The ABLE Act and What It Means For Individuals With Disabilities
By: Shawna Lubs
In December 2014, President Obama signed the ABLE Act into law. The ABLE Act, which stands for Achieving Better Life Experience, will allow individuals with disabilities to accrue more than $2,000.00 into a bank account without it causing a disruption in Social Security Benefits.
The act will allow an individual to deposit up to $14,000 per year, and a total of up to $100,000.00 in special accounts. This will not be a countable asset to Social Security, and participants will remain eligible for Medi-Cal. However, if the account accrues more than $100,000.00, the individual’s Social Security payments will be suspended until the ABLE account dips below the $100,000.00 mark again.
The accounts will be governed like 529 accounts. The money will be deposited to the account after taxes, and will be eligible for tax free withdrawals when used for specific eligible purposes including education, health care, transportation, housing and more. In order to be eligible to open an account, an individual must receive a diagnosis of a long-term disability prior to the age of 26.
At this time, the ABLE Act is merely weeks old. The Federal Government is not requiring that states adopt the act, but given the response to the act, it does seem that most states will opt-in. As of this printing, we have not seen any states opt-in yet, due to the fact that each state will have to develop their own regulations and systems for the accounts. It is anticipated that most states will opt-in as soon as early 2015.