The federal Achieving a Better Life Experience (ABLE) Act authorizes states to develop their own ABLE programs and offer ABLE accounts to qualified disabled beneficiaries. This ABLE legislation, once law, will allow for the development of an ABLE program in Arizona to better allow individuals with disabilities in Arizona to save for their future.
The ABLE Act amends Section 529 of the Internal Revenue Service Code of 1986 to create tax-free savings accounts for individuals with disabilities, called ABLE accounts. Contributions to an ABLE account may be made by any person, including the account beneficiary, family and friends, and may or may not be tax deductible depending on the specifics of state ABLE laws.
The ABLE 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. Additionally, the ABLE Act suspends the payment of supplemental security income benefits to an individual 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 individuals (26 U.S. Code Section 529A). Examples of qualified disability expenses related to the blindness or disability of a program beneficiary include expenses for: 1) housing; 2) transportation; 3) education; 4) employment training and support; 5) assistive technology and personal support services; 6) health, prevention and wellness; 7) financial management and administrative services; 8) legal fees; and 9) funeral and burial expenses.
Federal law limits eligibility to individuals with significant disabilities with an age of onset of disability before turning 26 years of age. A person who meets this requirement and who is also receiving supplementary security income benefits is automatically eligible to establish an ABLE account; those with an age of onset of disability before turning 26 years of age who do not receive supplemental security income benefits are eligible to open an ABLE account upon obtaining a disability certification from a physician.
House Bill 2388 appropriates $240,000 from the state General Fund in FY 2016-2017 to the Department of Economic Security (Department) for the implementation and administration of the Program.
Once ABLE accounts are operational in Arizona, they will no doubt be a useful tool for some disabled individuals and their families. It seems we may now be one more step closer to making Arizona ABLE accounts a reality.