for the person with the disability. So if when the government's looking at whether they're eligible for SSI or Medicaid, they're not going to count that money that's sitting in the ABLE account.

Steve: 4:28

So how would that be different than a special needs trust? If you have an ABLE account? Why do you still need a special needs trust?

Unknown: 4:34

An ABLE account is not a replacement for a special needs trust, but it's another tool that can often be used in conjunction with a special needs trust ABLE accounts are a little bit different in a few ways, but it's the same and that the funds is the same as a special needs trust and that the funds in the account are not accountable asset but there are caps on how much you can contribute to enable account each year. You And in total that we can talk about. And it's different from a special needs trust and some other ways in terms of who controls it, and how funds can be spent. So, a little bit more on ABLE accounts in particular, one thing to know about it is that in Michigan, you can put up to $500,000 into an ABLE account, which is a

Steve: 5:22

pretty significant amount, assuming I get 500.

Unknown: 5:26

Right? Right. So that's a pretty large chunk for most families. Now, if the person with the disability is on SSI, they can have a maximum of $100,000 and an ABLE account before it starts to be a countable asset.

Steve: 5:42

In other words, you're saying if someone did have $500,000, they'd have to spend down 400,000 and be disqualified for Medicaid until they spent that money

Unknown: 5:51

at for SSI. That's correct. So

Steve: 5:54

making an ABLE account a beneficiary in a life insurance policy, it's let's say, $200,000, would actually be a bad thing,

Unknown: 6:02

it would be a bad thing, if the person's going to be on SSI, because of that $100,000 cap. The other cap to be mindful of is the an annual contribution amount, you're not able to contribute more than $15,000 a year generally speaking into an ABLE account. And so when when parents or others are thinking about life insurance, or estate planning, when both parents pass away, and most families there will be a significant amount going to the person with the disability, and it's likely to be more than $15,000 in one pop. So it could be a relatively small inheritance where an ABLE account would work. But for most families, it will be more than $15,000. And so an ABLE account is not the the ideal tool to use for us for estate planning for life, insurance payouts, and so forth. So that's something to keep in mind. There are exceptions for that annual contribution that are have have been enacted into law where if the person with the disability is the one working and earning wages, they can actually contribute more than 15,000. But it's right now the cap is an additional about $12,000, that could be added out of that person's earnings. Another thing to be aware of as who can contribute to these accounts, and really anyone can contribute the person with the disability can put in their own money, it could be wages, it could be extra Social Security, that they don't have a good way to spend. It could be parents, grandparents, anyone wanting to give a gift to the person could contribute to their ABLE account. But you have to bear in mind that it's a $15,000 total, all the contributions in the aggregate it's not 15,000, from Grandma 15,000 for mom and dad, and so forth. It's 15,000 in the aggregate.

Steve: 7:59

So suppose you got grandmas and grandpas and both sides, Mom and Dad's parents, and one doesn't know the other ones putting money in there. What happens if they both put 15,000 in a one year, and the access will be considered a countable asset or resource to the person with a disability. So someone's got to be the orchestra leader here to understand what's going on and who is playing what in where the money is coming from, and where it's going.

Unknown: 8:23

Exactly. So family members, even divorced parents and things need to communicate with each other about who's contributing and how much with ABLE accounts, it's really the person with the disability can be the account holder that's controlling the funds. And if they're not able to control it themselves, a guardian can can can control it, or an agent under a power of attorney. And so really, whoever the person is that is responsible for the account should be watching who's contributing and how much,

Steve: 8:59

you know if it is an ABLE account, I think on all 50 states, for the most part, they're built on federal law. So they're going to be pretty similar from one state to the next a few bells and whistles might be different. But is there anything that would alert from the ABLE account organization to say, Hey, 20,000 just went in?

Unknown: 9:18

Yeah, I'm not aware of a particular alert that comes out. You know, there are just like any other investment account, you get reports periodically from the the management company in Michigan. You know, each state has their own abl program if they choose to do so in Michigan, Michigan, the Department of Treasury has contracted with a private company to do the hands on management investment and it's right now it's TSA consulting that has that contract, but they just like any other you know, financial institution will send out periodic reports about how the investment is doing and more And money out. So the account holder will be able to track how much is going in. But I'm not aware of particular flags that alert you immediately when too much has been. So

Steve: 10:12

in other words, be aware keep track. If by the end of the year you find out that you have too much in there, you better have it withdrawn, or actually, the asset amount is calculated each month, isn't it? It is you'd have to catch it the month that went in. So it's really important to keep your eyes on this keep

Unknown: 10:31

track communicate well with with anyone that you think might be contributing, and keep close track they do for SSI and Medicaid, and particularly SSI is a hawk with this. It's, it's the end of each month, you need to be below assets, they may not catch it immediately. They may catch it later. But for every month that you were over, there's a penalty. So you actually hope that it's caught sooner? Not later.

Steve: 10:59

Yeah. And they don't have any forgiveness on that either. No,

Unknown: 11:03

no, it's they run a tight ship there.

Steve: 11:05

Yeah. And so you're saying that the ABLE account holder, which is the person with a disability, can have some control over this, which is very different from a special needs trust, where the trustee has absolute control,

Unknown: 11:20

that's cracked, that's one of the differences. So with a special needs trust, which many of our listeners are probably familiar with, it's another tool for sheltering private funds that it can keep the person below the asset limit. It is a is a specific type of trust. And so there's a trustee that's in charge of that fund, whatever money is in the trust is controlled by the trustee. With an ABLE account, there is no trustee. It's not a trust, it's a savings account. And so the person with the disability can be in charge of it themselves. And for many, that's a great thing. That's an independence tool that wasn't available before. So in a good example, a client of ours has severe physical disability, but cognitively is able to handle his own finances and would love to be able to do that and have that independence. With a special needs trust, that's really not an option. He can can tell his trustee what he needs what he wants. But ultimately, the trustee has absolute discretion over those funds. With an ABLE account, though, he's able to access it himself, he's able to decide what he wants and what he needs and access it. There's now debit cards associated with most ABLE accounts that you can app to use. And so he's able to have a debit card tied to his ABLE account that he can use himself, he can make investment decisions himself. For some people with disabilities, they may need more help than that they may not be able to be completely independent in managing it. But it might be a nice way to allow someone to practice using a small amount of money. You know, you could choose to have a relatively small amount in that's in a cash portion of the ABLE account, where a person with a disability with perhaps an intellectual impairment could practice managing, let's say $500, or even $100. And using a debit card and doing a small budget that they're in charge of and making expenditures and things it's a can be a good learning tool that allows for a little bit more independence.

Steve: 13:42

Now, it's my understanding that with a special needs trust, there's no limitations and how the money could be used. You could use it to buy Christmas presents for mom and dad or the trustee could use it to buy Christmas presents for the loved ones for Christmas. Are there any restrictions in the how the money inside enable account is used?

Unknown: 14:01

There are there there's some restrictions, a special needs trust, but there are more with ABLE accounts. So the thing is that you can use it on have actually been defined by the IRS. And that sounds funny, but this is a rule that is an IRS rule because these are tax advantaged savings accounts and we'll talk a little bit more about the tax side of things. But the IRS defined what they mean by qualified disability expenses and they have a list of things that fall under that umbrella. And it is a pretty broad umbrella. It does cover a lot of things. So it covers things like education, housing, transportation, assistive technology, medical, you know, basic kinds of things that would be needed for someone because of their disability. But it doesn't cover things like pure recreation, gift giving pure vacation expenses. groceries, yes, food is a gray area, you need to be careful spending it on food, housing expenses are allowed. But food is something that it's not clear whether that falls under housing expenses. So that's a gray area. And what what's been recommended by most quote experts enable is that you avoid using it. And food unless it's special food, like someone is on a special diet because of their disability, then, arguably, that's a perfectly fine expense. But, you know, there are some things to be aware of, in terms of how you can use this money, and that you need to be careful when you're using it. You're not required at this point to turn in receipts and things for how you're spending it, but the IRS could ask,

Steve: 15:50

so it might be a good practice to keep receipts, get a shoe box, and just toss them in there in case they're needed in the future,

Unknown: 15:56

right? Keep a ledger, keep a ledger of how you're spending it. And be be, you know, be mindful of the rules that they they could ask eventually got to be prepared.

Steve: 16:08

I'm just thinking for a person with like you said, maybe a mild intellectual disability who's learning how to use money that has also a special needs trust, they could probably open up or get a prepaid debit card, and they can trust you to put $500 in there. So they would have they could do anything with that for entertainment, etc, and learn more about managing money and have to worry about is this a qualified expense to see this movie?

Unknown: 16:35

Mm hmm. I think there's a ways in which special needs trusts and ABLE accounts can interact. You know, some for many people, they will have a large chunk of money and a special needs trust or bigger, let's say than what's in their ABLE account, especially when parents have passed away and left in inheritance. And they'll have a trustee that's in control of the money in the trust. But the trustee might determine, you know, it would be nice for the beneficiary to have access to some money themselves in many special needs trusts now, or including a provision that would allow the trustee to move some money from the trust into an ABLE account for that purpose so that the beneficiary has direct access to a small amount of money. And that's working nicely for some people. Another thing that's just a little tip that will add that has come up and when we've given talks or that clients have asked us about is that for people on SSI, there are quirky rules with when you spend money out of a special needs trust and housing expenses and basic housing. You know, if you pay rent out of a special needs trust that douce the person's SSI, by up to one third, and so many people are, you know, frustrated by that rule. Sometimes they will spend the trust money anyway, knowing that they'll get the reduction and the SSI others are trying to find a way to have housing that's low enough that they don't have to dip into trust funds, they use trust funds and other things because they don't, they don't want to lose any of their SSI. But the way that the rules were written for ABLE accounts, if you spend money out of an ABLE account, and housing, even on basic rent basic month to month expenses, you don't get a reduction in your SSI. And so that's one reason why people like ABLE accounts is because they want being able to supplement housing related expenses, they know that if they use trust funds to do that, that's going to reduce their SSI. So they like able because it doesn't cause a reduction in SSI. So we've had, we've talked with families about, you know, if you have money sitting in this trust that you wish you could use and housing, move a little bit of that money into enable account, move a little bit of the trust funds into it, and then pay the housing out of able. So that's another way in which trust funds and ABLE accounts can work hand in hand to maximize what a person is receiving in SSI in their private funds.

Steve: 19:18

So even though a trustee who has sole control over the money distributed from the trust, is using it specifically for housing, but the disabled person never has constructive receipt of that money. That still could reduce your Social Security.

Unknown: 19:32

It can it can because if you are having, quote, help from someone else to pay your housing expenses, then the government has determined that you don't need your full SSI. Because you have help coming from someone just like if mom and dad gave the person a free room and board, they're going to get a reduced amount of SSI. They treat Social Security treats especially it's trust the same way they view money coming out of the special needs trust To pay housing as help from a third party source, so they reduce your SSI just like if you are getting it for free. So Abel has special treatment, they don't treat Abel the same way, in that in that particular regard. So that's another way that people are learning to maximize their benefits, they can use their private funds to supplement housing and, and not get a cut in their SSI.

Steve: 20:29

Where would the average person get this information from?

Unknown: 20:34

So there are a lot of people out on the internet talking about this, there's been a lot of chatter around special needs trust, enable accounts over the last few years. And this is something that we when we go out and we give talks to parents, we bring up a lot of housing organizations that develop creative housing for people with special needs are keying into this and trying it out. And it's working. It's working well. So I can't point you to a great resource off the top of my head that fleshes this out fully, but it's out there, it's out there on the internet, it's out. It's if you talk to housing, housing groups, they're becoming aware of this.

Steve: 21:15

And the next topic, we're going to talk about creative housing. And so this is a, this is something that comes up, it just begs another question, because I didn't know what you're just talking about. It did not know that there was a restriction on money from especially as trust. But if there's especially is trust, and they want to pull out $20,000 to put down to buy a house, which is an exempt asset, that wouldn't affect the Social Security,

Unknown: 21:37

right? That's correct. So the part that affects that, for one thing, it only applies to SSI, it doesn't apply to people on social security disability, it only applies to beneficiaries of SSI. So that's important to know. The other thing is that it's only on the basic, what we would consider to be basic monthly living expenses, rent, utilities, things of that nature, it's not on capital expenses, like buying a house, putting a roof on the house, those are my next question about a roof. Yeah, so maintenance to that to a home. All of those things, those sort of capital expenses do not affect the SSI, it's the basic month to month living expenses, there's a list of things, but it's things like rent and utilities.

Steve: 22:26

Okay. So apparently, there is a lot of landmines you could step on, if you're not informed when you do this. And maybe it's better for one person. Sometimes, and maybe the trustee of the trust also has an eye on the ABLE account because they got to be working together in some cases, right

Unknown: 22:42

right to to use them effectively, you really do want to get advice on the best way to to manage a trust and an ABLE account, because there are ways to use them together to really achieve the best quality of life that we can for the beneficiary. So there's probably a few other things to cover an evil that are important. So one question that comes up is who who qualifies for an ABLE account person with a severe enough disability and the onset of the disability has to be before age 26. So it's not for someone who became disabled later in life, it's for someone who is disabled before 26. If you're disabled enough, so to speak, to qualify for SSI, or social security disability that you qualify in terms of the severity of that disability for enable account. If if it's a younger person, perhaps that a child maybe that hasn't yet tried to apply for any social security benefits, you can get a certified letter from a civil physician that describes the disability and proves that it's severe enough. So that's an option if parents, for example, are setting up an ABLE account for their minor child,

Steve: 23:59

who's that on SSI yet?

Unknown: 24:01

Right? Right. So they haven't gone through and have what we call a disability determination with social security. And then, you know, just a couple of other things to talk about is the tax benefits, which a lot of people are initially drawn to is that, like a college savings account. These accounts grow tax free, so there's no interest in earnings. There's no taxes. In Michigan, there's also a state income tax deduction, and that's for the person contributing to the account. There's Michigan's offered the state income tax deduction, but there's no federal income tax deduction, which some people hope there would be but it's really just for the state and that's that differ state to state so you can shop around you don't have if you live in Michigan, you don't have to join Michigan's abl program. There's a pretty good website out there that compares the states different Apr offerings. And I'll give you that website. It's www dot APR, and rc.org. That stands for able National Resource Center. And they compare the different state programs, they do a pretty good job.

Steve: 25:15

I know they, they could have different investment strategies and choices in some have the debit cards, and some don't have the debit cards. Right. Okay, one more question. You mentioned it as an asset qualification level for Medicaid and for SSI. Mm hmm. If someone takes money out, it creates a problem with SSI, if a larger amount of money is taken out on a monthly basis, is there any distributions from an ABLE account that might jeopardize qualifications for Medicaid?

Unknown: 25:47

Not that I'm aware of as long as you're following the rules that it's a qualified disability expense. And you will also wouldn't want the person to request funds out of their ABLE account and hold them. That's a way in which it could become an asset in their packet. So you want to when you want to spend the money, spend it right away and spend it on something that is the qualified disability, my

Steve: 26:14

understanding is you could have more than $2,000 in the middle of the month, but don't have it at the end of the month, right?

Unknown: 26:20

Don't hold it over.

Steve: 26:21

So if grandma does die and leaves you $5,000, and it's not going to go into a trust, buy a new stereo, buy whatever he wanted at that point, but make sure you have less than 2000 at the end of the month. Right?

Unknown: 26:33

Right. Don't hang on to it. It's income in the month that it's received. And it's the following month, it's an asset,

Steve: 26:39

wow, they make this a little bit hard. It's a great opportunity. But it certainly is something you have to keep an eye on to make sure that things are being monitored properly. Anything else we need to know about evil accounts.

Unknown: 26:51

I think another key thing to be aware of that where we can kind of wrap up with this is the question of what happens to the money when the person with the disability dies. This This becomes important. If if the account starts to hold a lot of money, you know, we said that, if you're on SSI, it could have up to $100,000 in it. If you're on social security disability, it can have up to $500,000 in Michigan, that would be a lot for an ABLE account. But it's possible. If there's money left when the person with the disability passes away, it is subject to what's called a Medicaid payback. And what that means is that if the person has been spending using Medicaid dollars, since they opened the ABLE account, anything left in the evil account when they die goes back to Medicaid as reimbursement. It's not Medicaid that's been spent over their course of their whole life. It's since they opened the ABLE account. And in each state, they are keeping track of how much Medicaid each person uses. So that is they get the first crack at being repaid when the person dies. So you know, and if the person hasn't utilized a lot of Medicaid, then the leftover money can go to their heirs, but if they have used a lot, then it's likely that Medicaid will take the whole remainder at the person's death.

Steve: 28:17

So let me ask then, if someone starts out at 18, or they're on SSI, and then mom or dad either retire or die or become disabled, then they go on to Rs di mm, which is part of the VA disability income rather than SSI. Let's say between 18 and 30, they're on Medicaid and racked up a lot of bills. But then when they're on IRS di, then they're still under the age of 26. An ABLE account is opened and somebody puts $500,000 in there. First of all, since they're no longer subject to SSI, that's no longer restriction. Mm hmm. Is that 500,000 past the weather on our SDI, a problem for Medicaid?

Unknown: 29:06

No. So if the person's off of SSI, they're an rst or SSDI. But they are on Medicaid. It's still a non countable asset. So they could have they could have $490,000 in the ABLE account and still get Medicaid, because they're under the threshold for what's allowed to be in an ABLE account in Michigan. It's unlikely that people are going to reach that high of an amount because of the $15,000 annual cap. If you can only put $15,000 in a year. It's going to take a lot of years to get up that habit. 30 years yeah, and without spending anything out of it well,

Steve: 29:51

so someone can say gee, I'll save the expense and the hassle of a special needs trust by leaving the library Insurance when they're on SSDI Mm hmm. into the ABLE account because you have to leave at 15,000 bucks a year to take a deposit program over a 30 year period, they get to that. Okay. All right. So

Unknown: 30:13

you know, it's the Medicaid payback at the person's death, to me is not a death knell. It doesn't mean don't open enable account, it just means Be mindful of that, especially when you think about how large you want to let this account get just knowing that if they'd if they do pass away, and they've been using Medicaid, it's going to go back to Medicaid. So that's just something to keep

Steve: 30:36

more of a cash management kind of thing for smaller expenses, smaller being, you know, less than a couple $100,000 or whatever. And like you said, it could be used from trustee moving money from a special needs trust into the ABLE account for monthly expenses for a house. Mm hmm.

Unknown: 30:55

But

Steve: 30:57

yeah, it's worthwhile habit, if you have a larger chunk of money, it should be in the trust.

Unknown: 31:01

Mm hmm. Exactly. So there's a variety of ways in which this can be used, it's a good tool, it's not necessarily a replacement for a special needs trust, many, many people will have both. Anything else we need to know. I think that's a good summary. Thank you.

Steve: 31:17

One more question. Actually, too? Well, you already told us that people can go for additional information about other states offerings, or then go on mia abel.org. If they're a Michigan resident, right. And you can open it online. Yeah, do it yourself.

Unknown: 31:33

So people often ask that they ask if they need an attorney to open it. No, you don't they ask if you can go to your bank and open it No. For most states, there's a website that you start with, and it is my April, that org in Michigan. That's it, they've improved the quality of that website, it's getting better. But that's the place to start, okay to open an account. And then they walk you through, you know, your investment strategies that you can choose from and so forth. But, but that's the way to do it. You don't you don't necessarily need an attorney to help you do that you

Steve: 32:06

can do yourself, for someone who feels they're not very savvy with investments, they make it very, very easy. They're prepackaged Yes. So I can find out, you know, at the site, this stock or that bond, you buy the package a package B package C, depending upon how risky you want to be with the money,

Unknown: 32:23

right?

Steve: 32:23

They've got a very consumer friendly, right? If they have a very trusted financial advisor, they could probably buy it there, too. There's no additional charge for that. Mm hmm. That person, they want some explanation as to what these investment strategies

Unknown: 32:39

with how

Steve: 32:40

aggressive they want to be. But it's really not hard to get on the line and read through for the average person to understand

Unknown: 32:46

No, I we've heard feedback from families that that they found it to be simple and straightforward, and most people didn't feel like they needed additional help to through that process.

Steve: 32:58

Well, thank you, Sarah, I really appreciate that. And I'm sure the listeners will too. And we're gonna take a little break right now and come back with Dan and talk about creative housing options for people with disabilities. So having direct home ownership.

Unknown: 33:14

Yeah, it can be difficult finding a successor trustee, somebody who take over when the parents can't. So you have to think that through carefully, and that's what attorneys and other housing specialists will help a family do. The last option that I'm going to mention, and this is one that has a lot of interest by a lot of families is well, you know, there's we're not rich, and we don't have a lot of money to put together this house and put together this service funding package. But what if we were a nonprofit corporation where we could get gifts from the community and from foundations and from others that be tax deductible gifts to a nonprofit, with that help us get the money, we need to put this up. And then a lot of cases it will. And when you're a nonprofit organization to create supportive housing, it doesn't mean you have to create licensed adult foster care. And you can be a nonprofit that creates supportive living, and in unlicensed settings, regular houses and apartments and condos. And so nonprofits are key in a lot of cases. The other big advantage of a nonprofit Housing Corporation is it has an inside track of getting certain funds from the government to put up the house. Now HUD Housing and Urban Development passes out a lot of dollars to create affordable rental units for people with disabilities who are low income. And to understand all those rules of how housing grants work from the government is a little daunting, but it's not insurmountable. I always say that a good housing specialist is got to be bilingual. They have to be Be able to speak HUD, and they have to be able to speak community mental health CMH. And those two worlds don't know each other very well. But if a nonprofit organization can apply for government benefits that are for affordable housing for people with disabilities, they can get some big chunks of money. And that's what I did when I worked with hope network because we applied for HUD and Misha and Housing Trust Fund and low income housing tax credits, and all these fancy ways of raising capital to put up a nice place. And then the mental health system takes up from there and figures out how can we put our Medicaid dollars toward the support staffing in that affordable place that has been created, and so that people can afford to live in a decent place without having to have ongoing huge gifts from family and friends for the long haul. They still use private money in the mix, but it helps when the housing is free and clear. So we've created examples here in my presentation of four houses side by side that we're all set up to serve people with disabilities in three in each house. Rule of thumb when you create new housing from scratch is have as many bathrooms as you have bedrooms. It sounds silly, you can save a lot on support staffing costs, if people have their own private space rather than that's always shared. And of course, foster care. It's almost always shared space, both in the bedrooms and and, and bathrooms. But if you create housing intentionally, with that little rule of thumb, you can sometimes avoid some support costs

Steve: 36:43

more for the extra plumbing at the outset. In the long run, it's going to be less expensive. And for the staffing support.

Unknown: 36:50

That's our experience. So we've created all three or 400 units of housing over a few years and all around Michigan, on how to put together the HUD and other Minnesota Michigan State Housing Development Authority money to create affordable rental units for people with disabilities. So there's examples here we've got all kinds of examples where nonprofits are in the picture. that a lot of times if the State Housing Authority is giving you a grant to put up brick and mortar, they'll want to make sure that that project is not commingled or intermixed with other projects that could go bad. So they like to have a new little nonprofit for each project that they help fund. And so we created probably 30 little nonprofits that would hold brick and mortar and develop rental housing under the rules of those grants that we got. Another source of the grants is the Federal Home Loan Bank that gives grants for the development of affordable rental housing,

Steve: 37:50

something similar can be developed in other states, they might have their own Misha, but it might be the Wyoming version of it. That's right.

Unknown: 37:57

So Illinois has to get its own Housing Development Authority, and most states do so. And it's all really comes from the federal government passed down through HUD grants. There's a lot of fancy name programs for how they do disability related housing development. The ones that you see most often are just HUD grants, HUD 811, programs 811. It's just the section of the law that created this funding stream. And everybody knows them as HUD 811 programs. There's some creative housing, that's done by shelter plus support, they call it shelter Plus, they recognize that there's a need for development of rental housing that's affordable for people that are on SSI, or just above the SSI level, which isn't very much deliver, you need subsidized rents and housing. And so the HUD piece that you can weave in there, if you can speak HUD and apply for HUD grants, really makes it affordable because then you only pay one third of your SSI. SSI this year is something like 783 a month, you only pay one third of that is your rent for room and utilities. If you live in a HUD packed place like that, there's other rental schemes and different kinds of programs. But they're all exciting in terms of being able to make it affordable to live in a decent place. Then the private money can be used to augment Medicaid, if possible, to create the kind of support staffing structure that you really want. There's examples of how we've put together condo projects and, you know, group rental projects in order to make it affordable using our government backed and gifted money if you're a nonprofit. That's tax deductible by the donor. I know that's a lot to throw it people in terms of how to put it together. But I would just say Don't get too excited about the brick and mortar location. First, figure out what you really need and start working the person centered planning process through the mental health system. Sometimes they call it person centered planning, sometimes they call it self determination or individual service budgets or CLS Community Living supports, figure out what's going to be available for the staffing support that you need. And then get excited about how to either create a new place that might even be more family controlled, like through a trust, or have a connection to a nonprofit that is developing a bunch of housing for people with disabilities and how can you get involved with them? Or I guess the last alternative is, how can you maybe be at the forefront of creating a new nonprofit organization that can do the application for some of these grants and gifts. And if you leaning toward creating a new nonprofit, in other words, you like the idea of having family control and being at the center of this really consumer driven by what you need. But you don't want to necessarily just jump on to another nonprofit housing development organization, then there's a little bit of legal work to do. And I think there's a real need for attorneys like us and others who can help put together the corporate structures for the nonprofit organization, or help with the special needs trust, if you choose to actually own the property in a special needs trust, or just give you advice about how your government benefits are going to be affected by all this. There is a need for technical assistance. And it's just not there so much for so many families. My big push in so many years and are not very successful yet in this is how can we get localized Clearing House organizations to really track who's doing what you know, who's doing licensed foster care who's doing as a nonprofit, the development of affordable rental housing for people with cognitive impairments, or autism or Down syndrome? What families have gone out and really, really worked hard to create something that's that's family driven to get what they really want in that house that's down the street, would they be willing to share information with other people, we just everybody seems to be starting from scratch. And Steve, you and I have talked about this for many years. We're not very far on creating that kind of clearing house, but we need it. And before I retire, we're going to get it somehow. I'll help. Yes. So it's it's a big topic, it's exciting topic. There's a lot of good success stories, I would say as a cautionary measure at the end here that it's not like you create this housing and you wind it up like a clock. And it just takes until it's done. And they are all, you don't need it anymore. You do have to tweak these housing arrangements over time, you get a mix of two or three people that are great, and then the mix changes, and it's not great. And you got to figure out how to enforce rules and how to do blended management. One of the key things for this concept of supportive housing is, or key organizations is this thing called the Corporation for Supportive Housing. It's a national effort to do supportive living and regular houses that are affordable. And they have the concept that I think is very simple, but very true. Usually, the things that are true are the simplest, you have to have blended management of the landlord function in the support service function. If somebody is decompensating, and not able to fill the rules, or follow the rules to live there in a safe way, then you don't just kick them out because and that's what foster carers used to do is kick people out, they couldn't fit the rules, you accommodate them, you do blended management, you figure out what will help them fulfill their obligation to protect the rights of quiet enjoyment of the other people that are next door. And so you really have to go with the flow and bend over time as to how you create this. And there needs to be somebody that a family especially can rely on to make that work over time. You know, there is a misnomer out there that people think well, the higher need you are, the more disabled you are, the more you need to be in foster care. And that's not really true. There's some people who have very high needs who don't do well in a six bed group home and will never do well in a six bedroom home because of their behaviors. And so you may look at somebody that's got high behavioral needs and needs almost one on one staffing all the time, but they can do a much better In a smaller setting, or a one person setting, sometimes now there's a challenge for how to really meet somebody's high needs and one person home money wise. But there's ways of blending that together to make it work better than, than a than a six pack group. So don't presume that high need people have to be in foster care. And that's only the high functioning people, they can go into supportive living in unlicensed setting absolutely

Steve: 45:28

appropriately supported, I like that term, because it can be very high level of support or a low level of support or something in the middle. But for the individual, the appropriate level of support, can in many, many cases allow them to live far more independently than in a group home. But for some folks, a group home might be the best solution. Dan, I think you have there's anything else you want to add in here. I do have one more question. Somebody's hearing this and an area where there's not a lot of support, and they they may be live in a rural environment. And they want to take a look at some kind of creative housing for their son or daughter. What is the best way for them to get started in in terms of attorneys, it's like doctors, you know, you don't want to go for a heart problem to a podiatrist. attorneys do specialize. If they're in Grand Rapids, they want to talk to you. But let's say they're in a state.

Sarah: 46:23

Now, it is hard when you're sitting up in the center of the Upper Peninsula of Michigan with very few people around that have similar needs. And how do you really put this together? You really need to reach out to I would say one of the government backed resources that people often miss is organizations that are funded by the federal government, as in DD councils, developmental disability councils and the like. They're funded, really, by federal legislation at every state, every state has one or the same grant source that funds DD councils also funds things that are called protection and advocacy organizations, usually in the state capitol of the state. But they have satellite offices around many states, where you can call them and say, they're the closest thing to a clearing house that we have, I would say it's not perfect, but they at least can put you in touch with organizations that already are trying to do what you think you need, and help you brainstorm and putting it together. It doesn't mean they're going to put together all the housing themselves, but they give out grants to organizations to do this. We'd love to have a grant in Michigan from the DD Council to do this Clearinghouse function to set up a website where people can look in their state at who's doing what hopefully one of these years don't fund that will keep trying.

Steve: 47:54

Yeah, good thing is that most states have not all of them have an arc area Resource Center. And most of you have something called the CI l for Center for Independent Living but they have different names for them. Like in Kent County here in Michigan, it's

Unknown: 48:09

disability have this

Steve: 48:11

count right deck is the acronym they use for that. And along the Lakeshore, we have disability network Lake Shore, but they are both CIA elves. And, and you if you look up Center for Independent Living for the state that you live in, you'll probably find that and many of them might be able to give you a very valuable information is how to get started or get in touch with other people that have similar interests that you might not even know they exist in the next town. So there's always going to be a solution. Some will be easier than others, but they're all worthwhile pursuing. Thanks, Steve. Hey, thank you, Dan. Appreciate it. And we'll be visiting again on other issues.

Kerry Johnson: 48:56

Hi, this is Carrie. I am the proprietor of the unlucky chat cafe and co host of navigating life as we know it. today. Steve spoke with attorney Sarah Kirkpatrick about ABLE accounts, how they work and why you might want to have one, Steve's here. So let's start our chat. Steve, what should people keep in mind about ABLE accounts when they consider opening one for their child with a disability? Well, they're

Steve: 49:22

a great tool, especially if you also have a special needs trust. And since there are some costs involved in setting up a trust, they see an ABLE account as a more cost effective way to set money aside for their child with a disability. But as Sarah pointed out, there are many reasons for having both. One thing in particular is worth noting here, especially trusts enable accounts have different restrictions and how the funds are used, for instance, have a special needs trust buys food or pays for the rent and utilities for your child with a disability. Those payments are considered to be income for SSI eligibility In other words, because those expenses are being covered. It's as if they're getting a gift or income from an outside source, that income, that mouth, they paid for the rent and for utilities and for food could reduce their SSI benefit,

Kerry Johnson: 50:12

and then also affect their Medicaid eligibility,

Steve: 50:15

possibly, they're eligible. So that's not a good thing to do. However, and this is gonna sound kind of wonky here, though, you can pay those expenses out of an ABLE account. So you could monthly take distribution from the specialist trust, and put in the ABLE account, and then write checks to pay for those things. And that's okay.

Kerry Johnson: 50:34

Hmm. All right. So as we understand that,

Steve: 50:37

that's why you have both that makes it you have to launder the money, so to speak for eligibility purposes.

Kerry Johnson: 50:43

So you can set up an abl plan sponsored by any state, it doesn't have to be the Michigan plan.

Steve: 50:49

Nope, there's 50 ABLE accounts, you can go to anyone, any state. Now, they are a little different from one state to the next. For instance, in Michigan, when you put money in there, there's limitations to how much you can put in it is tax deductible on your Michigan tax form. That's not always the same case, if you're a resident of some other state that might not be tax deductible to them. Now somebody else from Indiana opens a Michigan ABLE account. They don't get a deduction on their Indiana State tax, only the resident of Michigan that opens account in Michigan gets a deduction.

Kerry Johnson: 51:24

So why would I want to open one in another state,

Steve: 51:28

there are some differences. But in many cases, the differences there might be a benefit available from one from one state that isn't an r1 here in Michigan. But the chances are that that tax deduction is going to outweigh the benefits that might be available other places for a while some of those ABLE accounts in some states offered a debit card to go along with it. So your son or daughter could use that to go buy things that they need, okay, but it wasn't counted against them. Some states didn't offer a debit card, some have different configurations on investment options, etc. Ours is all held through one company as some other places give you a choice of 10 different companies to hold the assets to invest them. So there's some differences. But in the end, the tax deduction is rather significant. You get to save money with that.

Kerry Johnson: 52:16

Okay, well, is there anything else you want to point out to our listeners, before we close the cafe and turn out our light?

Steve: 52:22

Well, there are some really cool resources we're gonna post and one of them is it's a comparison for states. So let's say you heard that while Colorado has got a really great one. Yeah. And the link is I'm not going to read it off, because it's too long to remember. But we will have a posted on Facebook, and on our website, you click out of that, and it gives you three columns, and you just put down the states put on Michigan, Colorado, and Florida, and all of a sudden will populate the little boxes that compare one to the other. Oh, no, it's better than having 50 of them out there one time because that would be kind of lame, right. But you can take you know your pair three at a time to see what they look like. So we heard some other State offers a better plan you could put down and you live in Michigan, you can put down the Michigan plan then put down to up to two other states to see how they compare side by side.

Kerry Johnson: 53:10

Very good. Cool.

Steve: 53:12

But that's about it. I think that everything that was in the talk with Sarah was spot on, it was really good. I just want to encourage all those who are interested in setting up an ABLE account to do some research and comparisons, the state that you live in probably has the best option for you. But you might want to just see what's out there. And that comparison tool works really well.

Unknown: 53:34

Excellent.

Steve: 53:35

Do you want to take us out? Do you want me to do it?

Kerry Johnson: 53:36

I think it's your turn.

Steve: 53:38

It's probably my turn. I we want to thank very much everybody's involved in producing this podcast on a weekly basis. We have Alex Johnson, the youngest Johnson child in our producer, he does a lot of things behind the scenes, and we're very grateful for the work that he does. Holly Johnson, which is our oldest Johnson child, or I should say the one with the most experience and oldest. Yes, she's the most experienced Johnson child. Yeah, she manages and created and manage the website and does a really good job and really proud of what she did. Please check it out. And then we have Daniela Munoz, who is our intern. Yes, it's kind of a snappy thing. But we have an intern. And she manages all post production contact with our people that we interview and comes up with some great suggestions as research for us and a bunch of other things too. And that's about it. Some people, some organizations have a staff of 20 or 30 people. We've got a handful of really good people exactly.

Kerry Johnson: 54:36

To true

Steve: 54:37

fit my lovely wife, who is my co host, sitting across me right now.

Kerry Johnson: 54:41

We also want to thank our listeners. Thank you. Thank you for tuning in and listening to us. I hope you really learned some valuable information here. I think it's exciting. Yeah,

Steve: 54:52

please visit the Facebook. Tell us what you think. Give us an idea of something you want us to cover that maybe we haven't so far,

Kerry Johnson: 54:59

make records. mendation absolutely minor critiques are okay.

Steve: 55:04

You know, doing a podcast is kind of a lonely thing. There's really no interaction with people. So we have to hear from you somehow, please, we need you to respond on Facebook and let us know you're out there.

Kerry Johnson: 55:13

Excellent.

Steve: 55:13

I agree. So 123 Thanks for listening