Congress has recently passed a new law that will change the lives of millions of people living with disabilities. Achieving a Better Life Experience, otherwise known as the ABLE Act will allow those living with disabilities to establish tax-exempt savings accounts that will not be counted against them when qualifying for government assistance, such as Medicaid and SSI. In the past, disabled persons were limited to no more than $2000 per month in income in order to qualify for these assistance programs, essentially forcing them to live in poverty or give up their government assistance. By passing the ABLE Act, Congress has recognized the increased financial needs of those living with a disability.
People who already meet the SSI and/or SSDI disability standards will automatically qualify, given that the onset of their disability occurred before the age of 26. The accounts will work much like a 529 or 401k account and will allow for contributions not to exceed their state’s annual gift-tax exemption. Assets in the accounts can also be rolled over, penalty free, into another ABLE account or to a beneficiary’s qualifying family member. Assets left over at death will be used to reimburse the state for Medicaid payments made on behalf of the beneficiary.
The accounts will be available at a minimal cost and may be used to pay for qualified expenses related to the health, education and maintenance of the beneficiary as a result of living with a disability. Each state will be responsible for establishing their own ABLE program guided by the Secretary of the Department of Treasury. The states should begin accepting the applications to establish the accounts by the end of 2015. This is a HUGE step in a much needed direction for those living with a disability.
To learn more about the ABLE Act please visit the National Disability Institute website at http://www.realeconomicimpact.org/News.aspx?id=460