ABLE Act Passed by Senate

governmentThe Achieving a Better Life Experience (ABLE) Act was passed in the United States Senate in a 76-16 vote. The bill has already passed the House of Representatives, and will now to go President Obama for his signature.

The bill will allow families to fund accounts, similar to college 529 plans, to cover living expenses for a loved one with a disability. This legislation is important, because under current laws, individuals with disabilities can lose access to SSI (Supplemental Security Income), Medicaid, and other benefits if their savings exceeds $2,000. These limits have led many individuals with disabilities to choose against working, even when they were able to hold a job, for fear of exceeding their income and savings limits and losing access to needed benefits. This has also caused many individuals with disabilities to lose access to needed benefits when a well-meaning family member left money to them in their will. Under this legislation, the money could go into an ABLE account without affecting the beneficiary’s access to benefits.

To be eligible for an ABLE account, an individual must have received a diagnosis that meets the standards for SSI prior to the age of 26. The account can be established by any contributor, including parents, family members, friends, or the individual themselves. Tax rules will be similar to those governing college 529 plans, including annual contribution limits, and may vary from state to state. Contributions will be made from the contributor’s after-tax income, so earnings and distributions will not count as taxable income for the beneficiary, and will not affect the beneficiary’s access to SSI benefits. Assets under $100,000 contained within an ABLE account will not be considered in determining the beneficiary’s qualifications for SSI and other federal benefits.

Qualified expenses would include anything related to education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and any other expenses approved by the Secretary of the Treasury under regulations.

The bill was sponsored by Senator Bob Casey (D-PA) and Senator Richard Burr (R-NC), and it has attracted bipartisan support that is quite unusual in Congress these days. Senator Casey said,

“For years, we’ve created incentives in the tax code to save for higher education or to save for retirement. Now at long last for Americans who have a disability, those families will be able to save – whether it’s to pay for health care or education, the basic expenses that these individuals with disabilities have wanted to save for for many years.”

Liz Field, president of Autism Speaks, said,

“We celebrate Senate passage of this historic bill that will provide families with disabilities with what they deserve: a chance to help themselves. As 50,000 kids with autism age into adulthood every year, the passage of ABLE could not be timelier.”