ABLE ACT of 2014
The Achieving a Better Life Experience Act (ABLE ACT) of 2014, became effective on January 1, 2015, is a new type of savings option for people who have a disability and their loved ones. Modeled after college savings accounts, the ABLE ACT was passed as part of the Tax Increase Prevention Act of 2014.
A Few Details To Know:
- A person must have become disabled before age 26.
- Loved ones can contribute/gift up to the annual exclusion amount to such an account.
- Only one account may be set up for a person.
- Such an account may hold up to $100,000 (without negatively affecting the person’s eligibility for SSI and Medicaid).
- When the person dies, the funds left in such an account must be first used to pay back the State where the disabled person lived (repayment for Medicaid benefits provided to the person).
- Funds in such an account may be used for the person’s “disability-related expenses”, which include educational expenses, housing costs, transportation costs, health and wellness costs, personal supportive services, assistive technology.
- The purpose of the law is to “(1) encourage and assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities to maintain health, independence, and quality of life; and (2) provide secure funding for disability-related expenses of beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, SSI and Medicaid, the beneficiary’s employment and other sources.”