I get SSI. Can I put gambling winnings in an ABLE account?

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Q. I need help with an ABLE account. I have been receiving Supplemental Security Income (SSI) for many years now due to being disabled. In November 2022, I was at a casino with a friend and I won $18,900 on a 50 cent slot machine. I was playing a slot machine at 50 cents a pull. I ended up winning $18,900. I’m happy that I won, but now I am extremely worried about possibly losing my benefits or being penalized for it. Does an ABLE account protect me if I were to put my winnings in it?
— Concerned

A. Congrats on your winnings, but you’re right to have concerns.

Social Security Disability is a federal program that is based on a determination by the Social Security Administration that an individual cannot work due to a medical condition, so it is not affected by the receipt of assets or income.

But other programs, including Medicaid and Supplemental Security Income (SSI) are based on an individual’s assets, so they can be affected by the receipt of unexpected assets, such as an inheritance or windfall from a lottery or gambling, said Christopher Olszak, an attorney with Davison Eastman Muñoz Paone in Toms River.

“While you likely are receiving Medicare benefits as a disabled individual, you do not mention if you are also receiving Medicaid benefits,” he said. “If so, Medicaid has a general requirement that your assets cannot exceed $2,000.”

The State of New Jersey allows a disabled individual to establish an ABLE account, which is a savings account that is designed to allow disabled individuals and their families to save private funds to supplement benefits that the individual relies on from the government, such as Medicaid and SSI.

ABLE stands for “Achieving a Better Life Experience.”

As of Jan. 1, 2022, a disabled individual can contribute up to $16,000 to an ABLE account, but the overall value of the account cannot exceed $100,000, Olszak said.

“A disabled individual can own one ABLE account and the individual must be blind or disabled by a condition that began before the individual’s 26th birthday,” he said. “Funds in the account can only be used to pay for qualified disability expenses, including but not limited to expenses for education, housing, transportation, basic living expenses, health and personal support.”

However, the remaining assets in the ABLE account, if any, must be paid to Medicaid to reimburse the program for any Medicaid benefits received by the account owner during his or her lifetime, Olszak said.

You should speak to an attorney to see how this kind of account may work for you, and you can learn more on the state’s website.

Also, Olszak said, the casino should have reported your winnings to the IRS, so do not forget to check with your tax preparer to determine if you will owe any income taxes to the federal government or to the state.

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This story was originally published on Jan. 3, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.