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The Achieving a Better Life Experience Act of 2014 (ABLE)
Overall Purpose of the Act
The Achieving a Better Life Experience (ABLE) Act was first introduced in 2006 to allow individuals with disabilities to open up tax-free savings accounts. These accounts can accrue up to $100,000 for individuals with disabilities without the fear of losing government benefits. individuals who receive SSI or Medicaid are unable to have assets totaling more than $2,000 because it would result in being disqualified from government benefits. ABLE allows individuals with disabilities to save up to $100,000 in a separate account without penalty. The legislation is intended to ease the financial burden faced by individuals with disabilities by creating tax-free savings available to cover qualified expenses such as education, housing, and transportation.
The details below are liable to change because the Treasury Department is still considering final regulations for the legislation. At which point, each state will have to develop their own set of regulations in concordance with the Treasury Department. Optimistically, individuals with disabilities will be able to open their own ABLE accounts before the conclusion of 2015.
Synopsis of Act:
ABLE ACT (H.R. 647)
ABLE creates a new subsection Section 529 of the Internal Revenue Code. ABLE has been re-drafted to follow all the requirements and regulations of a traditional 529 qualified tuition program:
-Easy to open and available in any state*
-Annual cutoff for deposits is $14,000
-Same tax-free treatment of account applies
-Same reporting requirements apply as to a traditional 529
*TBD once regulations are finalized
Eligibility and Stipulations:
- Children and adults whose disabilities occurred before age 26 and who meet the SSI program’s disability standard would be eligible to open an ABLE account in their state of residence
- All individuals can only open one ABLE account
- Individuals are able to accrue as much as $100,000 in an ABLE account and still be eligible for government benefits. However, if individuals accrue more than $2,000 in assets aside from their ABLE account, then they can be disqualified from benefits until they are once again below the $2,000 threshold
- Individuals who exceed $100,000 in their ABLE account will also be disqualified from government benefits until the account is below the $100,000 threshold
- Upon the ABLE account holder’s death, the remaining funds will first be used to payback ALL Medicaid expenses incurred after the ABLE account was opened
- There will likely be a limit to the number of withdrawals an individual can make a year*
- ABLE accounts will be regulated by each state
- Ideally, ABLE accounts will be available at the conclusion of 2015
- Other limitations and regulations are TBD.
*TBD once regulations are finalized
The following are the qualifying expenses under ABLE:
- Expenses include tuition for preschool through post-secondary education, which shall include higher education expenses and expenses for books, supplies, and educational materials related to preschool and secondary education, tutors, and special education services.
- Expenses for primary residence, including rent, purchase of a primary residence of an interest in a primary residence, mortgage payments, real property taxes, and utility charges.
- Expenses for transportation, including the use of mass transit, the purchase of modification of vehicles, and moving expenses.
D) Employment Support
- Expenses related to obtaining and maintaining employment, including job-related trainings, assistive technology, and personal assistance supports.
E) Health Prevention and Wellness
- Expenses for health and wellness, including premiums for health insurance, mental health, medical, vision, and dental expenses, habilitation and rehabilitation services, durable medical equipment, therapy, respite care, long term services and supports, nutritional management, communication services and devices, adaptive equipment, assistive technology, and personal assistance.
G) Assistive Technology and Personal Support
- Expenses for assistive technology and personal support with respect to any item described in clauses (A) through (F)
H) Miscellaneous Expenses
- Financial management and administrative services, legal fees, expenses for oversight, monitoring, or funeral and burial expense. Individuals can also use the ABLE account to offset the fees of creating a Special Needs Trust.
History of Bills:
* H.R. 647 and was introduced to the House on February 13, 2013.
*On February 13, 2013 H.R. 647 was reference to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
*On February 15, 2013 the bill was referred to the Subcommittee on Health. No further legislative action has been taken on either bill to enact the ABLE Act into Federal legislation.
*On July 31 2014 the bill was considered to be amended.
*On November 12, 2014 HR 647 was amended and discharged from the Committee on Energy and Commerce to the House
*On December 3, 2014 the House voted to pass the legislation by a vote of 404-17.
*On December 19, 2014 President Barack Obama signed the ABLE Act into law
Visit the ABLE Act fact sheet to learn more about this legislation
ABLE Act News:
-Obama Signs ABLE Act (December 22, 2014)
-ABLE Wins Final Vote in Senate (December 16, 2014)
-House Passes ABLE, Final Senate Vote Expected Shortly (December 3, 2014)
-Congress Finds Cause to Agree on: Disability Assistance (November 26, 2014)
-Deal Reached on Tax-Free Disability Savings Accounts (September 19, 2014)
-The ABLE Act Moves Forward in Congress (August 6, 2014)
-Casey Chairs Hearing to Push for Passage of His Bill-... (July 23, 2014)
-The United States of ABLE: Majority of Congress Signs on to Bill (November 13, 2013)
-LA Legislature Urges Congress to Pass ABLE (April 26, 2013)
-Crenshaw, Casey Stage Capitol Rally for ABLE (March 14, 2013)
-ABLE Act Reintroduced in New Congress (February 13, 2013)