ABLE Act To Allow Tax-Free Savings Accounts For Disability Expenses
By the end of 2016, Pennsylvanians should be able to set aside money in tax-exempt savings accounts to spend on the wide range of expenses brought on by disabilities.
The new Pennsylvania Achieving a Better Life Experience Act, also called ABLE, allows family members to contribute up to $14,000 total per year into an “ABLE account,” which is modeled after the Section 529 accounts that parents can use to set aside pre-tax savings for their children’s college bills.
Nancy Murray of Achieva, a Pennsylvania-based disability advocacy organization, said the expenses permitted under the new law include both everyday costs and disability-specific needs.
“Just like folks without disabilities, when it comes to needing funds for housing, transportation and education, but it’s also going to take care of things like hearing aids and eyeglasses and assistive technology,” Murray said. “Many, many people with disabilities rely on iPads and speech-generating devices to communicate … and they’re very, very expensive.”
Up to $100,000 of ABLE savings will be exempt from the eligibility requirements imposed by Social Security and medical assistance programs. The “means-tested” calculations currently used for those government assistance programs currently cap a person’s assets at $2,000.
“Means-tested means that really, the person is going to be relegated to a poverty level, and when you are at a poverty level, it’s going to be really hard to save money,” Murray said.
However, Murray noted that a person is currently only eligible for an ABLE account if their disability started at or before the age of 26.
“If all of a sudden you and your husband are 60 and your son is returning home at the age of 30 having been injured in a conflict, well, your life is now changed for the rest of time too,” Murray said. “Those families are going to need support just like the families of children with Down’s Syndrome do.”
She said a bill currently pending in Congress would boost the eligibility age by 20 years. A related bill would allow the individual with a disability to input their own savings into the ABLE account up to $11,700 annually, on top of the existing $14,000 cap.
At a ceremonial signing in Harrisburg on Monday, Governor Tom Wolf called the ABLE Act a, "Small step in the direction of embracing society’s responsibility and society’s self-interest in addressing autism in a fulsome way.”
“When they get to the age that the school system stops caring for them, they don’t have to go into an institution,” Wolf said. “They can actually do this with their families in a family setting, with friends, and live a full life.”
The road to passage for the ABLE Act was paved in large part by U.S. Senator Bob Casey (D-PA), who sponsored the 2014 federal law that legalized tax-exempt disability savings accounts at the state level.
“Many of us just didn’t want to let Sen. Casey down,” Murray said. “He got this through Congress, provided that leadership, and we just wanted his state to be one of the first.”