Tuesday, May 5, 2015
In December 2014, President Obama signed into law the Achieving a Better Life Experience (ABLE) Act, which went into effect this year. The ABLE Act enables people with disabilities and their caretakers to open savings accounts for disability related expenses without jeopardizing Medicaid coverage and other federal benefits as long as the balance does not exceed $100,000. The goal of ABLE accounts is to provide an opportunity for a brighter economic future for individuals with disabilities and a level of comfort for those that love and support those individuals.
An ABLE account can be opened for any eligible individual—that is, someone who is entitled to benefits based on blindness or disability under Title II or XVI of the Social Security Act. A person with a “disability certification” is also eligible.
ABLE accounts are patterned after 529 plans, and allow for tax-free growth while the funds are in an ABLE account and then allow for tax-free distributions when the funds are used for qualified disability expenses. Moreover, ABLE accounts allow for a change in the designated beneficiary of an account as long as the new beneficiary is a member of the family.
See James W.C. Canup, What Does “ABLE” Mean?, Wealth Management, May 5, 2015.