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Proposed Bill Would Allow Tax-Free Trusts For Those With Disabilities

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(Updated: March 3, 2009 at 1:16 PM CT)

A bill proposed in Congress would allow tax-free savings accounts for people with disabilities much like those already in existence for those saving for college.

The bill sponsored by Sen. Robert Casey, D-Penn., and Rep. Ander Crenshaw, R-Fla., would allow trusts to be created to pay for disability related expenses such as education, housing, health care and personal support services. The funds in the trust would not count against the individual’s maximum asset amounts to qualify for Medicaid and other government programs.

Called the Achieving a Better Life Experience Act of 2009 or the ABLE Act of 2009, the bill would create accounts similar to the 529 plans that currently exist to save for college. Up to $500,000 could be invested in the accounts, which would be tax-free in many cases.

“Too often persons with disabilities are caught in between the cracks in our society. The ABLE Act will provide families with a savings tool that is flexible and portable. The accounts are designed to help ease difficult financial situations and provide peace of mind to the families of individuals with disabilities,” Crenshaw said.

In order to become law, the bill would need to pass both the Senate and House and be signed by the president.

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Comments (3 Responses)

  1. stemark says:

    The original bill was in the 110th Congress sponsored by Rep. Crenshaw of Florida (HR 2370) and at the end of the session, he had 127 co-sponsors. Both the Dodd and Spector bills came later. Rep. Crenshaw has re-introduced it as HR 1205 and currently has 27 co-sponsors. It is expected to retain most of the previous support and has been vetted by the CBO as neutral.

  2. mzeppuhar says:

    Steve and others:

    Richard B. shared with me the text of the original Crenshaw bill and I wholeheartedly support this new bill, if it doesn’t stray from the path of the original. This would be a huge benefit. It would allow money to be saved for services like dental and vision care not currently covered by Medicaid for adults, without any punitive repercussions to SSI. I’m excited and hopeful to see some reasonable measures being taken. Wish I could vote!!

  3. momofrn says:

    While the proposed bill may ease financial burdens for some, given the nation’s current economic status shouldn’t it be time that children with disabilities deserve some type of funding under SSI that isn’t solely determined by their parents or guardians income giving those on welfare yet another tax exemption.

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