Savings accounts for disability services spreading quickly

A savings account program benefiting people with disabilities throughout their lives has been adopted by 38 states and the District of Columbia, with New Jersey and Washington state the latest to launch.

Achieving a Better Life Experience was originally signed into law as part of the Tax Increase Prevention Act of 2014, H.R. 5771 (113). It permitted states to establish tax advantaged accounts for disability-related services. Eligible participants must be disabled in the eyes of the Social Security Administration or by a doctor before age 26.

“People with disabilities are disproportionately held in poverty in many circumstances," said Chris Rodriguez, director of public policy at the National Disability Institute, because Medicaid services often require individuals to have maximum assets as low as $2,000.

By contrast, contributions of up to $15,000 a year with no lifetime limit can be made to ABLE accounts without affecting eligibility for Medicaid or Social Security.

The money can be used to pay for a range of expenses not covered by Medicaid or Medicare, from the costs of raising a significantly disabled child to accessible housing, transportation, personal assistance services, assistive technology and health care for adults.

Ohio was the first state to launch an ABLE program in June 2016; by April 2017 a total of 20 states had done so.

Each is slightly different. Some states, like Ohio, allow residents of any state to enroll. Others, like Florida, restrict the benefit to their own residents. Rodriguez's organization has a tracker that follows implementation status and details variations among states.

Rodriguez said he expects California, Arkansas and Mississippi to enact their programs soon, adding that there may be others.

Implementation does not always come quickly.

Former Gov. Chris Christie signed a New Jersey-based ABLE program into law in January 2016 but it didn't launch until two months ago. "We are thrilled that it’s here,” said Nicole Tomlin, a New Jersey based lawyer focusing on guardianship, estate planning and estate administration for people with disabilities, who said she had been worried about where the state stood on the issue.

More than 20,000 people with disabilities nationally now have ABLE accounts with a total of $105 million in assets under management, he said.

The program gained an additional benefit from last year’s tax law, H.R. 1 (115), which allowed 529 college savings accounts to be used to cover up to $10,000 a year in K-12 expenses, including for private religious schools. The legislation also allows for a rollover of 529 funds — up to $15,000 a year — into an ABLE account without penalty.

Another significant change may be coming: Bicameral ABLE legislation would increase the age threshold for eligibility from under 26 to under 46.

The Senate bill, S. 817 (115), was introduced by Bob Casey (D-Pa.), ranking member of the HELP Children and Families Subcommittee, and has nine co-sponsors. The companion measure, H.R. 1874 (115), has 35 co-sponsors; among them are 20 Democrats and 15 Republicans, including House Republican Conference Chairwoman Cathy McMorris Rodgers (R-Wash.).

The increase would be noteworthy because many adults become disabled later in life, as a result of conditions like multiple sclerosis, Lou Gehrig’s disease or paralysis due to an accident.

Rodriguez estimated that about 8 million people currently are eligible to open ABLE accounts, and that raising the age of eligibility could add 6 million more.