As a new kind of account allowing people with disabilities to save money becomes more available, federal officials say there are big implications for Medicaid.

Money saved in so-called ABLE accounts generally does not count when determining eligibility for Social Security, Medicaid and other government programs.

However, the new financial offering which was established under a 2014 federal law is nuanced and now the Centers for Medicare and Medicaid Services is clarifying how ABLE accounts will impact Medicaid eligibility.

“State Medicaid agencies must disregard all funds in an ABLE account in determining the resource eligibility of Medicaid applicants and beneficiaries who are subject to a resource test,” writes Brian Neale, director of the Center for Medicaid & CHIP Services in guidance to state Medicaid officials this month.

Money deposited in an ABLE account by a third party should not be seen by Medicaid as income or considered part of the resources of the account holder, Neale said.

However, earnings from a job, for example, that are deposited by a person with a disability in their ABLE account do count as income for that month, he said, but do not go against an individual’s allotted resources going forward.

On the flip side, however, Neale notes that Medicaid programs are in many cases required by law to recover funds remaining in ABLE accounts if a beneficiary dies. States can seek up to the value of any medical assistance that the individual received from Medicaid while the account was in place.

In order to qualify for an ABLE account, individuals must have a disability that onset by age 26.

Currently, 28 states have ABLE account offerings. Individuals with disabilities can access accounts through any state program no matter where they reside. Accounts are limited to $14,000 in annual deposits. Money in the accounts can be used to pay for qualified disability expenses like education, housing or transportation.

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