The Achieving a Better Life Experience (ABLE) Act
- ABLE Act allows for individuals with disabilities to save for certain expenses
- Funds in an ABLE account should not affect eligibility for federal benefits
- Minnesota launched its ABLE program on Jan. 31, 2017
The federal Achieving a Better Life Experience (ABLE) Act was signed it into law by President Obama on December 19, 2014. The ABLE Act changes the tax code to allow for tax-advantaged savings accounts for qualified individuals with disabilities to save for certain expenses, such as education and transportation. If properly managed, funds in an ABLE account will not jeopardize eligibility for critical federal benefits like Social Security and Medicaid.
Minnesota officially launched its ABLE program on Jan. 31, 2017. Minnesota joined a consortium with eight other states to create and operate an ABLE Act program. The consortium’s goal is allows the participating states to pool resources together and potentially operate their programs at a lower cost. If you need to act now to protect funds, we encourage you to learn about The Arc Minnesota’s Master Pooled Trust.
With ABLE plans now available across the nation, Minnesotans with disabilities and their families will soon have another excellent way to save funds to enhance the individual’s future. However, an ABLE account might not always be the best option. Another form of financial plan might be better to ensure the money saved in the account can be used to meet the needs of a person with disabilities and not jeopardize his/her public benefits. Our Master Pooled Trust might be one such option. The cost to set up our trust can be much less than a private trust, and The Arc Minnesota provides its services as trustee. For some individuals, it may be advantageous to have an ABLE account and a MPT.
The ABLE Act has restrictions on its accounts that might or might not work for your situation; read this fact sheet for more on those restrictions. Some important considerations on deciding which account is best for you include how much money is going into the account, both in one year and in total; age of onset of the disability; age of the beneficiary; tax advantages on earnings; rules on how funds can be used; and fees.
Another important difference is the requirement for a Medicaid payback. With an ABLE account, all funds remaining in the account at the time of the beneficiary’s death, including funds from parents or others, might be sent to the government as a payback for Medicaid services. Conversely, if a MPT is set up to hold funds provided by others, the remaining money is not subject to the Medicaid payback and can be directed to family members or others.
First draft of federal regulations to implement ABLE Act June 2015
Interim federal guidelines on ABLE Act Nov. 2015
Social Security Administration instructions to its staff on implementing the Arc
- North Carolina
- Rhode Island
Qualified individuals from any state may open accounts with many of the above programs; some state’s programs are only available to residents of that state. Each program’s website should be able to tell you whether a program is statewide or nationwide.