December of 2014 marked the culmination of almost ten years of effort. In an important milestone for all disabled people in our country and their families, President Obama signed into law a bill called the ABLE Act.
ABLE stands for Achieving a Better Life Experience.
As is true of any bill signed into law, ABLE has to be implemented and put into action. The states, autism speaks.org explains, must each allow for a new type of savings account, one that helps pay for expenses for individuals with developmental disabilities such as autism and Down syndrome.
The idea behind ABLE is to allow individuals with disabilities to save for their future needs while still retaining eligibility for federal assistance programs. The accounts are patterned after 529 Education accounts, and like 529s, income earned on ABLE accounts is not taxable, and withdrawals to pay for qualified disability expenses are also tax-free.
Some of the main features of ABLE include:
- Individuals would be limited to one ABLE account apiece, worth up to approximately $100,000.
- Contributions to the account may be made by any person – the account holder, relatives, or friends.
- There would be an annual cap on contribution accounts.
- While an ABLE account would not impact an individual’s eligibility for government benefits, states would recoup certain expenses through Medicaid upon the individual’s death
Who would be eligible for an ABLE account? An individual would need to meet two criteria:
- He/she became disabled before the age of 26
- He/she is receiving federal benefits either under SSI (Supplemental Security Income) or SSDI (Social Security Disability Insurance), OR has a disability certification under IRS rules
As of the end of 2015, the following states have signed ABLE into law and are in various states of developing their programs:
Alabama, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Iowa, Kansas, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oregon, Rhode Island, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia.
Here in Indiana, Bills SB11 and SB184 are pending. A Legislative Services Agency report analyzing the effects ABLE might have in Indiana states:
“Given the median family income disparity between families with no disabled children and families with at least one disabled child, ABLE account participation is expected to be small. With an estimated 67,000 disabled children in the state, a maximum of 1,200 families are expected to request ABLE accounts.”
At Rebecca W. Geyer & Associates, we know that individuals with special needs and their families face unique challenges and a myriad of legal issues. For many of our clients with a special needs child, a special needs trust is a way to provide specific directives about the care of a loved one while protecting his or her inheritance and allowing him or her to receive important governmental benefits.
If Indiana allows for the establishment of ABLE accounts, it would be of enormous benefit to the disabled and their families.