What is the ABLE Act?
The ABLE Act allows some people with disabilities to create savings accounts to hold money that may be used on necessary expenses without jeopardizing eligibility for Medicaid, SSI and some other federal programs.
The ABLE Act amends Section 529 of the Internal Revenue Service Code of 1986 to create tax-free savings accounts for individuals with disabilities. The bill aims to ease financial strains faced by individuals with disabilities by making tax-free savings accounts available to cover qualified expenses such as education, housing and transportation. The bill supplements, but does not supplant, benefits provided through private insurances, the Medicaid program, the supplemental security income program, the beneficiary’s employment and other sources.
An ABLE account may fund a variety of essential expenses for individuals including medical and dental care, education, community based supports, employment training, assistive technology, housing and transportation.
The ABLE Act provides individuals with disabilities the same types of flexible savings tools that all other Americans have through college savings accounts, health savings accounts and individual retirement accounts.
The legislation also contains a Medicaid pay-back provision when the beneficiary passes away.
It eliminates barriers to work and saving by preventing dollars saved through ABLE accounts from counting against an individual’s eligibility for any federal benefits program.
Read more at: National Down Syndrome Society (NDSS) ABLE Page
Learn More About ABLE Accounts
The ABLE Act limits eligibility to:
Individuals with significant disabilities whose onset of disability occurred before turning 26 years of age
- You need not be under the age of 26 to be eligible for an ABLE account. You could be over the age of 26, but must have documentation of disability that indicates you became disabled before the age of 26.
If you meet this criteria and are also receiving benefits already under SSI and/or SSDI, you are automatically eligible to establish an ABLE account.
If you are not a recipient of SSI and/or SSDI but still meet the disability onset age requirement, you are still eligible to open an ABLE account upon obtaining a disability certification from your physician.
The total annual contributions by all participating individuals, including family and friends, is $14,000. The amount will be adjusted annually for inflation.
Under current tax law, $14,000 is the maximum amount that individuals can make as a gift to someone else and not pay taxes (gift tax exclusion). The total limit over time that could be made to an ABLE account will be subject to the individual state and their limit for education-related 529 savings accounts. Many states have set this limit at more than $300,000 per plan.
However, for individuals with disabilities who are recipients of SSI and Medicaid, the ABLE Act sets some further limitations.
The first $100,000 in an ABLE account will be exempted from the SSI $2,000 individual resource limit. If and when an ABLE account exceeds $100,000, any amount over $100,000 will count toward that resource limit. If an individual’s countable resources go above $2,000, the beneficiary will be suspended from eligibility for SSI benefits and no longer receive that monthly income. If the only reason for SSI suspension is the ABLE account, once ABLE funds dip below $100,000, SSI payments will be restarted. However, if the reason is not because of funds in excess of $100,000 in an ABLE account (e.g., $2,500 in a standard checking account), SSI benefits may be terminated.
When ABLE funds are in excess of $100,000 the beneficiary will continue to be eligible for Medicaid. States will be able to recoup some expenses through Medicaid out of an individuals ABLE account upon the death of the beneficiary.
In Montana, contributions up to $3,000 can be deducted from state taxes each year as long as the contribution is to an account owned
by the contributor, the contributor’s spouse, or the contributor’s child or stepchild if the contributor’s child or stepchild is a Montana resident. SB 399 – ABLE Bill
The ABLE program is relatively new and various programs across the country are just now starting to operate. Montana’s ABLE program is anticipated to begin soon and once it opens we will have more information about it. However, Montana residents may also open an ABLE account in another state that allows accounts to be opened by individuals with disabilities nationwide.
Although someone may only have one ABLE Account, section 303 of the PATH Act eliminated the residency requirement of the ABLE Program. This means people from Montana can choose to open, or transfer to, accounts in other states.
Alabama: Enable Alabama
Alaska: Alaska ABLE Plan
Illinois: Illinois ABLE
Kansas: Kansas ABLE Savings Plan
Nebraska: ENable Savings Plan
Nevada: ABLE Nevada
North Carolina: NC ABLE
Minnesota: Minnesota ABLE Plan
Ohio: STABLE Account
Oregon: Oregon ABLE Savings Plan
Rhode Island: RI’s ABLE
Tennessee: ABLE TN
Because ABLE is an evolving program and it will be possible to have an account in any state offering nationwide eligibility, it is important to follow changes to determine what the best fit is for your family.
Other questions may remain unanswered by this website, such as how ABLE Accounts will be different from Special Needs Trusts, etc.
Choosing the right option, or options, for your family is a decision that needs to be researched.
Here are several resources to help learn more about the ABLE program:
ABLE National Resource Center: ABLE National Resource Center Home Page
ABLE National Resource Center PowerPoint: Implementing ABLE: 2016
Other National Disability Institute Webinars: NDI Webinars
Montana Law: SB 399 – ABLE Bill
Montana ABLE Oversight Committee: Oversight Committee
National Down Syndrome Society’s ABLE Page: NDSS ABLE Act
The ARC ABLE Program Implementation: ABLE Program Implementation
The Law: Public Law No: 113-295
Social Security POMS: SI 01130.740 Achieving a Better Life Experience (ABLE) Accounts
Article in Apostrophe Magazine: ABLE Act: Montana legislature in motion
Multi-state ABLE Consortium Established: Illinois Press Release
Related: Special Needs Trusts
Special Needs Trust Description: The Montana Estate Lawyer: Planning with Special Needs Trusts
Bills to change ABLE:
The ABLE Age Adjustment Act (S. 2704, H.R. 4813) would raise the age limit for eligibility for ABLE accounts to individuals disabled before age 46. Currently, only individuals with a severe disability prior to the age of 26 are eligible to open an ABLE account. Many disabling conditions can occur later in life. Increasing the age limit for ABLE accounts will allow more individuals to save for disability related expenses in ABLE accounts. Sponsors: Senator Casey and Rep. Van Hollen.
The ABLE Financial Planning Act (S. 2703, H.R. 4794) would allow families to rollover savings from a Section 529 college savings plan to an ABLE account. Many families save for a child’s college education by opening a 529 account, sometimes before their child is born. They face taxes on their withdrawals for anything other than college expenses. The ABLE Financial Planning Act would allow them to rollover the funds from their 529 account into an ABLE account for their child. Sponsors: Senator Casey and Rep. Crenshaw.
The ABLE to Work Act (S. 2702, H.R. 4795) would allow individuals and their families to save more money in an ABLE account if the beneficiary works and earns income. Specifically, an ABLE beneficiary who earns income from a job could save up to the Federal Poverty Level ($11,770 – 2016) each year in addition to the amount they are currently allowed to save. The bill would also allow ABLE beneficiaries to qualify for the existing Saver’s Credit when they put savings in the account. Sponsors: Senator Burr and Rep. Crenshaw.