It was this time last year when The Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE Act) obtained final congressional approval and was signed into law by President Obama. The final signature concluded an eight-year campaign to gain approval for a tax-free savings account to help individuals and families finance disability needs.
Since then legislatures throughout the United States have taken hold of this bill and have started implementing it into their states.
Montana Governor Steve Bullock signed the bill May 5, 2015, becoming the 10th state to enact ABLE legislation.
Senators Mary Caferro, D-Helena, and Thomas, brought the bill before the 2015 Montana legislature knowing time was of the essence.
“The response by Montana lawmakers was overwhelming,” Senator Fred Thomas, R-Stevensville, said. “The Bill passed 149 to 1 between the house and senate combined.”
“Montana’s legislature only meets every other year,” Caferro said. “So, if we wouldn’t have come together now, Montanan’s with disabilities would have had to wait two years to open ABLE accounts.”
“The fact that Montana lawmakers passed the ABLE Act so quickly, and with a near unanimous vote, exemplifies their support for people who have disabilities,” Caferro said, who also serves as the director for The Arc Montana. “I commend Senator Thomas for his ability to speak to everyone, regardless of political party, with a message we could relate to. The brilliance that Senator Thomas brought to the table was bridging the ideological divide on the issues of disability and finances. We all want the same things, and his message was loud and clear. He pointed to the common dream Montanans share as he explained the opportunities in the ABLE Act, which is to create a secure future for our loved ones.”
How ABLE Works
Prior to the enactment of the ABLE Act, a person receiving disability benefits, such as Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI) or Medicaid, risked a reduction or a total loss of benefits if they accumulated more than $2,000 in savings. However, under this new provision, people with disabilities, or their families, can set up a savings account for disability-related expenses. Up to $14,000 per year can be deposited into an individual’s ABLE account, with a maximum accumulation of $100,000.
Specifically, the act allows individuals and families to establish a tax‐free account to save for the care and medical needs of people with disabilities.
According to The National Disability Institute, an estimated 58 million individuals with disabilities live in the United States. Individuals who are disabled before age 26 and either receive SSDI, SSI or file a disability certification under the IRS rules may qualify for an ABLE account.
“The ABLE account gives people with disabilities a choice,” Thomas said. “Now people with disabilities and their families have the opportunity to save for expenses outside the scope of what is covered by disability benefits, such as housing, transportation and education.”
Save for expenses
An ABLE account can fund a variety of essential expenses for individuals, including medical and dental care, education, community-based supports, employment training, assistive technology, housing or transportation. The ABLE Act provides individuals with disabilities the same types of flexible savings tools that others have through college savings accounts, health savings accounts and individual retirement accounts.
The legislation also contains Medicaid fraud protection against abuse and a Medicaid pay-back provision when the beneficiary passes away. People will also be able to work and save through ABLE accounts without affecting some federal benefits programs. An ABLE account is designed to supplement, not replace, benefits provided through private insurances, the Medicaid program, SSI, employment or other sources.
Although the ABLE Act was signed into law by President Obama, it is up to each state to determine whether to offer a qualified ABLE account. If a state chooses to offer an ABLE-qualified account, then it must then set parameters and establish rules.
For example, the Montana ABLE Act will be crafted through a public-private partnership using selected financial institutions to serve as depositories while the Department of Public Health and Human Services will draft program rules. Some states have opted for a government-run program, while others may choose to contract with another state to allow its residents to use the other state’s ABLE program.
AWARE supports ABLE
AWARE Inc., Montana’s largest provider of services for people with disabilities, recruited a lawyer to provide services, free of charge, to draft the bill language.
“It took a lot of people working together and moving quickly to bring ABLE legislation to Montana,” Caferro said. “There are a lot of tax issues that needed to be addressed. We really needed an attorney well versed in tax law to help with that.”
Additionally, AWARE offered its lobbyist to assist with the bill’s passage. The Arc Montana organized families to testify before the legislature, write testimonials and generate grassroots support.
“Families were key, the commitment of their time and their energy hit the ball out of the park,” Caferro said.
“We are hoping every state moves quickly to implement the ABLE Act,” Thomas said. “As Montana showed, it takes a lot of people cooperating to make this a reality, but it’s worth it. These accounts open so many doors for people with disabilities and their families who want to save for their future.”