The Stephen Beck, Jr., Achieving a Better Life Experience Act (ABLE) Act, signed into law in December, created new opportunities to help families plan for their loved ones with disabilities.
The new law, commonly referred to as the ABLE Act, allows the creation of tax-advantaged savings accounts for individuals with disabilities and their families. Income earned by the accounts would not be taxed. The accounts operate like the 529 college savings accounts, according to The Arc, a national community-based organization that advocates for and serves people with intellectual and developmental disabilities and their families.
The legislation began with several parents from the Down Syndrome Association of Northern Virginia. They identified a need to provide a way for individuals and their families to save for the future. The parents advocated for the ABLE Act, which gained political support in 2014.
Senator Richard Burr (R-NC) introduced the bill in 2011 along with bi-partisan support from Senator Bob Casey (D-PA), Congressman Ander Crenshaw (R-FL) and Congresswoman Cathy McMorris Rodgers (R-WA) to assist parents of disabled children, who often face difficulties preparing for the long-term expenses for their child, by expanding the use of 529 education savings accounts to help cover disability expenses as the individual ages.
"Families of individuals with disabilities often face overwhelming financial burdens associated with the expensive costs of healthcare, education, housing and transportation," Burr said in a statement about the ABLE Act. "Currently, families can save for their children's education through tax-favored 529 education savings accounts, but parents of disabled children do not have access to the same federal and state tax benefits to save for their child's upcoming long-term expenses. By allowing families to use 529 education accounts for disability-related expenses, this bill will make it easier for parents of disabled individuals to invest in their child's future, thereby opening the door to a world of opportunities."
The National Down Syndrome Society, Autism Speaks, The Arc, Collaborations to Promote Self Determination, the National Disability Institute and the National Fragile X Foundation supported the passage of the ABLE Act, which passed in 2014 and was signed into law in December 2014. According to The Arc, the accounts create more individual choice and control over spending on qualified disability expenses while protecting eligibility for Medicaid, Supplemental Security Income, and other important federal benefits for people with disabilities.
The ABLE Act recognizes that living with a disability comes with expenses such as accessible housing, transportation, personal assistance services, assistive technology and health care not covered by insurance, Medicaid or Medicare, and allows for families to plan for those expenses.
Individuals with a significant disability that developed before the age of 26 are eligible for an ABLE Account. If you or your family member meets that requirement and already receives benefits under the Supplemental Security Income or Social Security Disability Insurance, you are automatically eligible to establish an ABLE Account. If you do not receive these benefits, but meet the age limit requirement, you will be eligible to open an ABLE account if you meet the Supplemental Security Income criteria regarding significant functional limitations.
In 2015, the U.S. Treasury Department will write the regulations that will explain the standard of proof and documentation required to open an ABLE Account. The total annual contribution that will be allowed is $14,000. Each state will set the total limits. Some have already set limits of more than $300,000. Each state is responsible for establishing and operating an ABLE program. A state may also contract with another state.
Money saved in the ABLE Accounts could be used for a "qualified disability expense," which would include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses, according to the National Down Syndrome Society, which has Advocated for People with Down Syndrome since 1979 and pushed hard for passage of the ABLE Act.
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