A year and a half after legislation paved the way for people with disabilities to save without jeopardizing their government benefits, the first ABLE accounts are about to become available. Nebraska is the first to announce a launch date, June 30, with Florida to start July 1, 2016.
The new offering was created by the federal Achieving a Better Life Experience, or ABLE, Act, which became law in 2014. ABLE Act allows people with disabilities to save up to $100,000 in a special account without risking their Social Security, Medicaid and other government benefits. Eligibility for ABLE accounts is limited to those with a disability that originated before the age of 26. Funds in ABLE accounts must be used for “qualified disability expenses”, meaning any expense incurred by the beneficiary as a result of living with a disability. These include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses to enhance the beneficiary’s quality of life. Interest earned on savings in the accounts will be tax-free. Individuals may open an ABLE account in any state that offers an ABLE program.
However, before individuals could open the new accounts, states had to pass their own legislation and establish regulations for the new savings vehicle. Arizona ABLE ACT (HB 2388) passed on 5-5-2016 and is awaiting the Governor’s signature. Once ABLE accounts are operational in Arizona, they will no doubt be a useful tool for some disabled individuals and their families.