Many individuals affected by disabilities who live in California may be allowed to save more than $2,000 without losing eligibility for Medicaid, Supplemental Security Income (SSI), and other public benefits. If legislated in California, the federal Achieving a Better Life Experience (ABLE) Act, enacted in December 2014, will allow individuals whose disabilities occurred before age 26 to open one tax-exempt ABLE savings account to spend on qualified disability expenses.
According to a media release from the California State Independent Living Council, the ABLE Act supports the independence of people with disabilities in pursuing an education, buying a car or house, paying for assistive technology and personal support, setting aside funds for unexpected healthcare expenses, and more.
“We’ve worked on the ABLE Act for a very long time,” said World Institute on Disability’s Deputy Director Thomas Foley. “Providing people with disabilities the chance to work and save money for the future without restrictive asset limits is huge.”
Many individuals with disabilities and their families rely on state and federal benefits to cover living expenses. Without the ABLE Act, they are limited to no more than $2,000 ($3,000 for a couple) in assets, such as cash savings, investment accounts, and other personal assets, before government support programs are reduced or suspended. That asset limit is too constraining for people with disabilities who face unexpected medical expenses, transportation fees, and daily living expenses, and hinders their ability to live independently.
Representative Ander Crenshaw, who reportedly championed the ABLE Act, was quoted in The Boston Globe article, “You can save money to go to college or to retire, but [people with disabilities] couldn’t save money to use for disability expenditures…. It was forced impoverishment.”
Enactment of the ABLE Act in California is moving forward in Assembly Bill 449, introduced by Assemblymember Jacqui Irwin, and Senate Bill 324, introduced by Senator Fran Pavley. The Act is under consideration in 29 states and recently was passed in Virginia.
Modeled after 529 college savings plans, interest earned on ABLE accounts is tax free. Qualified individuals, their family members, and friends can deposit $14,000 (the annual gift-tax exemption) annually in ABLE accounts up to $100,000 without risking SSI eligibility. Each state can establish a higher annual limit corresponding to their 529 account limits. Balances up to $300,000 will not affect Medicaid coverage eligibility.
“Educating the public about the importance of passing the ABLE Act in California will be a top priority for California’s Independent Living Centers,” noted Liz Pazdral, executive director, California State Independent Living Council. “Without these accounts, many people with disabilities have limited avenues for true independence. Through resources, such as the ‘Understanding ABLE‘ free webinar on March 26 and information on Youth Organizing! Disabled and Proud’s website, the public can learn about the ABLE Act. And we need to share real-life stories with our policymakers on how the Act will improve the lives of Californians with disabilities.”