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ABLE Act – Enhancing the Financial Stability of America’s Disabled

ABLE ActIn December 2014, the U.S. House of Representatives voted to approve a bill that would ensure a new way for people with disabilities to save money without risking the federal benefits they are already receiving. The ABLE (Achieve a Better Life Experience) Act will radically change the current scenario. It is hailed as the “broadest legislation” with regard to people with disabilities since the passage of the ADA (Americans with Disabilities Act) around 25 years back.

At present, people with disabilities qualify for disability insurance only if they have no more than $2000 in assets. Under ABLE, they can establish special accounts at any financial institution of their choice and save up to $14, 000 annually under current gift-tax limitations. Here are some highlights of the bill.

  • To remain eligible for Social Security and other government programs, the upper savings limit is $100, 000.
  • Medicaid coverage can be retained irrespective of their ABLE account balance.
  • The interest accrued on savings in the accounts would remain tax free.
  • The funds deposited in the accounts can be used for expenses related to healthcare, transportation, and housing among other expenses — things that are not provided today through existing Medicaid supports.

The disability community and social security disability lawyers widely support this bill, though concerns exist regarding the bill’s provision that limits eligibility to individuals with conditions occurring before the age of 26.

Recent news reported that Delaware legislation was planning to create a tax exempt savings account under the ABLE Act. This savings account is a tweaked version of the 529 Education Savings Plan available to families across the nation. To qualify, individuals with impairments will have to provide medical documents to prove that their condition developed before the age of 26. SS benefits would cease once the account touches more than $100, 000 though Medicaid benefits would continue. Consistent with education savings plans available to other residents, each account can hold up to $ 350, 000. The annual contributions from family, friends and other sources stand at $14, 000 and will be tied to inflation.

About Rajeev Rajagopal

Rajeev Rajagopal

Manages the day-to-day operations of MOS from NY. With an interest in information technology, I have guided MOS to extensive use of digital technology and the internet that benefits MOS as well as MOS clients.