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The U.S. Senate passed the Achieving a Better Life Experience (ABLE) Act of 2014 by a vote of 76 to 16 late Tuesday evening, agreeing with the House of Representatives that the bill should become law. President Obama is expected to sign the bill soon.
The ABLE (Achieving a Better Life Experience) Act allows individuals with developmental disabilities and their families to save money tax free for their disability service needs, and allows these assets to be exclude for purposes of eligibility to receive needed government supports including Medicaid, Supplemental Security Income (SSI), and Social Security Disability Insurance (SSDI). ABLE addresses barriers to independent living because individuals’ access to certain essential government funded programs can be lost once they establish a minimal level of income and savings.
Beginning in 2015, children or adults who acquire a disability before age 26 will be able to annually save up to the amount of the IRS gift tax exclusion, currently $14,000, and up to $100,000 total while remaining eligible for public programs such as Medicaid and SSI. The ABLE Act will allow for similar certain individuals with disabilities and their families to maintain savings accounts similar to 529 saving plans for education.
Once the President signs the ABLE Act, the federal government will issue guidance on exactly how to set up and fund ABLE savings plans.