Achieving a Better Life Experience – ABLE Act Overview

Please note: The following has been cross-posted from the National Down Syndrome Society.

ABLE Act is signedIn Michigan, the ABLE Act was signed into legislation on Oct. 28, 2015.

The Achieving a Better Life Experience (ABLE) Act of 2013 (S 313/HR 647) was introduced in the 113th Congress on February 13, 2013, by a bipartisan, bicameral set of Congressional champions including Senators Robert Casey, Jr., (D-PA) and Richard Burr (R-NC), and Representatives Ander Crenshaw (R-FL), Chris Van Hollen (D-MD), Cathy McMorris Rodgers (R-WA), and Pete Sessions (R-TX). On December 3, 2014, the ABLE Act passed in the US House of Representatives (404-17). Two weeks later, on December 16, the US Senate voted to pass the ABLE Act as a part of the Tax Extenders package. On Friday, December 19, 2014, President Obama signed the Tax Extenders package, making the ABLE Act the law of the land.

The ABLE Act amends Section 529 of the Internal Revenue Service Code of 1986 to create tax-free savings accounts for individuals with disabilities. The bill aims to ease financial strains faced by individuals with disabilities by making tax-free savings accounts available to cover qualified expenses such as education, housing and transportation. The bill supplements, but does not supplant, benefits provided through private insurances, the Medicaid program, the supplemental security income program, the beneficiary’s employment and other sources.

An ABLE account may fund a variety of essential expenses for individuals including medical and dental care, education, community based supports, employment training, assistive technology, housing and transportation. The ABLE Act provides individuals with disabilities the same types of flexible savings tools that all other Americans have through college savings accounts, health savings accounts and individual retirement accounts. The legislation also contains a Medicaid pay-back provision when the beneficiary passes away. It eliminates barriers to work and saving by preventing dollars saved through ABLE accounts from counting against an individual’s eligibility for any federal benefits program.

Following the passage of ABLE at the federal level, many states moved quickly to pass their own ABLE bills authorizing establishment of state ABLE programs. To learn more about implementation of ABLE in the states, visit the NDSS State ABLE webpage.

ABLE Accounts: 10 Things You Must Know

 1. What is an ABLE account?

An ABLE account is a tax-advantaged savings accounts that qualified individuals with disabilities will be able to open as a result of the passage of the ABLE Act of 2014 and subsequent enactment of state ABLE laws. Earnings on ABLE accounts will not be taxed. Contributions to the account may be made by any person (the account beneficiary, family and friends) and may or may not be tax deductible depending on the specifics of the state ABLE law.

2. Why the need for ABLE accounts?

Millions of individuals with disabilities and their families depend on a wide variety of public benefits for income, health care and food and housing assistance. Eligibility for these public benefits (SSI, SNAP, Medicaid) requires meeting a means or resource test that limits eligibility to individuals who report no more than $2,000 in cash savings, retirement funds and other items of significant value. To remain eligible for these public benefits, an individual must remain poor. For the first time in public policy, the ABLE Act recognizes the extra and significant costs of living with a disability. These include costs related to raising a child with significant disabilities or a working age adult with disabilities, for accessible housing and transportation, personal assistance services, assistive technology and health care not covered by insurance, Medicaid or Medicare. Under ABLE, eligible individuals and families will be allowed to establish ABLE savings accounts that will not affect their eligibility for SSI, Medicaid and other public benefits. The legislation explains that an ABLE account will, with private savings, “secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, Medicaid, SSI, the beneficiary’s employment and other sources.”

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