The Achieving a Better Life Experience (ABLE) Act of 2013 (S. 313/H.R. 647) was introduced in the 113th Congress on February 13, 2013, by a bipartisan, bicameral set of Congressional champions including Senators Robert Casey, Jr., (D-PA) and Richard Burr (R-NC), and Representatives Ander Crenshaw (R-FL), Chris Van Hollen (D-MD), Cathy McMorris Rodgers (R-WA) and Pete Sessions (R-TX). On December 3, 2014, the ABLE Act passed in the US House of Representatives (404-17). Two weeks later, on December 16, the US Senate voted to pass the ABLE Act as a part of the Tax Extenders package. On Friday, December 19, 2014, President Obama signed the Tax Extenders package, making the ABLE Act the law of the land.
The ABLE Act amends Section 529 of the Internal Revenue Service Code of 1986 to create tax-free savings accounts for individuals with disabilities. The bill aims to ease financial strains faced by individuals with disabilities by making tax-free savings accounts available to cover qualified expenses such as education, housing and transportation. The bill supplements, but does not supplant, benefits provided through private insurances, the Medicaid program, the supplemental security income program, the beneficiary’s employment and other sources.
An ABLE account may fund a variety of essential expenses for individuals including medical and dental care, education, community based supports, employment training, assistive technology, housing and transportation. The ABLE Act provides individuals with disabilities the same types of flexible savings tools that all other Americans have through college savings accounts, health savings accounts and individual retirement accounts. It eliminates barriers to work and saving by preventing dollars saved through ABLE accounts from counting against an individual’s eligibility for any federal benefits program. The legislation also contains a Medicaid pay-back provision when the beneficiary passes away.
Following the passage of ABLE at the federal level, many states moved quickly to pass their own ABLE bills authorizing establishment of state ABLE programs. In December 2015, Congress made a technical fix to the federal ABLE law to eliminate the prior state residency requirement, which now allows ABLE accounts to be opened in any state by individuals with Down syndrome and their families. The first state ABLE programs were launched in June 2016 in Ohio, Tennessee and Nebraska. To learn more about implementation of ABLE in the states, click the State Able Programs toggle section below.
In addition, on March 17, 2016, three bills were introduced at the federal level to make improvements to the federal ABLE Act.
In December 2017 Congress passed, and the President signed into law, the ABLE to Work Act and the ABLE Financial Planning Act.
The ABLE to Work Act will allow an ABLE account’s designated beneficiary to contribute an additional amount beyond the current limitation on contributions ($15,000 for 2018), up to the lesser of the Federal poverty line for a one-person household (currently $12,060); or the individual’s compensation for the taxable year. In addition, the legislation allows a designated beneficiary of an ABLE account to claim the saver’s credit (a nonrefundable tax credit for eligible taxpayers for qualified retirement savings contributions) for contributions made to his or her ABLE account. As a result, the ABLE to Work Act will bring more people with disabilities out of poverty and incentivize them to work by permitting them to save their earnings in an ABLE account, and ultimately becoming less dependent on government supports.
The ABLE Financial Planning Act will allow ABLE beneficiaries to roll over regular 529 accounts to 529A (ABLE) accounts up to the annual maximum contribution. This new law will be particularly helpful for families who set up 529 accounts before receiving a child’s diagnosis, or for teenagers who incur life-changing events that render them unable to go to college and use their 529 funds for their original purpose.
NDSS also looks forward to working with Congress to pass the ABLE Age Adjustment Act in the near future. This legislation would increase from 26 to 46 the age of onset of disability to be eligible for an ABLE account. In addition to helping individuals that incur disabilities later in life, increasing the age limit would also increase participation in state ABLE programs, which would increase efficiencies and lower the administrative costs that are passed on to beneficiaries.
Federal ABLE Improvement Bills
On March 17, 2016, members of the US House of Representatives and US Senate introduced three bills to enhance the Stephen Beck Jr. Achieving a Better Life Experience (ABLE) Act of 2014. The bills did not pass during the 114th Congress but, on April 4, 2017, they were reintroduced in the 115th Congress. The bills were introduced in the House by Representatives Cathy McMorris Rodgers (R-WA), Tony Cárdenas (D-CA), Pete Sessions (R-TX), Chris Smith (R-NJ) and Jim Langevin (D-RI) and, in the Senate, by Richard Burr (R-NC), Bob Casey (D-PA) and Chris Van Hollen (D-MD). The three bills are described below.
The ABLE to Work Act (S. 818/H.R. 1896) would incentivize employment by allowing ABLE beneficiaries who work and earn income, but do not participate in an employer’s retirement plan, to save additional amounts in their 529A (ABLE) accounts up to the federal poverty level (currently $12,060) in addition to the $14,000 annual maximum contribution. Beneficiaries would also be eligible for the Saver’s Credit, an existing federal tax credit that low and middle-income individuals can currently claim when they make contributions to a retirement account.
The ABLE Financial Planning Act (S. 816/H.R. 1897) would protect against life-changing events by allowing ABLE beneficiaries to roll over regular 529 accounts to 529A (ABLE) accounts up to the annual maximum contribution. This bill would be particularly helpful for families who set up 529 accounts before receiving a child’s diagnosis, or for teenagers who incur life-changing events that render them unable to go to college and use their 529 funds for their original purpose.
The ABLE Age Adjustment Act (S. 817/H.R. 1874) would improve the equitable treatment of people with disabilities by raising the age of onset of disability from 26 to 46, which would allow more individuals who become disabled later in life to take advantage of the benefits of ABLE accounts.
In the 114th Congress, two of the bills – the ABLE to Work Act and the ABLE Financial Planning Act – advanced through the Senate Finance Committee and were scored as “negligible,” thereby not requiring an offset. By contrast, the ABLE Age Adjustment Act received a $2 billion score, which was deemed unworkable and the bill did not advance.
NDSS supports these bills aimed at making ABLE accounts more effective in promoting financial independence and more accessible to a wider population of the disability community.
Ask your Senators and Representative to cosponsor these bills. Advocates are encouraged to send their Members of Congress this one-pager, which provides details about the bills and about how to co-sponsor them.