(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.

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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.