Achieving a Better Life Experience (ABLE) Program


By: Matthew C. Doughty, CPA (     

Millions of individuals with disabilities and their families depend on a wide variety of public benefits for income, health care, food and housing assistance.  For the first time, eligible individuals and families will be allowed to establish a savings account that will not affect their eligibility for Social Security Income, Medicaid or other public benefits.

The Achieving a Better Life Experience Act was signed into law on December 19, 2014.  ABLE amends the federal tax code to allow Section 529 tax-exempt savings accounts to be established for disability-related expenses.  Modeled after college savings accounts, the program is meant to encourage individuals and their families to provide private funding to assist disabled individuals in maintaining a healthy, independent, and quality lifestyle.

A couple of key facts about the program, which is available starting in 2015, are as follows:

  • An individual eligible to be the designated beneficiary of an ABLE account must be disabled or blind andthe onset of the disability must have occurred before the individual attained age 26;
  • Any person may make nondeductible contributions to an ABLE account for the benefit of an eligible individual. Contributions must be in cash, and the aggregate annual contribution amount cannot exceed the annual gift tax exclusion amount ($14,000 for 2015) by all participating individuals, including family and friends. Any amount in an ABLE account, including earnings, in excess of $100,000 is considered a resource of the designated beneficiary and, therefore, may suspend certain public benefits;
  • Distributions from an ABLE account for a tax year are not included in gross income (including any earnings on the account) unless they exceed the amount of qualified disability expenses incurred during the tax year; and
  • Qualified disability expenses include any expenses related to the eligible individual’s blindness or disability which are expended for the benefit of the designated beneficiary of the ABLE account.  Common costs may include education, housing, transportation, health care expenses, amongst other related costs.

What’s the Catch?

Each state is responsible for establishing and operating an ABLE program. If a state should choose not to establish its own program, the state may choose to contract with another state to offer its eligible individuals with significant disabilities the opportunity to open an ABLE account.

As of the release of this article, New York State has not yet established a state run ABLE Program.  Please go to the Autism Speaks website via the following link to encourage your State representatives to open the program in your state:

Take Action in your State!

Individuals with disabilities face significant barriers to living independently and finding and holding employment. Although the Federal government provides certain safety-net programs, these benefits can either be lost once the disabled individual establishes a minimum level of savings and income, or is inadequate due to the increased costs of health care and support systems to allow them to be employed and live independently.  ABLE accounts may not be appropriate for all, but for many people, this will allow fuller, more independent lives.

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