The ABLE Act Passed! So, What Does the Enactment Really Mean For Disabled Americans – An Update

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I covered the fight to have the ABLE Act become law of the land earlier last spring, and I am ecstatic to report an update on the RYV! blog about the passage of the legislation, and what it means for the millions of disabled Americans affected, including yours truly.

What is the ABLE Act? – A Refresher
The ABLE (Achieving a Better Life Experience) Act (H.R. 647 / S. 313) establishes savings accounts for use by Americans with disabilities where deposits are able to grow tax-free.  ABLE accounts came about due to an existing tax code that allows states to offer similar accounts that are more post-secondary education-based (the 529 College Savings Accounts).  When disabled individuals and families are given the green light later this year, they will be allowed to save a specified amount annually without harsh penalties that once existed before the Act was passed.
Why Was There a Need for the ABLE Act?
It goes without saying that millions of individuals with disabilities depend on a plethora of services and benefits for income, healthcare, food and housing assistance, and other resources just to have the minimum of their daily activities and needs fulfilled.  There are strict financial guidelines that potential and current beneficiaries have to adhere to in order to be considered eligible for assistance from public benefits programs like SSI, SNAP (food stamps), Medicaid, etc.  Beneficiaries are expected to meet the resource limits (financial limits) of these benefits programs to gain access to the resources they need; however, meeting these stringent rules oftentimes meant that beneficiaries had to be in the strong grips of poverty (read:  severely destitute).
The ABLE Act is the first public policy that takes into heavy consideration the remarkable costs of living with a disability for individuals and families.  Such costs include, but are not limited to:  raising and caring for a disabled child, or caring and supporting a working-age disabled adult; accessing appropriate housing and transportation; utilizing personal assistance services (home health services and the like); acquiring assistive technology; and healthcare costs that are not covered by public insurance (Medicaid and/or Medicare).
Eligible individuals and families will be afforded the chance to open ABLE savings accounts that will NOT affect their eligibility for the aforementioned public benefits services.  To go deeper into this, the Act outlines that ABLE accounts will, with private savings,

“secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, Medicaid, SSI, the beneficiary’s employment and other sources.”
(Excerpted from the National Down Syndrome Society’s ABLE Act Overview.)

What was the ABLE Act’s Status Before it Became Law?  
The legislation was introduced in the U.S. Senate and U.S. House of Representatives on February 13th, 2013.  This was the second time the Act was introduced to Congress; the first attempt failed to get pushed through by the previous Congressional body.
On December 3rd, 2014, the ABLE Act passed in the U.S. House of Representatives (voting totals:  Yea – 404; Nay – 17; Not voting – 13).
On December 16th, 2014, the U.S. Senate voted to pass the ABLE Act as a part of the Tax Extenders package (voting totals:  Yea – 76; Nay – 16; Not voting – 8).
On December 19th, 2014, President Obama signed the Tax Extenders Package, making the ABLE Act law in the United States.
If you want to learn if your federal representatives supported the ABLE Act becoming law, click the links to view the co-sponsors of the bill in each Congressional house.
Senate ABLE Act Co-Sponsors
House ABLE Act Co-Sponsors
How Many Will Benefit from the Passage of the ABLE Act?
There are over 58 million disabled Americans; close to 10 percent (or 5.8 million) of these individuals and families will meet the eligibility requirements to establish ABLE accounts.  Though more data is needed to gauge a precise figure of eligible beneficiaries, this is a significant portion of the largest minority group in the United States who will have the opportunity to create ABLE accounts on their behalf, and widen their financial net.
What are the Eligibilities For Creating an ABLE Account?
To better understand the eligibility requirements of the ABLE Act, I decided to break it down by the imperative requirement, which is age, and then number of accounts a beneficiary may have, and how Social Security benefits (SSI and SSDI) factor in.
Age Limit:

  • The final version of the ABLE Act specifies that an individual is eligible to acquire an ABLE account if she or he has had an onset of disability before turning 26 years old.  This means that a person had to either been born with or had to acquire their disability before their 26th birthday.
  • However, do note that you do NOT need to be 26 years old to be eligible for an ABLE account; you will have to have documentation stating that your disability existed before you turned 26 years old.  Anyone who acquires a disability AFTER their 26th birthday will not be eligible to gain access to an ABLE account.

Number of ABLE Accounts a Person May Have:

  • Only one ABLE account per eligible beneficiary.

How Will Social Security Benefits be Affected:

  • If you meet the age limitation eligibility for an ABLE account, and are also receiving benefits, such as SSI and/or SSDI, you are automatically eligible to establish an ABLE account for yourself, or have someone do so on your behalf.
  • If you are not currently receiving SSI and/or SSDI benefits, but still meet the age of onset disability requirement, you would still be eligible to open an ABLE account if you meet the SSI criteria regarding significant functional limitations.

What are the Money Limits for the ABLE Account?
Annual Contributions:

  • Total annual contributions by all participating individuals, which includes family and friends, is $14,000.
  • This amount will be adjusted yearly for inflation.

This amount, $14,000, is the maximum number that individuals can make as a gift to someone else and not pay taxes (this falls under gift tax exclusion).  The amount limit over time that would be deposited into an ABLE account will be affected by the individual state the ABLE account owner resides and their state’s limit for education-related 529 savings accounts.  In regards to education-related 529 saving accounts, the majority of states have a threshold limit of $300,000 per plan.  However, there are tighter savings restrictions for those with disabilities who are on SSI and Medicaid, and open an ABLE account.
Total Amount Contribution that Can be Deposited into ABLE Accounts Without Penalty for SSI Beneficiaries:

  • $100,000.

The first $100,000 in ABLE accounts will be exempted (read:  not count against) from the SSA’s (Social Security Administration’s) current $2,000 individual resource limit for SSI beneficiaries.  If an ABLE account were to exceed that $100,000 limit, the SSI beneficiary would be suspended from eligibility of SSI benefits and will no longer receive the monthly income (SSI check).  The most important fact to note is that the SSI beneficiary WILL still be eligible for Medicaid.
Below is an example of how exceeding the limit would impact an SSI beneficiary:

  • Let’s say that Aisha had $120,000 in an ABLE account.  Aisha would no longer meet the requirements to receive an SSI check/monthly income, BUT she would still retain her Medicaid (health insurance).  That is a big contrast to how the system worked without ABLE accounts – if Aisha had more than the $2,000 individual resource limit for SSI beneficiaries in a bank account (whether savings, checking, etc.), she would risk losing her SSI monthly income AND her Medicaid.

This ability to save more money, and keep one’s Medicaid, is a major game-changer for beneficiaries on SSI; the high risk and fear of being penalized and without healthcare was an incredible barrier, and discouraged many from opening bank accounts in the first place.
What Expenses Can be Designated to be Used With an ABLE Account?
Under the final version of the legislation, a “qualified disability expense” covers any expense that is associated with the designated beneficiary of the ABLE account as a result of living a life with a disability.
Examples of qualified expenses include:

  • Education
  • Housing
  • Transportation
  • Employment training and support
  • Assistive technology
  • Personal support services
  • Health care expenses
  • Financial management and administrative services
  • And other expenses that the Treasury Department develops this year regarding regulations

How Do I Go About Opening an ABLE Account?
Each state will be responsible for creating and operating an ABLE program for its residents.  If a state chooses to not establish such program, it has the opportunity to collaborate, or contract, with another state to provide its residents who are eligible for the program the chance to open an ABLE account.
The Treasury Department will develop the following guidelines for states regarding:

  • Information to be presented when one goes to open an ABLE account
  • The documentation required regarding one’s eligibility for the ABLE account as a person with a disability
  • Clarity of details concerning the “qualified disability expenses,” and what documentation will be needed for tax reporting purposes

Until the Treasury Department finalizes the aforementioned details, along with hosting a public comment period on proposed rules of program implementation, no ABLE accounts can be created.  Once the particulars have been settled, states will be afforded the opportunity to accept applications to open ABLE accounts before the end of this year.
What Has Been the Disabled Community’s Response to the Passage of this Legislation?  
The overall reaction to the passage of the ABLE Act within the disabled community has been mixed.  Though the majority of disabled Americans supported and pushed for Congress to pass the ABLE Act, and signed into law by the President, for the past couple of years, there has been disappointment shared about the “watered down” version that did make it through the Congressional body.
The major disappointment voiced surrounds the age limit requirement.  The disabled community is the only population where a person can become a member at any given time in their lifespan; becoming disabled does not have an age restriction.  To limit access to establishing ABLE accounts disadvantages the majority of those in the community who would greatly benefit financially, and that exclusion puts a hard damper on the victory of the passage of the Act.
What’s Next for PwDs? – Final Thoughts
Getting a very conflicted Congress to band together for the disabled community regarding the ABLE Act was a feat within itself.  However, it displayed why advocacy, particularly political lobbying and involvement, is imperative for the disability rights movement to gain victories for legislation and policies that seeks to improve our lives and independence as a people.  This win should energize us to keep fighting for more equal acess, justice, and opportunities for all – our voices and lives matter, and it is time that politicians and policy makers begin, and continue, to take stock in our well-being and livelihoods.
(Featured headlining image:  Courtesy of Pixabay.)
(Information sources:  VOX & the National Down Syndrome Society.)

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