The Achieving a Better Life Experience (ABLE) Act (PL 113-295), signed into law in December of 2014, allows certain individuals with disabilities the opportunity to save resources in a tax advantaged savings account (an ABLE account) where the beneficiary is the account owner and income earned on the account will not be taxed. Funds from these 529A ABLE accounts can help designated beneficiaries pay for qualified disability expenses.
The account can be used for the purposes of covering disability-related expenses for education, housing, transportation, employment support, health, prevention and wellness, assistive technology and personal support services, certain financial management and administrative expenses as well as other approved expenses. Distributions are tax-free if used for qualified disability expenses.
The ABLE Act allows people with disabilities under the age of 26 to save for their long-term care and disability expenses without risking the loss of needed federal benefits. The resources saved in an ABLE account are not included when determining the individual’s eligibility for federally funded means tested benefits, including Supplemental Security Income (SSI) and Medicaid. SSI monthly benefit payments will be suspended (not terminated) for funds above $100,000 and continue when assets are below $100,000.
The opportunity provided through the ABLE Act to assist in securing more financial stability for individuals with disabilities and their families is profound; however, it is limited to those individuals with an age of onset of disability prior to age 26. Many individuals who could benefit from ABLE accounts miss out since many conditions can and do occur later in life, including multiple sclerosis, Lou Gehrig’s disease or paralysis. Additionally, veterans who become disabled as a result of their service after age 25 are currently ineligible for ABLE accounts.
The ABLE Age Adjustment Act (S. 817/H.R. 1874) would amend Section 529(e) of the Internal Revenue Code to increase the eligibility threshold for ABLE accounts for onset of disability from prior to age 26 to age 46. The National Indian Council on Aging supports the ABLE Age Adjustment Act. Raising the age of eligibility from 26 to 46 would add 6 million more new potential ABLE account holders. The ABLE Age Adjustment Act would allow a total of 14 million eligible individuals to open an account and provide long-term stability and viability for the ABLE program.
The ABLE Act has already improved the lives of thousands of people with disabilities, with approximately 35,000 ABLE accounts open nationwide with $170 million assets as of 2018. The long-term effectiveness, availability, and affordability of ABLE programs for individuals with disabilities will be improved with this age expansion for eligible enrollees. As of October 2019, 42 states and the District of Columbia have active ABLE programs. However, residents of those states who do not have an active ABLE program may elect to set up an ABLE account in another state that allows out-of-state residents to do so. Passage of the ABLE Age Adjustment Act will increase the pool of eligible account holders by 75 percent and allow millions of Americans with disabilities to establish greater financial security.
The United States Congress introduced the ABLE Age Adjustment Act in early 2019 but it received a $2 billion score, which was deemed unworkable and the bill did not advance. The bill has since been reintroduced in the 116th Congress. Contact your senators and representatives and ask them to support people with disabilities by cosponsoring the bipartisan ABLE Age Adjustment Act.