The ABLE Act allows disabled individuals to save more money for their own use without affecting their benefits like Medicaid and Supplemental Security Income (SSI). There will not be tax on the earnings in these accounts and they are as easy to set up as any bank account. The ABLE Act is credited to our own Senator Bob Casey, a strong advocate for programs that affect people with disabilities and the elderly.
The original version of the law stated that you had to be disabled before the age of 26. Senator Casey has now succeeded in passing the ABLE Age Adjustment Act which expands the ABLE program to an estimated 6 million people by raising the age of disability from 26 to age 46 starting in 2026. It is a practical change as disabilities often arise in accidents or a health crisis later in life, including to disabled Veterans.
The money in the ABLE account can be used for what are called “qualifying disability expenses,” including education, housing, health expenses, transportation, personal support, among others.
The accounts can be funded by third parties, such as parents, up to the annual Federal Gift Tax Exclusion, currently $17,000. If the value of the account exceeds $100,000, the account will be considered an available resource for SSI purposes. Surprisingly, it will not be considered a resource for Medicaid purposes.
ABLE accounts really make sense for those higher functioning disabled individuals who want to earn a wage but not lose their government benefits. They can now save well in excess of $2000, keep their benefits and hopefully live a more comfortable and independent life. See www.paable.org for more information.