One of the most frustrating things about poverty programs is that they often feel like a trap. They help you get by, but they don’t always give you a way out. Many programs, like SNAP and SSI, have strict asset limits. Save up too much money and you could lose your benefits. It’s awful!
We’ve seen stories like this over and over again in the news lately, and that’s because somewhere between 40,000 to 70,000 people lose their benefits because of asset limits every year.
It’s heartbreaking because there are workarounds that can help you protect your benefits but most people don’t learn about them until it’s too late… but if you don’t know and you make a mistake, you can lose your benefits and even have to repay money to the government.
Why Programs Have Asset Limits
Many vital benefit programs, such as Supplemental Security Income (SSI) and Medicaid, have strict asset limits. These limits are in place to ensure that benefits are directed towards those with the greatest financial need. However, they can also discourage individuals with disabilities from saving and accumulating assets, creating a cycle of dependency.
Some of the benefit programs that have asset limits include:
- Supplemental Nutrition Assistance Program (SNAP)
- Supplemental Security Income (SSI)
- Temporary Assistance for Needy Families (TANF)
- Housing Choice Voucher Program (Section 8)
- Medicaid
- and more!
Although the current asset limit for each program may vary, they are usually ridiculously low. The current SSI resource limit is $2,000 for individuals and $3,000 for couples. This asset limit includes cash, insurance policies, and other things that many people aren’t even aware of. This means that if you have countable assets exceeding these amounts, you may become ineligible for SSI benefits.
While some programs have adjusted their limits over time, many have not kept pace with inflation and the rising costs of living, leaving individuals with disabilities with few options for long-term financial security. For example, NPR recently reported that the SSI limit would be $10,000 today if it had properly kept up with 51 years of inflation.
How to Protect Your Benefits
Today, we’re going to talk about a few workarounds that can help you break free from that cycle. Whether you want to buy a life insurance policy or a home of your own, there are tools that you can use to save money and insure yourself without breaking those asset limits.
ABLE Accounts
There’s a little-known secret weapon that can help you save for the future without affecting your benefits. It’s called an ABLE account.
Achieving a Better Life Experience (ABLE) accounts were created under the ABLE Act of 2014 to address this challenge. These tax-advantaged savings accounts allow individuals with disabilities and their families to save and invest money without jeopardizing their eligibility for critical benefits.
The money you put into an ABLE account doesn’t count against you for programs like SNAP or SSI. It’s protected. According to Business Insider, you can save up to $100,000 in an ABLE Account without it affecting your SSI benefits. That’s amazing!
Benefits of ABLE Accounts
Here are some specific benefits to using an ABLE Account:
- Asset Protection: Up to $100,000 in an ABLE account is exempt from SSI asset limits. This allows individuals to accumulate savings without impacting their eligibility for benefits.
- Tax Advantages: Contributions to ABLE accounts are made with after-tax dollars, but earnings grow tax-free and qualified distributions are tax-free.
- Flexibility: Funds in ABLE accounts can be used for a wide range of qualified disability expenses, including education, housing, transportation, healthcare, assistive technology, and more. You can use it to pay rent, put a down payment on a house, or even buy or repair a car.
- Portability: ABLE accounts can be opened and used in any state, regardless of where you live.
- Control: The account owner retains control of the funds and can make decisions about how they are used.
ABLE Eligibility Requirements
To be eligible for an ABLE account, an individual’s disability must have onset before age 26. However, there is no age limit for opening an account. Even if you’re 56, you can still open an ABLE account as long as your disability began before you turned 26.
But what if your disability started after age 26? Don’t worry, there’s good news! In 2026, the age limit will increase to 46 thanks to the ABLE Age Adjustment Act. This means that millions more people will become eligible for ABLE accounts. So, if you’ve been waiting for this opportunity, mark your calendars for 2026!
You also need to meet the program’s definition of disability. This usually means that you need to be getting SSI or SSDI benefits. If you aren’t getting those benefits yet, you may still be eligible but there are a lot more hoops you need to jump through to prove that you meet the program’s definition of disability. You’ll have to contact an ABLE Account provider to discuss your options.
How to Get an ABLE Account
Now that you know the benefits of ABLE accounts and who is eligible for them, you’re probably wondering how to get started. The good news is, it’s easier than you might think!
Each state has its own ABLE program with specific rules and investment options. You can easily find your state’s program by visiting the ABLE National Resource Center website at AbleNRC.org. They have a helpful webinar that you can watch to learn more about these accounts and they’ll also help you figure out which one is best for you.
You’ll need some basic information to apply, such as:
- Proof of identity (like a driver’s license or passport)
- Proof of disability (like a Social Security award letter or doctor’s letter)
- And you’ll also need your Social Security Number.
Many states allow you to apply for an ABLE account online, which is the quickest and easiest way. However, you may be required to go in and complete a paper application in some cases.
Once your application is approved, you can start contributing to your account. You can also have friends, family and others contribute to your account as well. Any money that goes into your ABLE Account will be protected from counting against the asset limits for programs like SNAP, SSI and Medicaid.
Strategic Insurance Options
It’s not just straight-up saving that can mess up your benefits. Sometimes, just buying certain things like a life insurance policy can also cost you big time.
Karen Williams learned that the hard way. She had watched family members scramble to find the money to pay for funerals before and she didn’t want her kids to go through that. She bought a life insurance policy to cover her funeral expenses. When the Social Security Administration discovered it two years later, they cut off her benefits and demanded that she repay $20,385 dollars in just 30 days. It was an impossible task.
They said that the cash value of the policy was $1,900. That, plus her $200 or so in savings, put her just little over the asset limit. As a result, they stopped her checks and demanded that she pay back everything she had received. It was so stressful that she was hospitalized twice for heart attacks.
This heartbreaking story highlights how even the most responsible choices can backfire when navigating the complexities of poverty programs. Karen’s situation is not unique; countless others have been blindsided by these harsh rules.
That’s because there are very few things that don’t get counted against you as an asset. You’re allowed to have a home and one car. You can put money into trusts or get waivers, but this often requires personalized advice from a lawyer – and most people who need help from these programs can’t afford that.
It appears there’s also an exception for burial insurance but a lot of funeral insurance is sold as life insurance instead, which still counts against the asset test. If you’re going to get insurance coverage for your burial, make sure it’s a burial insurance policy and not life insurance.
Unfortunately, Karen didn’t know that in time and she ended up on a rollercoaster ride that lasted for years. She was able to get by in the short-term with the help of family and friends. Eventually, her lawyers at Community Legal Services were able to score some wins. The Social Security Administration admitted that they hadn’t properly notified Karen of her right to appeal, so they waived the repayment… but then later, the agency ignored it’s own decision and tried to get the money back anyway. Karen’s attorneys had to appeal again and now the order to pay is on hold. Karen’s getting benefits from a different program now, but she’s still stressed about what’s going to happen with that $20,385 bill that they keep trying to collect.
As NPR reported, Karen’s “case shows that SSI’s asset limits and rules are so complex that not even Social Security’s staff can always get things right.” And that’s ridiculous.
Relief Recap
So, just to recap, here are the things you can do to protect yourself against those asset limits:
- Open an ABLE Account if you’re eligible. If you aren’t eligible now, go mark your calendar for January 1, 2026, when the age limits increase.
- Make sure any funeral insurance policies you buy are burial insurance, not life insurance. Check with an insurance agent and a benefits attorney to make sure any policies you buy aren’t going to wreck your benefits.
- If you’re going to receive an inheritance or other large sum of money, meet with a lawyer to discuss setting up a trust before you receive the funds.
Ultimately, you always need to keep that asset limit in mind. I know it’s frustrating and unfair, but staying aware can prevent unexpected payment stops or large repayment demands in the future. It’s better to be proactive now than face those disastrous consequences later.