Week #1: What is ABLE?
History and Brief Definition of ABLE
In December 2014, Congress passed the Stephen Beck, Jr. Achieving a Better Life Experience Act, which added Section 529A to the federal tax code. This enables eligible individuals with disabilities to save money in a tax-exempt account that may be used for qualified disability expenses. This will allow qualified individuals with disabilities to save money while keeping their eligibility for federal public benefits.
The ABLE Act, considered by many to be one of the most significant pieces of legislation for the disability community since the Americans with Disabilities Act, had overwhelming bipartisan support in both the Senate and the House.
This law was the result of nearly a decade-long cross-disability grassroots effort. This effort originated with a group of parents of children with disabilities who recognized the unfairness of not being able to save funds in their child’s name for fear of losing essential benefits, benefits that allow their child to live independently in the community.
Topics at a glance
How much can you save in an account?
The total annual contributions into an ABLE account by all contributors combined, including family, friends and the beneficuary themselves, for any given tax year is $14,000. The amount may be adjusted periodically to account for inflation. 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.
What is the impact on benefits: SSI, SSDI, Medicaid, others
One of the most remarkable things about an ABLE account is that it allows you to accumulate more than $2,000 in assets without losing your federally funded means tested benefits. This includes SSI and Medicaid. Funds in an ABLE account are not taken into consideration when determining eligibility for these types of programs.
There is one exception, however, related to ABLE account holders that are also receiving SSI benefits. If you are receiving an SSI check, you will continue to do so until your ABLE account goes over $100,000. Since the annual contribution limit to an ABLE account is $14,000, it will take quite some time for ABLE beneficiaries to accumulate enough assets in the account to approach this $100,000 threshold.
Once an ABLE account exceeds $100,000, your SSI check will be suspended until such time as the account balance falls back below the $100,000 threshold. Although your SSI benefits may be suspended if you exceed the $100,000 threshold for an ABLE account, your Medicaid benefits will remain intact.
How many accounts can a person have?
The law prohibits any person from having more than 1 ABLE account at any given time.
Who can contribute to the account?
Anyone can contribute into an ABLE account including friends, family, and the beneficuary (the account holder).
Does a person need to wait for his state to launch a program?
No. While the original law passed in 2014 did stipulate that an individual had to open an account in their state of residency, this provision was eliminated by Congress in 2015. This means that regardless of where you might live and whether or not your state has decided to establish an ABLE program, you are free to enroll in any state’s program provided that the program is accepting out of state residents.
How many ABLE programs are open?
The first ABLE program was launched in June of 2016. Since that time, over 20 additional states have launched ABLE programs, most of which are enrolling individuals nationwide. In order to see which states have launched an ABLE program, just visit the ABLE map on the home page of this website by clicking HERE. The blue states represent states that are currently enrolling eligible individuals.
View ANRC's informational videos
For a more indepth video covering the basics of ABLE click HERE.
Register for our the "Debunking ABLE Myths" webinar
This webinar, sponsored by Fidelity Investments, will focus on building a very basic understanding of the ABLE Act, including its history, the fundamental components of any ABLE program, and the current status ABLE program development. The webinar will incorporate a panel of ABLE related stakeholders that will be asked to give their perspective on the presentation, including their experience with the given topic.
Click HERE for more information including on how to register.
"Ask the Experts"
The ABLE National Resource Center is always ready and willing to anwser your ABLE related questions to the best of our ability. If you have a question or comment please click HERE to submit your question or comment and we promise to get back to you as soon as possible.
View our Friday Fast Facts
Fast Fact Friday: Deposits into an ABLE account are not allowed to exceed $14,000 in any given tax year.
Fast Fact Friday: You are allowed to open an ABLE account outside your state of residency.
Fast Fact Friday: Over half the states in the country have launched ABLE programs.