Achieving a Better Life Experience Act (ABLE)

The Achieving a Better Life Experience Act (ABLE) was finally signed into law by the President on December 19, 2014. Tax-free savings accounts can now be built for a population that has historically been forced to live in poverty. Up until now, in order to be eligible for SSI and Medicaid, a person could not have more than $2,000 in cash and property ($3,000 for couples) or make more than $700 monthly (!) in order to be eligible for Medicaid or SSI. This means they can’t save money for things that Medicaid and SSI don’t cover like education, housing, a job coach or transportation. While the rest of society is encouraged to save for emergencies, unforeseen expenses and rainy days, people with disabilities – who have naturally higher expenses and higher medical needs – were forced to scrape pennies and do without due to archaic laws and discriminatory notions held by society in general.

What is the ABLE Act?

Once enacted by the States, this bi-partisan piece of legislation will give people with disabilities and their families freedoms and security never before experienced. It amends the IRS code of 1986 to allow savings accounts to be set up for individuals with disabilities much like the college tuition accounts known as “529 accounts” that have been around since 1996. The Treasury Department is currently writing all of the regulations. There will then be a period of time where public comments on the proposed rules will be allowed. Before the end of 2015, every State is expected to establish and operate an ABLE program.

  

  ü  Allows savings accounts to be set up for individuals with disabilities

  ü  Recipients do not have to count funds as income

  ü  Recipients do not have to pay taxes on funds if they are used for disability-related expenses

How does it work?

In a nutshell, once enacted by a State, an ABLE savings account can be opened up by an individual with a disability or by someone else on their behalf. Up to $14,000 may be deposited yearly untaxed, with that amount to be increased as inflation rises. If an account surpasses $100,000, the owner of the account will no longer be eligible for SSI but would not be in danger of losing Medicaid. When a person dies, Medicaid will be reimbursed first from the account before it is dispersed to the person’s estate.

  ü  Can be opened up by an individual with a disability or by someone else on their behalf

  ü  Up to $14,000 may be deposited yearly

  ü  Up to $100,000 can be accrued without affecting SSI

Who is eligible?

Individuals with a disability wanting to establish an ABLE account must have acquired their disability before turning 26. If an individual is over the age of 26 but their disability onset was prior to turning 26, they will be still be able to establish an ABLE account. Individuals who meet this requirement and receive SSI or SSDI are automatically eligible to establish an account. Individuals who do not receive these services may still be eligible if they meet SSI criteria regarding who is eligible. The Treasury Department will further explain standards of proof in the regulations they are currently completing.

  ü  Onset of disability must have occurred prior to turning 26 years of age

  ü  Must meet SSI eligibility criteria

What can the funds be used for?

While the details are still being finalized, it is anticipated that the funds will be allowed to cover any disability-related expenses, including:

  ü  Education

  ü  Housing

  ü  Transportation

  ü  Employment training and support

  ü  Assistive technology and personal support services

  ü  Health, prevention and wellness

  ü  Financial management and administrative services

  ü  Legal fees

  ü  Funeral and burial expenses

This is a great step forward in the right direction for this community. Let’s hope the regulations are completed sooner rather than later so that individuals and families can begin saving for a better life!

More 411 on the ABLE Act

In May, I posted "ABLE Act - Savings For People With Disabilities" which explains what the ABLE Act is and why it's so important to the disability community. I just came across this other article that also explains what it's about in very real terms. I wanted to share it because I can't stress enough how important it is that this piece of legislation become a reality! Here's the link to "How Medicaid Forces the Disabled to be Poor"

ABLE Act - Savings for People With Disabilities

The Achieving a Better Life Experience (ABLE) Act was introduced in Congress in February 2013 and it has recently been analyzed by the Congressional Budget Office (CBO), a nonpartisan federal agency that that provides budget and economic information to Congress. If and when it is finally passed, it can make a huge positive impact on the lives of people with disabilities.

ABLE Act – What it means

The ABLE Act would amend the IRS revenue code in such a way that would allow savings accounts to be set up for individuals with disabilities much like the college tuition accounts known as “529 accounts” that have been around since 1996. The money accrued in that account is not considered taxable income to the individual and their eligibility for SSI or Medicaid is not at risk, which are often times the only income and medical coverage people with disabilities have. 

A real life example:

Tony’s sister has a beautiful little girl who was born with cerebral palsy. Little Maggie is the light of her mother’s eye but she has a long road ahead of her. Tony sees how much it costs to get the equipment Maggie needs and deserves in order to be included in the rest of the family’s daily life. Maggie’s mom works very hard but can’t possibly cover all the expenses on her own.  Medicaid only covers the very basics and even those things are often a fight to get. Tony decides to help out by setting up an ABLE account for Maggie’s needs. He knows it won’t count as income to Maggie’s household so there’s no risk that the SSI and Medicaid Maggie and her family rely on will be affected. Family members & friends regularly deposit money in Maggie’s account for holidays & birthdays and Maggie’s mom is able to pay for the expenses that Medicaid doesn’t cover.

Key Characteristics

• Anybody (including the individuals with disabilities themselves) can set up an ABLE account and multiple accounts in different states can be set up for one individual
• Qualified expenses include education; housing; transportation; employment support; health, prevention, and wellness; miscellaneous expenses (such as financial management or legal fees); assistive technology and personal support services
• Earning and distributions from the account would not count as taxable income to the owner
• Contributions would be made using cash from the contributor’s after-tax income
• Assets in these account would be disregarded when determining the individual’s eligibility for most federal means-tested benefits such as medical coverage
• The first $100,000 would be disregarded when considering the eligibility for SSI

ABLE Act – Impact on SSI

In order to quality for SSI, an individual cannot have more than $2,000 in assets (for couples it’s $3,000). If their assets exceed this maximum amount, they must spend down the excess before they can qualify. Think about what this means! A person with disabilities cannot have a “rainy day” fund or a savings account for fun vacations like the rest of society. Doesn’t every financial expert say that we should have at least 6-8 months of expenses saved in case of an emergency? I guess people with disabilities don’t have emergencies like people without disabilities! Why would they need to have money saved up? The reality is, people with disabilities have higher medical expenses but are expected to live in poverty before they can qualify for government assistance which covers the very, very basics! And I hope that you, dear reader who doesn’t have a disability, will not become disabled due to an accident or illness because any money you’ve worked so hard to save up until then will have to be handed over until you have almost nothing left.

Another real life example:

Joe has always been a hard worker. He got his first job as a cashier at age 16 and was taught to save by his parents. By the time he turned 26, he managed to save over $15,000 in a savings account. For his 27^th birthday he and his friends decided to go bungee jumping. That decision cost him his legs. After a freak accident, Joe became paralyzed from the waist down. He had to stop working because of his injuries and no longer had medical coverage. He applied for SSI and Medicaid but because he had so much money saved – money he was saving to buy himself a home – he didn’t qualify. Joe had to spend all that money he worked so hard for before he could find any assistance. A man who was independent and always worked for the things he wanted now had almost no money left and had to depend on the government for what little they could do for him.

Support is growing

Thankfully, the list of people and organizations that are behind the ABLE Act is steadily growing. The passage of this Act is crucial to people with disabilities and their loved ones.  

Congressman Crenshaw states it well: 

"No longer would individuals with disabilities have to stand aside and watch others use IRS-sanctioned tools to lay the groundwork for a brighter future. They would be able to as well, and that's an accomplishment we can all be proud of."

To see if your state’s Representatives and Senators support the ABLE Act you can check the following websites:

House of Representatives 113th Congress (2013-201

4)

Senate113th Congress (2013 - 2014)

It’s time for the government and certain populations in our society to expect those with the least to give the most!

Equality for all, ALWAYS!

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