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Congress Passes ABLE Act

Yesterday, Congress passed the Achieving a Better Life Experience Act of 2014 (ABLE Act). The ABLE Act will create tax-favored accounts for children and adults whose disability occurred before the age of 26; a step in the right direction to helping families take care of their disabled children.

The purposes of this Act is to: (1) encourage and assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities to maintain health, independence, and quality of life; and (2) provide secure funding for disability-related expenses of beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, title XVI (Supplemental Security Income) and title XIX (Medicaid) of the Social Security Act, the beneficiary’s employment, and other sources.

ABLE act

The ABLE Act will allow anyone to contribute to this tax-favored account however, beneficiaries are limited to one account. These accounts are able to receive up to the annual gift tax exemption (currently $14,000 per year). The ABLE Act will start to apply to taxable years beginning 2015.

The Act requires amounts in ABLE accounts to be disregarded in determining eligibility for means-tested federal programs, except distributions for housing expenses under the supplemental security income program and for amounts in an ABLE account exceeding $100,000. The payment of supplemental security income benefits to an individual are suspended during any period in which such individual has excess resources in an ABLE account, but does not suspend or affect the Medicaid eligibility of such individual.

The Act will allow qualifying parents to create tax-free savings account for their disabled or special needs child to be used for approved expenses such as education, housing, and health care. In addition to this, another big  for many families is that the savings account will not take the place of other benefits that the child may be eligible for including SSI and Medicaid. This is very important for families who have been faced with making a decision between providing for their child’s future and getting their child the help that they needed through available programs now.

Over 19 organizations signed a letter of support for the ABLE Act urging congressional leaders to the pass the bill including the Autistic Self-Advocacy Network, Autism Speaks, Muscular Dystrophy Association, and the National Federation of the Blind.  Congress for a change worked together on this legislation which went through many twists and turns.

The ABLE Act has been a labor of love for a lot of advocates, but it started as an idea by a fellow father, Steve Beck. Beck has a daughter with Down syndrome.

Under existing law, individuals who qualify for SSI disability and Medicaid cannot hold more than $2,000 in assets in their own name. This creates forced poverty. Adults with Down syndrome, and other disabilities, must choose to work less, or be paid less, or not work at all so that they maintain the social support services they depend on for providing the basics. It’s a system that enforces disability on the disabled.

Beck wanted to try to fix this in some measure. Kids with just 46 chromosomes can receive tax advantages through college savings accounts to help them live independently. Beck thought something similar for individuals with disabilities should be acceptable to most policy-makers. While it took some time, it turns out he was right. The ABLE Act allows a savings account for specific purposes–education, transportation, housing, and other services–to be established to benefit individuals with disabilities, like Beck’s daughter.

To read the full ABLE Act, click here.

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