Thursday, January 14th, 2016
Hello everyone, and welcome to our blog post this week!
Today, we are going to focus on a very important piece of legislation that could have tremendous positive impact on the financial health of self-advocates at ILO: the ABLE Act and resulting ABLE accounts. If you are not familiar with the ABLE act, we would like to take this opportunity to introduce you to the legislation, and resulting ABLE account, and perhaps summarize exactly why we think that it is so important.
If you are familiar with the ABLE Act legislation, then you are already aware of how this tool is one of only two legal ways for an individual with a disability to save for the future without jeopardizing benefit eligibility. You are probably also aware of the slow passage of this act through congress, and may be anxious to know where the act currently stands and how/when the different states are planning to implement it.
The following is our summary of the ABLE Act and ABLE account accessibility.
The ABLE Account: A summary for new readers
An ABLE account is a savings account that is established for the sole use of an individual with disability. The account is set up like a 529 college savings account will allow individuals with disabilities to accumulate savings that are not subject to federal and/or state tax provided the funds are used for qualifying expenses. In addition to this, the savings in these accounts will not affect an individual’s eligibility for government benefits. This account is intended to supplement, not supplant, federal benefits and benefits paid through Medicaid, private insurance, and employment.
The National Down Syndrome Society (NDSS) is an avid advocate and ardent supporter for the ABLE Act and the resulting ABLE account; they identify a number of benefits that would result from enabling access to this type of savings account. As stated on their website, an ABLE account could fund a variety of essential expenses for individuals, including medical and dental care, education, community based supports, employment training, assistive technology, housing, and transportation. The ABLE Act provides individuals with disabilities the same types of flexible savings tools that all other Americans have through college savings accounts, health savings accounts, and individual retirement accounts.
If you would like more information about ABLE accounts, and how they can become an important part of your special needs financial plan, please contact us! We would love to help you design a Comprehensive Special Needs Financial Life Plan that takes into account the needs of the individual with disability and the family as a whole, spanning across two generations. Click here for more information.
ABLE Accounts: Coming Soon
Now for the really exciting news! According to reports in the Wall Street Journal and Disability Scoop, recently passed legislation may make ABLE accounts accessible to individuals with disabilities within in the next couple of months; as is written on disabilityscoop.com, tucked inside a tax bill approved by lawmakers last month is a provision that will permit individuals with disabilities to open new accounts established under the Achieving a Better Life Experience, or ABLE Act in any state, regardless of where they reside. The change means that people with disabilities across the country will be able to open ABLE accounts when the first state programs are up and running, which could happen as soon as February or March, advocates say.
This news isn’t only positive in terms of when individuals with disabilities can access these accounts; it also opens up the market and allows individuals with disabilities to look outside their state and find the ABLE account that best suits their needs. Thanks to this legislation, individuals with disabilities aren’t limited to the ABLE accounts provided by their states this is especially helpful to individuals in smaller states that may not be able to institute a large variety of options for ABLE accounts. They can shop around, browse their options, and choose an account that best suits their individual needs. And, according to experts, the new state-wide legislation also has the added (perhaps unintentional) bonus of improving the ABLE accounts from within. According to the Wall Street Journal, the fact that individuals can now shop for ABLE accounts across state boundaries does not only give the consumer more options, but may force states and banks to improve the offerings to consumers: Over time, experts expect there to be competition among states to attract out-of-state residents to their 529 ABLE programs, which may result in lower fees and better investment options for consumers.
Currently, 35 states have passed legislation for ABLE accounts, with 4 states expected to be offering these accounts within the next few months – Florida, Ohio, Virginia and Nebraska. It should be noted that this information is very preliminary, and details regarding how states will accommodate out-of-state residents, and how much fees will be to open accounts, are to be determined. Please stay tuned to ILO’s blog, as we will release this information as we receive it.
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