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ABLE Act

able“Can the ABLE Act help provide for my child’s financial future?”

At the end of 2014, President Obama signed into law the Achieving Better Life Expectancy (ABLE) Act. The ABLE Act allows people with disabilities that had an onset before age 26 to have a tax-exempt savings account to use for expenses related to health, independence, and quality of life. Income earned by the accounts would not be taxed. Contributions to the account can be made by the account beneficiary, family and friends, but would not be tax deductible.

For our AHC families, here are three things you should know right now about the ABLE Act.

1) Is my child with AHC eligible for an ABLE account?
The ABLE Act limits eligibility to individuals with significant disabilities with an onset of disability before age 26. If your child meets this criteria and is also receiving benefits already under SSI and/or SSDI, you are automatically eligible to establish an ABLE account for the child. If the child is not a recipient of SSI and/or SSDI, but still meets the age of onset disability requirement, you might still be permitted to open an ABLE account if the child meets SSI criteria regarding significant functional limitations. The US Treasury Department will be writing regulations in 2015 to explain further the standard of proof and required medical documentation. The person with a disability does not have to be under the age of 26 to be eligible to open an ABLE account. The child could be older than 26, but must have the documentation that indicates age of disability onset was before the age of 26.

2) How might an ABLE account help my child?
Many individuals with disabilities and their families depend on public benefits for income, health care, and help with food and housing (like SSI, SNAP, Medicaid). These programs require individuals to report more than $2,000 in cash savings, retirement funds and other items of significant value. Assets above $2,000 can make an individual ineligible for the programs. Now, eligible individuals and families to can establish ABLE savings accounts that will not affect their eligibility for SSI, Medicaid and other public benefits. Contributions to an ABLE account cannot exceed $14,000 per year or maximum of $100,000 total. If the ALBE account exceeds $100,000, program eligibility would be impacted. The funds could be used for education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses that will be further defined in regulations being drafted in 2015 by the U.S. Treasury Department.

3) How do I open an ABLE account for my child?
Each state will be responsible for establishing and operating an ABLE program. Some states may choose to contract with another state to run a joint program. Since the U.S. Treasury Department is in the process of writing the regulations, it remains unclear about the logistics of opening an account, exactly who is eligible, and what documentation may be needed to prove disability and open an ABLE account. But the law requires that States begin to accept applications to establish ABLE accounts before the end of 2015.

Stay tuned for more information about how ABLE accounts may help our AHC kids.

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You can find more information about ABLE accounts at these sites:
National Disability Institute:
https://www.realeconomicimpact.org/Public-Policy/ABLE-Act.aspx
Congress.gov:
https://www.congress.gov/bill/113th-congress/house-bill/647

Generously contributed by Meredith L. Schalick              

“This information is not intended as legal advice.”