It's hard to think about building assets for the future when you get public benefits and don't have much income. Also, programs like Supplemental Security Income (SSI) and Temporary Assistance for Needy Families (TANF) have resource limits that make it hard to save money.

However, there are ways of building your assets, even if you are on public benefits and have low income.

Building your assets means saving money or making investments by putting money in the bank, buying stocks, putting money into a retirement account, or buying a home. It’s important to build your assets, because assets help you:

• Become financially secure and more independent
• Deal with unexpected expenses that may come up, and
• Achieve your goals, like paying for school, going on vacation, buying a computer, starting a business, or owning a home.

Financial Literacy

"Financial literacy" means having a general understanding of how to manage your money. Over time, financial literacy can help you do big things, like pay for college, buy a house, or have money during old age. It can also help you stay away from scams and be ready for unexpected expenses and difficult life events.

Financial literacy is especially important for people with disabilities, because they often:

• Spend more on everyday activities
• Have high medical costs, and
• Get public benefits that have rules and restrictions about money and assets.

If you have a disability that began before you turned 26 and meets the Social Security Administration's disability standards, you can open an ABLE account. An ABLE account is a financial account that can help you:

• Build assets in an account that has tax advantages. Your money in an ABLE account won’t be taxed, so your wealth will grow faster. Plus, If you work and save earned income in your ABLE account, you may qualify for the federal Saver’s Credit.
  • IL ABLE is the Illinois ABLE account program.
  • Important: If you are an Illinois taxpayer and you put money in an IL ABLE account, you may be able to deduct that amount from your state income taxes. If you put money in an ABLE account set up in another state, you cannot deduct that amount from Illinois income taxes.
• Use your savings on many types of expenses. There are rules about spending the money in your ABLE account, but there’s also a lot of flexibility.
• Save up money without losing benefits. Many benefits programs have resource limits, but:
  • You can have up to $100,000 in your ABLE account and keep getting Supplemental Security Income (SSI) benefits, as long as you meet all other SSI rules. If you go over $100,000, SSI benefits will stop, but they will start up again if your ABLE account drops back below $100,000, and you won't have to reapply.
  • No matter how much you have in your ABLE account, the money in it won’t affect Medicaid, Health Benefits for Workers with Disabilities (HBWD), Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and most other programs with resource limits.

The bottom line: An ABLE account means that you can save up money without losing your benefits. It also lets family and friends give you money without affecting your benefits.

Note: After you die, in some cases the money in your ABLE account might be used to pay back the Medicaid program for certain types of services. Check with a benefits expert about your specific circumstances, and look into third-party Special Needs Trusts if this is an issue for your family.

Opening an ABLE Account

There are a few main rules for opening an ABLE account:

• You can only open an account through a state-designated program or institution.
  • IL ABLE is the Illinois ABLE account program.
  • You can choose to open an account in another state’s ABLE program.
• You can only open one ABLE account. (You cannot open accounts in more than one state.)
• You must have a disability that qualifies for an ABLE account and that began before you turned 26.
  • You can be more than 26 years old when you open your account – all that matters is when your disability began.

You can only have an account if you have a disability. However, another person, such as a parent or guardian, can help manage the account.

Comparing State ABLE Programs

Different states offer different ABLE account programs. IL ABLE is the Illinois ABLE account program. You are allowed to open your account in another state's program, so you should compare different state ABLE account programs to see which state’s program is best for you.

When you compare ABLE programs, think about these questions:

• Does the program offer any extra benefits for people living in your state? If you are an Illinois taxpayer and you put money in an IL ABLE account, you may be able to deduct that amount from your state income taxes. If you put money in an ABLE account set up in another state, you cannot deduct that amount from Illinois income taxes.
• How easy is it to put money in the account and take money out for qualifying expenses? For example, does it come with a debit card?
• How good is customer support? Try calling the program to see whether it seems helpful.
• What investments does it offer? Each state program offers different investment options. Choose a program that offers investments matching your needs.
• What fees does the program charge? There may be fees for opening the account and for keeping money in it.

Note: You can switch your ABLE account from one state program to another. You do not have to stick with the state program you choose.

Compare the ABLE account options in different states.

Rules on Depositing Money in an ABLE Account

There are two limits on how much can be put in an ABLE account in a calendar year:

• Up to $17,000 from any source (including your family and friends, your benefits, and other unearned income)
• Another $13,590 from your own earned income (if you have a job), as long as you are not already putting money into a retirement account through your employer. The $13,590 must be from your own earnings – it cannot be contributions from others or money you get from benefits or other unearned income.

Note: This means that if you earn $13,590 or more, you could have a total of up to $30,590 go into your ABLE account in a year. If you earn less than $13,590, the amount you could contribute would be lower.

Important: IL ABLE will automatically stop accepting deposits for the rest of the year once $17,000 has been deposited in the account (unless you have earned income and submit paperwork to deposit more than that amount). Not every state does this automatically, so if you have your ABLE account in a different state, you may need to keep good records, to make sure that too much money isn’t put into your account, even if it is other people making the deposits.

State ABLE programs also have limits on the total amount in your account — typically $200,000 to $500,000, depending on the state. For example, a state program might say that if you have $400,000 in your ABLE account, you cannot deposit any more money. For IL ABLE, the contribution limit is $450,000.

Rules on Spending Money in an ABLE Account

The money in an ABLE account has to be used for certain qualifying expenses, like:

• Daily living expenses
• Education
• Housing
• Transportation
• Help getting and keeping work
• Health care
• Assistive technology
• Legal fees
• Financial management fees, and
• Other approved expenses.

Many expenses qualify. For example, your rent, electric bill, and furniture are housing expenses. Gasoline and car repairs are transportation expenses. Health insurance premiums and copayments count as health care. Lunch at a restaurant, toothpaste, and toilet paper are daily living expenses.

Keep receipts whenever you use your ABLE account to pay for a qualifying expense. If you are audited by the IRS, you’ll need to show them how you’ve used your money. You can put all of the receipts into a binder or scan them and save them on your computer.

How Spending Works

An ABLE program may offer a debit card that is linked to the account. If so, you can use the debit card whenever you pay for a qualifying expense. For things like rent, you may need to write checks or withdraw cash from the account instead. You don't need authorization to spend your money: it's your job to make sure your expense qualifies and to keep records of how you use your ABLE account.

If you withdraw cash from an ABLE account, spend it on your qualifying expense. Don’t just hold onto the money or put it in a normal bank account – if you don’t spend the money, it could be counted as a resource for benefits programs. For example, if you take $3,500 out of an ABLE account and put it into a regular checking account instead of spending it, you will go over the resource limit for SSI.

As long as the money stays in the ABLE account, it won’t affect your benefits, so leave your money there until you need to spend it.

Learn more about ABLE accounts.

If you save money in an Individual Development Account (IDA), the IDA program’s sponsor or financial institution will match the money you save. The match may be anywhere from one to four times the amount you deposit. For example, if your IDA program has a 2:1 match and you deposit $50 into your account, the program will add an additional $100 towards your savings goal, so that your total savings for that month will be $150!

Note: There aren't as many IDA programs as there used to be. Some are still active, but it can take a bit of effort to find one that is accepting applications.

To open an IDA:

• For most IDA programs, your annual income must be 200% of the Federal Poverty Guidelines (FPG) or less ($29,160 per year for individuals). Some programs have higher limits, and you may qualify if your income is 65-85% of the median income in your area.
• You must have earned income from a job or your own business
• You have to take financial literacy classes about things like money, debt reduction, developing a savings plan, credit, and investing; and
• Depending on the program, you may also need to be a U.S. citizen or permanent resident.

You also have to use the IDA to save money for an approved goal. IDA programs usually allow one of the following goals:

• Buying a first home
• Paying for education or training costs, or
• Funding a small business.

Most IDA programs only let you save a limited amount of money in your account, usually $4,000 to $6,000. This includes the money you deposit plus the matching funds. Once you reach the limit, you won’t be allowed to deposit any more money into the account. IDA programs also limit how long you can save (usually three years).

Finding and Applying for an IDA

Once you’ve decided to do an IDA, you must take several steps to enroll in an IDA program:

1. Decide how much money you plan to save and what you are going to do with it. You could use the money for something that will help you with your education, with your small business, or with buying a home.
2. Find an IDA program in your area: Prosperity Now provides a map of financial programs by state, including IDAs.
3. Find out as much as you can about the IDA program you are considering.
   • How is the program funded? Is it federally funded?
     • If the IDA program is federally funded, money deposited and matched in that account will not be counted by SSI or Medicaid. That means it will not impact your benefits.
     • If you enroll in an IDA that is not funded by the federal government (for example, an IDA funded by a nonprofit or private company), the money in your IDA may cause you to lose your SSI and Medicaid benefits.
   • Does the program fund your goal?
     • Federally funded programs only let you save for small businesses, higher education, and the purchase of a first home.
     • Some privately funded IDAs may let you save for other goals, like buying a new computer or car.
4. Go to an orientation meeting to learn more about an IDA program that interests you.
5. If you decide to enroll, give the required personal and financial information to make sure you qualify for the program.

After you have been accepted into an IDA program, you will be given an IDA caseworker who will help you with your account. You’ll open a savings account with a bank or credit union that is tied to your IDA program. Depending on the program, you may need to deposit a certain amount of money into your account each month.

Usually, if you get Supplemental Security Income (SSI) benefits and have income from a job or from another benefits program, like Social Security Disability Insurance (SSDI), your SSI benefits amount will go down. Also, if you save up too much money in a bank account or build your assets in any other way, you could lose your SSI benefits if you go over SSI's resource limit ($2,000 if you’re single, $3,000 for couples).

Social Security’s Plan to Achieve Self-Support (PASS) program lets people who get SSI earn more money and save that money in a special type of account. There are two main benefits:

• You can save up resources without losing your SSI benefits.
• The income you put into your PASS won’t be counted as income by SSI, so it won't make your benefits amount go down.

The money that you save has to be used for a work-related goal you choose, such as:

• The cost of school or training
• Starting a business, or
• Paying for equipment, support services, and other expenses related to your work goal.

Note: If you already go to college or have a job, you can set up a PASS to help pay for your current work, school, or health expenses.

Applying for a PASS

To set up a PASS, you must:

• Get SSI benefits or become eligible for SSI benefits as a result of an approved PASS application.
• Have a source of income other than SSI (for example, SSDI benefits or wages from a job) or have resources over $2,000 that you can use to fund your PASS.
• Choose a work goal that will help you earn enough money to lower your SSI benefits or get off SSDI benefits altogether.
• Write a plan that shows how saving a certain amount of money will let you reach your work goal. A Social Security PASS specialist can help you write your plan.
• Be under age 65. If you are 65 or older, you may be able to set up a PASS if you were getting SSI benefits based on disability or blindness in the month before your 65^th birthday.

On the PASS application form, you must describe your goals and how you plan to achieve them. This description should be detailed enough to convince Social Security that:

• You have a clear plan
• The plan is realistic, and
• If you complete the plan, your need for SSI benefits will go down or you won't need SSDI at all.

If you do not yet have a clear goal or way to achieve it, try working on one with an organization like the Division of Rehabilitation Services (DRS), Bureau of Blind Services (BBS), or an Employment Network (EN) through the Ticket to Work program.

Using a PASS

After Social Security approves your plan, they'll send you instructions about how to keep good records and make sure your PASS funds and expenses are separate from your other money. Follow these rules carefully.

If a medical situation or some other issue comes up that impacts your ability to continue your PASS, talk to your PASS specialist about your options. You may be allowed to put your PASS on hold for up to 12 months without having to re-apply.

Tax credits can help you save money and build assets. A few important credits include:

• The Child Tax Credit (CTC)
• The Credit for the Elderly or Disabled
• Illinois property tax exemptions for people with disabilities, and
• The federal and state Earned Income Tax Credits (EITCs).

To get any of these tax credits, you must file your taxes!

Child Tax Credit (CTC)

The Child Tax Credit (CTC) gives parents with children under age 17 up to a $2,000 tax credit for each child. Eligible families must be working and earning at least $2,500 a year.

Note: If you get Supplemental Security Income (SSI) benefits and get money from a CTC, you should spend it within 12 months. After 12 months, Social Security will count that money toward SSI's resource limit.

Credit for the Elderly or Disabled

If you or your spouse is a U.S. citizen who got taxable disability income and was permanently and totally disabled during this tax year, you may be eligible for the Credit for the Elderly or the Disabled.

Illinois Property Tax Exemptions

Illinois offers a variety of Homestead Exemptions to help with the cost of property taxes. The Homestead Exemption for Persons with Disabilities takes $2,000 off the assessed value of a property that is owned and occupied by a person with a disability. Homestead Exemptions for veterans with disabilities include up to $100,000 off the assessed value when federal funds have paid to buy or build specially adapted housing, or $2,500-$5,000 off the assessed value for a qualified veteran with a disability. Learn more about the available Homestead Exemptions.

Earned Income Tax Credits (EITCs)

If you have low income, Earned Income Tax Credits (EITCs) may help lower your federal and state income taxes. Even if you don’t earn enough money to owe federal and state income taxes, you may be able to get the federal and state EITCs. Many people who qualify for EITCs don’t get them, because they don’t know they could or they don't file their taxes.

To qualify, you must have income from employment, self-employment, or employer-paid disability benefits that is below certain limits and you must file your federal and state taxes.

The amount you get from your EITCs depends on your Adjusted Gross Income (AGI), whether you are married, and the number of children you have. For 2023 (filing taxes by April 2024), the federal EITC ranges from $2 to $7,430.

The Illinois EITC is 18% of the Federal EITC, or $0 to $0. For example, if your federal EITC is $4,000, your Illinois EITC is $720.

Qualifying Children

A child must meet some requirements to be considered a “qualifying child” for an EITC:

• Relationship: The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these (for example, your grandchild, niece, or nephew).
• Residence: The child must live at the same residence as you for more than half the year and have a valid Social Security number.
• Age: At the end of the tax year, the child must be 18 or younger. Or, if going to school full-time, the child must be 23 or younger. The only exception is if your child is permanently and totally disabled, in which case there is no age requirement.

A qualifying child can only be listed on one tax return for an EITC.

How to Get an EITC

To claim a federal EITC, you must file a federal tax return, IRS Form 1040. If you have a qualifying child, be sure to attach a Schedule EIC.

To calculate the value of your EITC, you can use the Earned Income Credit Worksheet in your 1040 instruction booklet. Or you can ask the IRS to calculate it for you by noting an “EIC” on the Earned Income Credit line on your tax return.

To see whether you qualify for an EITC and how much you might get, use the IRS EITC Assistant.

To claim a state EITC, you must qualify for the federal EITC on your federal tax return and you must file a state tax return. Learn more about the Illinois Earned Income Tax Credit.

A trust is a legal arrangement in which a person or organization manages assets for someone else. The trust's assets can then be used to make payments for that person's expenses. The person whose expenses are paid for by a trust is called the “beneficiary” and the person or organization who is managing the assets is the “trustee.” Many kinds of assets can be put into a trust, such as cash, stocks, bonds, and real estate.

Some kinds of trusts, called Special Needs Trusts, can be set up to hold assets for a person with a disability. The assets in a Special Needs Trust do not affect the person's eligibility for programs like Supplemental Security Income (SSI), Medicaid, and, in many cases, Section 8. That means that if you are the beneficiary of a Special Needs Trust, your trust can have more assets in it than the resource limits for benefits programs usually allow. This can let you be more secure financially without losing your benefits. For more details, see Social Security's information about Special Needs Trusts and SSI eligibility.

The trust must be set up correctly. If your Special Needs Trust is not set up correctly, the assets in your trust might be counted toward public benefits resource limits and you could lose your public benefits. And after you die, the type of Special Needs Trust that was set up determines whether or not the assets in the trust have to be used to repay the government for any Medicaid expenses or can be left to other family members.

Special Needs Trust Rules

While public benefits, such as SSI, Medicaid, and HUD housing benefits, offer a basic level of support, a Special Needs Trust can be used to pay for other things. For example, money from the trust could be used to pay for your recreation expenses, telephone bill, education, and vacations. In some cases, using money from a Special Needs Trust to pay for food or housing expenses might affect your benefits. Some Special Needs Trusts say specifically that the money cannot be used to pay for these types of expenses. Others warn the trustee that doing so can cause the beneficiary's benefits to go down, but say that the trustee should make the best choice for the beneficiary based on all the factors.

Additionally, the funds in some types of Special Needs Trusts can be used to benefit only you; no one else can benefit from the trust unless it is what is called a Third Party Trust. And while the trust is set up to help you, payments should not be made directly to you. Payments made directly to you count as income and may affect your benefits.

Only the trustee can handle the money from the trust. When you need to pay a provider for something, the trustee will pay the money from the trust directly to the provider. In some cases, the trustee may put money into an ABLE account to give you direct access to cash and increase your sense of independence, but the trustee must make sure that the total amount put into the ABLE account does not go over the annual contribution limit.

In Illinois, there are three types of Special Needs Trusts:

• Self-Settled Trusts
• Pooled Trusts, and
• Third Party Trusts.

Each type of trust has its advantages and disadvantages, and the right type for you depends on your specific circumstances. These types of trusts are explained below.

Self-Settled Trusts

Self-Settled Trusts are used if you have accumulated assets, inherited assets, or gotten assets from a court settlement. In these situations, you actually own the money.

A Self-Settled Trust (sometimes called a "d4A Trust") is set up for you by your parent, grandparent, or legal guardian, or by a court. To qualify, you must be under 65 years old and must have a disability that meets Social Security's standards. If your disability doesn't meet these standards, you cannot have this type of trust. The trustee of your trust can be anyone except you.

After you die, any money left in the Self-Settled Trust will be used to pay back the state for the total amount of money it spent on Medicaid benefits for you. If money is still left over after the state has been paid, the trustee will give it to whomever is listed to get the money after you die.

Pooled Special Needs Trusts

A Pooled Trust (sometimes called a "d4C Trust") can be set up by you, your parent, your grandparent, or your legal guardian, or by a court. This type of trust uses the assets from different people and puts them into a large investment fund. Although the funds are pooled (used together), you still have your own separate account. To have a Pooled Trust, you must have a disability that meets Social Security's standards and be under age 65 under the current rules in Illinois.

A Pooled Trust must be set up through a nonprofit organization. The nonprofit organization will administer the Pooled Special Needs Trust, take care of all the tax preparation, make investment decisions, and act as the trustee. Depending on how it is set up, after you die any money left in the trust may be used to pay back the state for the amount of money it spent on Medicaid for you.

Third Party Trusts

A Third Party Trust can be set up by anyone other than you, including your parent, your sibling, or your grandparent, or even by a friend, using their own money, including money coming as an inheritance directly from the person to the trust. As long as the trust is set up correctly (with money from other sources and not your own money), a Third Party Trust does not have to repay the government for any Medicaid expenses.

Parents usually set up and supply the money for Third Party Special Needs Trusts, often through their wills or revocable living trusts, and sometimes by purchasing life insurance payable to the trust. These types of trusts are often set up for a child with a disability, but they can also benefit a child or children (or other person or other people) without a disability. A parent can set up a trust for a child of any age, from a baby up to a senior. For example, a mother who is 90 years old could set up a trust for her 65-year-old daughter.

Other family members, such as grandparents, aunts, and uncles, can also put money into this type of trust. The only person who cannot place money into this type of trust is you, the person who will be the beneficiary of the trust.

Some parents place their property in a "living" trust and leave instructions that a separate trust will be created for their child upon their death. This type of trust is often effective immediately. Anyone can give money to the trust by writing a check, writing a will naming the trust as the beneficiary, or naming the trust as a beneficiary of assets.

If you get SSI, any money from a Third Party Special Needs Trust that is used for housing or food expenses could affect your benefits. Housing and food are considered "basic needs" under Social Security laws. If you are getting free housing or food from someone else, including a family member or a trust, your SSI benefits can be reduced or, in some rare cases, stopped.

Note: Money from an ABLE account that is used for housing or food will not reduce SSI benefits. An ABLE account can be used in combination with a Special Needs Trust. Learn more about ABLE accounts.

When creating a Third Party Special Needs Trust, whoever sets up the trust must decide who will get any assets that are left in the trust after you die.