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 After a decade of lobbying by disability advocates, Congress passed
The Achieving a Better Life Experience (ABLE) Act in the final hour
before adjourning in December.
The ABLE Act allows families to set aside money that can be used
tax-free for a disabled person's expenses without risking the loss
of government benefits.
The beneficiary must have experienced the disability before age 26
to qualify for an ABLE account, which will be administered by the
states' 529 college savings programs.
The National Down Syndrome Society has estimated that about 5.8
million individuals and families could benefit from the accounts.
Disability advocates had predicted that ABLE accounts would start
becoming available later this year.
But one of the states that's farthest along in creating them,
Virginia, will not be able to offer the accounts until "the first
half of 2016," said Mary Morris, chief executive of the Virginia529
College Savings Plan.
Another state, Massachusetts, plans to make an announcement "in late
fall" about its program but currently is not committing to a
roll-out date, said Martha Savery, communications director for the
Massachusetts Educational Financing Authority.
'TREMENDOUS INTEREST'
So far, 11 states have enacted laws to create ABLE accounts, while
six other states have passed bills and are waiting for gubernatorial
signatures. Another 23 are considering such legislation, said Stuart
Spielman, senior policy advisor and counsel at Autism Speaks, a
research and advocacy group.
The 11 states that have laws in place include Arkansas, Kansas,
Louisiana, Maryland, Massachusetts, Montana, North Dakota, Utah,
Virginia, Washington and West Virginia.
"It's gratifying that there is tremendous interest in having this
vehicle available," Spielman said. "The states have said, 'We really
like this.'"
Families have to wait for their states to act, since the law allows
them to open just one account per beneficiary and only in the state
where the disabled person resides.
That contrasts with college savings plans, which don't limit where
or how many accounts can be opened.
To further reduce the accounts' cost in lost tax revenue, Congress
limited the amount that can be saved to $14,000 each year and
required that any money remaining in the accounts after the death of
a disabled person be subject to reclamation by Medicaid.
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Currently, people with disabilities cannot have more than $2,000 in
assets and still qualify for Medicaid, the government health program
for the poor, and Supplemental Security Income, which provides
stipends to low-income people who are elderly, blind or disabled.
With ABLE accounts, people could have up to $100,000 in assets
before their savings affects their ability to qualify for these
benefits.
CLAWBACK DRAWBACK
But just as the estates of elderly people are subject to what is
known as a "clawback" if they receive Medicaid benefits, the estates
of disabled people who die with money in their ABLE accounts would
also be subject to Medicaid claims.
That's a fairly significant drawback for many families, said
financial planner, John W. Nadworny.
These families may prefer to save for their children in their own
names and then set up a special needs trust in their wills to take
care of their children after the parents' death, said Nadworny,
director of special needs financial planning at Shepherd Financial
Partners in Winchester, Massachusetts.
Still, ABLE accounts would be a boon for disabled people who want to
save on their own without jeopardizing government benefits, Nadworny
said.
And publicity about the accounts will help families focus on the
need to save for children with disabilities, rather than simply hope
the government will take care of them.
"The government will do the best it can" but benefits aren't
guaranteed, said Nadworny, who co-authored the book, "The Special
Needs Planning Guide: How to Prepare for Every Stage of Your Child’s
Life."
"This educates people that they have to save."
(Editing by Beth Pinsker and Bernadette Baum)
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