Congress Eyes Changes To ABLE Act, Special Needs Trusts
A handful of bills designed to make it easier for people with disabilities to save money are advancing in Congress.
Two pieces of legislation updating the Achieving a Better Life Experience, or ABLE, Act got a green light from the U.S. Senate Committee on Finance this month.
Under the ABLE Act, which became law in late 2014, people with disabilities can establish special accounts where they can save up to $100,000 without jeopardizing Social Security and other government benefits. Medicaid eligibility is not affected by any level of funds accrued in the accounts.
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However, the accounts are currently limited to $14,000 in deposits per year. That would change under legislation known as the ABLE to Work Act that’s now headed before the full Senate.
The bill calls for people with disabilities who are employed to be allowed to save their earnings up to the federal poverty level — currently $11,770 for a single person — in their ABLE accounts above and beyond the existing cap, nearly doubling their annual savings allowance.
A separate measure that also won committee approval — the ABLE Financial Planning Act — would allow families to rollover money saved for an individual with a disability in a 529 college savings plan to an ABLE account.
“We anticipate that these could be two technically-significant improvements to the ABLE program that we could get done this Congress,” said Sara Hart Weir, president of the National Down Syndrome Society. “Especially for ABLE to Work, this is the most proactive improvement because we’re looking at ABLE as a way to incentivize employment.”
The first ABLE accounts became available this summer. Currently, four states have programs available and at least another dozen are expected before the end of the year, Weir said. Individuals living in any state can already take advantage of ABLE accounts offered through programs in Nebraska, Ohio and Tennessee.
A third tweak to the ABLE Act, which would allow people with a disability that onsets by age 46 to qualify for an account, has not yet been considered. At present, the ABLE Act only applies to those with a disability that occurs by age 26.
Meanwhile, aside from changes to the ABLE Act, the U.S. House of Representatives approved separate legislation this month impacting savings options for those with disabilities.
The Special Needs Trust Fairness and Medicaid Improvement Act would allow people with disabilities to establish their own special needs trusts. Under existing law, individuals must rely on other family members or petition a court in order to save money through a trust regardless of their own abilities.
“This is a fundamental issue of equal protection under the law for those who are facing life-changing disease or disability,” said U.S. Rep. Glenn Thompson, R-Pa., who sponsored the bill.
Similar legislation passed the Senate last year, but due to some changes, the bill approved by the House will now return to the Senate.